Despite regulatory pressures, competition still drives risk profiles. Making a profit -- while meeting and exceeding customer expectations -- remains the goal. Regulatory focus will probably concentrate on safety and soundness as the industry contends with the increase in substandard assets. The pressure to do so will build as rates move upward.
As the banking industry wades through the muddy waters of the times, with access to future profits no longer as clear, strategic plans should consider probable regulatory changes that will redefine acceptable appraisal valuations. Attempts to standardize repayment capacity may be on the horizon and could include required income verification rather than the use of stated income. With the market at the lower end of the rate curve, rate shock analysis expectations may enter the regulatory arena, as well.
Training is crucial for maintaining a strong, experienced staff. That will never change. Institutions that cut back on training could show more adverse effects over a longer period of time. A move toward effective relationship management will drive the need for well-rounded, well-trained, knowledgeable staff. Even with the current shaking of the industry and profit margin compression, it is important to remember that customers still perceive that having someone to talk to -- someone available and concerned -- still drives the quality of the account relationship. Making a profit is still possible in these turbulent times, if the service can back up the product. While rates speak loudly, quality service is worth paying for.