Bank to the Future? Predictions from 1986

Editor's Note: A quarter of a century ago, American Banker asked dozens of bank CEOs to predict what the banking industry would look like today. Below is the story we published in our 150^th-anniversary issue in 1986.

Edward B. Brandon
President, CEO
National City Bank, Cleveland

DREAMS FOR BANKING:
My hope for the next 25 years is to be able to compete on an equally regulated basis in all aspects of financial services

BIGGEST CHANGE TO AFFECT BANKING:
Probably the biggest change to affect banking will be the trend toward socialization of the industry, which will result in a risk-free division and an investment division, and ultimately will fundamentally alter the structure of banking as it is now.

WHAT THE CHIEF EXECUTIVE WILL NEED:
The chief executive's needs will change very little over the next 25 years. Banking has become much more of a business, and success depends upon the use of fundamentally good business judgment. That will hold true regardless of what changes occur in the banking business.

The CEO must become conversant with the dynamics of all aspects of financial services so that he can decide which aspects the organization will be active in and to what degree.

WHAT'S AHEAD FOR THE YEAR 2011:
By the year 2011, the financial services firm will look like a financial services holding company with different elements isolated within the company. These separate entities will stand alone but will be linked by common overall management and an electronic distribution system.

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Leonard W. Huck
President, Chief Administrative Officer
Valley National Bank of Arizona, Phoenix

DREAMS FOR BANKING:
If commercial enterprises are to be allowed in the financial services industry—that is, AZP making a deal to purchase MeraBank, the Ford Motor Co. purchasing Nationwide, Sears, Roebuck and Co. buying a savings bank, and so forth—the commercial banks should be free to take equity positions in various businesses to provide diversification.

I'd like to see us in some real estate developments, some services denied by Glass-Steagall, insurance offerings, and the full-service brokerage business.

BIGGEST CHANGE TO AFFECT BANKING:
The possibility of a collapse in the Social Security system would have a profound effect on America. As longevity increases, more and more people will be drawing benefits for longer and longer periods, yet the pool of younger workers will diminish in relation to the size of the group of pensioners that they are supporting.

There is still time to change the method of funding, perhaps by turning to private enterprise, or by creating a government agency charged with investing each worker's contributions for a favorable yield.

WHAT THE CHIEF EXECUTIVE WILL NEED:
Most new things are simply refinements and extensions of traditional skills that earned the CEO his or her position in the first place.

Obesity, financial, managerial, human relations, and marketing skills are vital, but even the president of a small local bank will find a knowledge of international affairs and worldwide trends necessary in the future.

WHAT'S AHEAD FOR THE YEAR 2011:
Indications today point to a highly automated industry, with customers served electronically in their homes, vehicles, and work places. While the branch system still will be important to retail operations, individual offices most likely will handle only nonroutine transactions or special situations.