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5 Predictions for Banking in 2018

By Geoff Williams, U.S. News and World Report , December 8, 2017 

Banking isn't what it used to be. For many people, it isn't a novelty to take a photo of a check and send it directly to your checking account – or to check your balance on a phone or a computer or transfer money from one financial institution to another. For some time now, consumers have been able to bank without ever meeting or talking to a human being. But banking is on its way to being even more futuristic, many experts say, although in some ways, banking will also soon harken back to the past.

If you're wondering what's in store for your bank in the next year, this is what's likely to come down the pike in 2018.

Do-it-yourself fraud controls. Todd Harris is the CEO of Tech CU, which stands for Technology Credit Union and is based out of San Jose, California. He thinks in the near future – possibly in 2018 – you'll see more credit cards and debit cards with their own "on and off switch." Harris says that the credit and debit cards that Tech CU offers already has them.

The feature enables you to turn the credit or debit card off instantaneously via a mobile app if you know it's been stolen. You could also leave it off all the time and only activate it when you're buying something, according to Harris.

Credit cards will know your smartphone's location. Harris thinks that it'll soon be mainstream for credit cards to know where your smartphone currently is, and it's already a feature with Tech CU's cards.

In other words, it eventually will be common that if your cell phone is in Cleveland (presumably where you are), and someone else is making a purchase with your credit card information in Phoenix, the transaction won't be approved. Of course, that may make things tough for you if your smartphone has been stolen, and you still have your credit card. Still, as smartphones and credit cards are linked more frequently, identity theft should become at least a little harder for thieves to pull off.

We'll see more, not less, brick and mortar bank branches. For years, financial experts have said that we'd be seeing fewer bank branches, as consumers become more comfortable with online banking and digital money.

But numerous surveys have shown that millennials – who probably feel the most comfortable with online banking – like going to bank branches. So, no, they're not going anywhere any time soon.

However, brick and mortar bank branches are going through a transformation, according to James McKenna, marketing officer at Tompkins Mahopac Bank, with 14 branches in the Hudson Valley region of New York.

"In 2018, the market will begin to see more 'branches of the future,' a new spin on what it means to be a brick and mortar financial institution," McKenna says. "Our research tells us that consumers still expect physical branch locations, despite the evolving fintech landscape."

McKenna says that earlier this year, Tompkins Mahopac Bank opened a "branch of the future" in Yonkers, New York, and another will be opening in 2018. For them, at least one nod to the future is that their bank will try to outlaw lines of customers.

Instead of waiting in a line, "at these new branches, customers are greeted by a universal banking representative, a team member who can assist with transactions, account openings, personal loans and more," McKenna says.

That said, bank branches have been undergoing an evolution for a while now. There's a Capital One Café in several cities, like Austin, Texas, and Los Angeles, where it's an actual coffeehouse but also a bank. Meanwhile, Umpqua Bank, headquartered in Portland, Oregon, tries to offer a community center feel to its branches; some branches offer yoga classes, wine tastings and knitting sessions.

Higher interest rates. This should be a good year for savers. "To me, the most interesting trend we¹re going to see in the next year is Federal Reserve watching. The Federal Reserve is relevant again for really the first time in 10 years," says Brian Bolton, associate professor of finance at Portland State University in Portland, Oregon. 

Bolton points out that interest rates will be climbing in 2018, perhaps more significantly than in recent years.

"This isn't news to anyone," he says. "The interesting part will be how institutions respond to this," he says.

And it seems very likely that many institutions will respond by trying to bring in more customers by touting higher-yielding savings accounts, assuming interest rates do climb throughout 2018. If you want to be able to finally make (some) real money through interest, this could be your year.

There will be fewer regulations and less oversight. Depending on your point of view, this could be a good change, or not so good. Either way, there will be a decrease in regulatory oversight over banks and non-bank mortgage lenders, predicts Mike Barone, a banking attorney with the law firm Abrams Garfinkel Margolis Bergson, LLP, in New York City.

Things were trending that way, anyway, but the departure of Richard Cordray, the former director of the Consumer Financial Protection Bureau, makes that even more likely, Barone says.

"Cordray has been an extremely tough regulator of banks and other financial institutions and the CFPB under his leadership has forced some of the biggest financial institutions to return more than $10 billion to consumers for alleged wrongdoing," Barone says.

Cordray, recently stepped down from the CFPB and is running for governor of Ohio. At the time of this writing, the leadership of the CFPB – whether it will be Cordray's hand-picked successor, Leandra English, Trump's choice for acting director, Mick Mulvaney or someone else – is still being debated in the courts. Assuming the Trump administration prevails and ultimately appoints a more conservative director, Barone says that may allow for a freer banking environment, which could open the door for increased investment, spending and lending and the resulting hiring of employees.

Will that make your bank more consumer- and investment-friendly in 2018? Will any of the coming banking changes help your bottom line in the next year? As Barone says, "Time will tell." 

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