Four Views On What's Ahead In Financial Services
ORLANDO, Fla.-Four financial services industry analysts see a future with fewer providers and with the survivors sharing certain common tactics and strategies.
In the near-term, meanwhile, it's imperative in any discussion of the financial services marketplace to consider the effects the recessions continues to have.
"In financial services we expect to see more bank failures, more closures of credit unions, and the overall number of financial institutions in the U.S. is going to shrink, probably fairly dramatically," acknowledged Jeanne Capachin, VP-research with IDC Financial Insights.
Ken Proctor of Cornerstone Advisors, lamenting he didn't have more "encouraging news to share," predicted it will be another 18-24 months before there is an "appreciable recovery. I don't know if the industry will shrink as dramatically as some think, as we heard that during the last banking crisis, but there will certainly be fewer institutions."
Regardless of what the final headcount is for financial institutions, Gwen Bezard of Aite Group said the survivors will be those that realize that "it's not going to be a matter of going back to the old, good times. The situation we are going to face in the next few years regardless of how quickly the economy picks up is going to be very different, in a good and a bad way. All of the new regulations and other factors have helped to create a big vacuum in the loyalty market. You have many credit card issuers unable to extend credit, and other institutions that have moved away from the loyalty market. To me there are great opportunities for institutions with good risk management and an appetite for risk."
While optimistic the U.S. is on the road to recovery, Raju M. Shivdasani, president of Harland Financial Solutions, believes it will be five years before any recovery is complete. After outlining challenges the government faces, Shivdasani said, "I think the single biggest thing we can do from a banking perspective is not to get into these shells and not freeze up on lending. I know it's tough, but make those smart loans like you need to, and it will come back to you in spades."