5. Fees Under Siege
Maybe it's because an overdraft fee is easier to understand than a credit default swap. Whatever the reason, challenges to bank fees for a variety of services are coming fast and furious as all aspects of the banking business are subject to scrutiny. The situation is unlikely to ease in 2010, with consumer financial protection likely to be a key feature of whatever financial services regulatory reform ultimately emerges from Congress. In a recent Bank Systems & Technology/Fiserv webcast, Mercator Advisory Group VP Bob Landry underscored the dilemma, noting that without overdraft fees, 45 percent of banks and credit unions would not have made money in 2008. "The [role of overdraft fees] in the overall ability of the industry to make money is pretty important," he said. But banks fight back on this issue at their peril, in terms of their already shaky reputations with the public. "It's a social issue," Landry noted during the webcast. Since the need to generate revenues is not ameliorated by social pressure, look for banks to revamp their offerings, he suggested -- charging for services such as minimum balances and optional features. -- K.B.
6. Attention Turns to P2P Payments
The big buzz at this year's BAI Retail Delivery Conference & Expo was around peer-to-peer (P2P) payments. Major players including S1 and FIS announced that they have teamed with PayPal to offer banks mobile or online P2P solutions. Meanwhile Fiserv has started to offer a new P2P personal payments service to the 3,000-plus financial institutions in its online payment network. In many ways the personal payments space is the last bastion of the personal check, but perhaps with these new developments, that will finally start to change. -- N.C.
7. Outsourcing Closer to Home
Seventy-two percent of North American bank technology executives expect their budgets to stay the same or decrease in 2010, according to a recent Aite Group report. As a result, banks seeking to improve efficiencies, reduce costs and free up capital are increasingly turning to outsourcing -- particularly in treasury management, wholesale lockbox, remote capture, disbursements, check processing and image exchange, according to reports. But outsourcing largely will remain on U.S. shores; only 4 percent of North American bank CIOs are considering moving operations overseas in the next two years, Aite notes. -- M.R.
8. Managing Finances Gets Social
Thanks to a combination of demographic trends, technology capabilities and uncertainty in the banking competitive arena, personal financial management (PFM) tools -- online resources geared toward helping consumers and small businesses manage their finances -- really took off in 2009 and are likely to present an even greater opportunity (or threat) to banks in 2010. PFM looks to be an ideal way for banks to improve customer experience and loyalty and to leverage their online banking platforms. Banks are in a prime position to help customers take more control over their finances. But PFM's growing popularity also raises the specter of disintermediation. The leading PFM players, including Mint (acquired recently by Intuit), Geezeo and Yodlee, are simultaneously potential partners and competitors to banks. -- K.B.
9. UnTARPed Banks
In December 2009 three high-profile banks -- Bank of America, Citigroup and Wells Fargo -- announced plans to repay tens of billions of dollars in federal bailout money. The question now becomes whether those moves came because the banks were dealing from a healthier balance sheet position or because they sought to get out from under the increased regulatory oversight imposed by TARP. In 2010 we'll learn if each bank's decision to repay bailout funds was the right one. In part, the future state of the economy could depend on those results. -- N.C.
10. HR's Moment in the Spotlight
When the Wall Street Journal reports that, "HR Executives Suddenly Get Hot," you know that things have changed in the business world. But it's not surprising that, with a wave of turnover in senior positions and reductions in workforces at companies of all sizes, corporate human resources departments are at the center of the action right now. It's no different in banking -- whether it's finding a new CEO at Bank of America, figuring out how to recruit millennial workers, or managing the countless layoffs that have occurred following mergers, restructurings or failures, human resources managers are playing a historic role in shaping the workforces that are going to lead the banking industry into 2010 and beyond. -- K.B.