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
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
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
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