ONE: THE HEALTH-WEALTH PORTAL 

Banks know health care is a big opportunity. They are spending more than $100 million a year acquiring and building technology to process claims and other transactions for providers of health services, according to the Healthcare Information and Management Systems Society (HIMMS).

But there's a lot more that banks could be doing, especially as more provisions of Obamacare—officially called the Patient Protection and Affordable Care Act of 2010—go into effect over the next two years. Besides serving as the payments vehicle for doctors, hospitals and health care plan administrators, banks could become central to a kind of "health-wealth" portal that many believe will be a major source of the $35 billion in health care savings that the White House projects the act will provide by 2013.

The idea, as imagined by HIMMS, is for banks to adapt their online and mobile banking platforms—which consumers use to transfer their money—to also accommodate the transfer of their electronic medical records from one health care provider to another.

"What we are suggesting is banks move beyond that core payments business to data processing," says John Casillas, senior vice president of the HIMMS Medical Banking Project. "Specifically, health data processing between the health care stakeholders."

Banks already play a role in consumer health care insurance options that require being tethered to health savings accounts and other specialized investment vehicles. So expanding into the medical records business would not be much of a stretch, Casillas says. And it would allow consumers to have their records made accessible to health care providers through HSAs and other accounts.

Privacy worries would be nil, since banks would not have access to the actual medical records; they would only be providing a lockbox that health care providers would access for the easy electronic transfer of records.

Casillas says banks would have minimal heavy lifting to do in terms of the necessary technology, because most of the protocols already are being established in the back offices of medical providers. Under the Affordable Care Act, health plans must adopt electronic processing protocols by July 2013. While health care providers are not required to accept them (a strange quirk in the law), they have been given generous financial incentives to do so.

The federal government is offering the incentives to help Medicare and Medicaid health care operators upgrade their systems for electronic records, provided they complete the work by October of this year. That's partly how the Affordable Care Act aims to cut overall health care expenses in the long run. Besides reducing medical errors, the upgrades for electronic medical records and data remittance are expected to generate tremendous cost savings for providers through reduced paperwork and faster claims settlements.

One goal of the two-year-old Medical Banking Project at HIMMS, Casillas says, is to figure out how to make the exchange of records between providers easier. And he believes banks could provide the solution, offering consumers a quick and secure way to control access to their own records.

He says it's too early to know whether this service might be a fee opportunity for banks. But he foresees a benefit to banks beyond that: online banking is a huge factor in increasing customer interaction and loyalty, and this would give people another reason to sign onto their bank portal, Casillas says.

"The idea of a consumer being able to not only match their financial but also their health care records through a single sign on, could provide basic value—add to the online banking environment," says Casillas. "I think it could be a competitive driver."

TWO: PLAN WISELY FOR THE EVENTUAL COOLDOWN IN HOT DEPOSITS

Checking and savings accounts at U.S. banks hit an all-time high of $10 trillion in September, as consumers remained wary of the stock market and opted to keep their money handy rather than sock it in illiquid certificates of deposits.

Bankers are well aware that sluggish loan demand can turn deposits into a headache. In this environment, it can be hard putting money to work. But a deposit buildup presents an even bigger challenge long-term: what happens after the surplus cash goes away?

Kamal Mustafa, chairman and CEO of Invictus Consulting Group, says banks need to think beyond the current short-term loss of yield. They are sitting on unrecognized amounts of hot deposits, or "refugee funds," as he calls them. Once consumers and business customers regain faith in the economy, they'll redeploy their cash into higher-yielding investments, which will cause major woes in asset/liability management for banks.

"The new deposits are very similar to brokered funds in one characteristic: they will be flying out of the banks when the equity markets come back and the bond markets come back," Mustafa says.

Invictus, which devises stress tests for banks, estimates that the bulging checking and savings accounts across the industry contain $1.28 trillion of hot deposits. If this money disappeared over the course of weeks or months, it would wreak havoc on the assumptions banks have made about capital adequacy, return on investment, and even fee income.

The danger, Mustafa says, is that institutions are setting themselves up for "very serious problems," if their asset/liability matching assumes that all of these new deposits have the same long-term characteristics as deposits made in the past.

In addition, the rates banks offer on loans and investments should be calculated only after identifying, and factoring out, these hot deposits, Mustafa says. "Treat them as highly volatile instruments, both from the reinvestment of these as well as the linkages to loans."

So far he sees little evidence of banks taking such precautions.

To flag hot deposits, Mustafa suggests using a simple ratio as a general guideline. Start with the deposit base (consumer, commercial and institutional) that the bank held prior to the recession, subtract any deposits associated with loans that are rolling off the books, and compare to current deposit levels. The difference between those two numbers is the amount Mustafa expects will shift once accountholders start looking for yield again.

Mustafa says boards of directors and their asset/liability committees need to start examining the quality of underlying deposits much more closely.

He says the committees have been focusing more heavily on assets than liabilities in recent years.

THREE: THE TAKING, AND EMBRACING, OF CORPORATE RESPONSIBILITY

Bank-bashing is practically a national pastime, one that even the president has indulged in. The relentless attacks have made some bankers reflexively defensive. But many are also pondering how the profession they love can do better.

Count Heidi Miller, who is about to retire as president of JPMorgan Chase's international business, among them.

In a speech to her fellow bankers this fall, Miller rattled off unemployment and income statistics that she says help explain the protest against Wall Street. Only 58 percent of the country's working age population is employed, and the Census Bureau recently announced that in 2010 median household income fell to $49, 445, the lowest level in more than a decade (adjusting for inflation). "This is a level of pain we can't and shouldn't ignore," Miller said.

Borrowing on ideas in an article that Ray Gilmartin, former CEO of Merck and a friend of hers, wrote for the Harvard Business Review, Miller called on corporations in general, and banks in particular, to rethink their guiding principles.

The focus on quarterly earnings results in strategic and operating decisions that are profitable only in the short term and diminishes corporate social responsibility as a consideration, she said, citing Gilmartin's article.

"I am sure much of what he writes will be reviewed with skepticism and controversy. Yet for me, given the pain we see in our own country and around the world, addressing the fundamental issue of the corporation's role is key," Miller said. For banks, such introspection will be essential to regaining trust and being seen as part of the solution, rather than part of the problem, she said.

So what might a new vision of corporate responsibility look like in execution?

For large banks, maybe it involves the rethinking of a decision to move thousands of back-office jobs overseas because it's cheaper.

For smaller banks, maybe it involves thinking creatively about how to be more helpful to the local community.

Midsouth Bank in Lafayette, La., offers one example. Though people who repeatedly overdraw their accounts can be very profitable, Rusty Cloutier, Midsouth's CEO, started a program last year to help these customers learn to live within their means.

This idea is not a moneymaker. Besides the potential loss of fee income for the $1 billion-asset bank, there's staffing to consider. The Fresh Start program has two "account analysis counselors" who reach out to customers. And the work sometimes can be thankless; not all customers are eager to be singled out by their bank as needing advice on how to manage their households better.

But Cloutier had been feeling increasingly uneasy about overdraft fees. He says the bottom line is: what's good for the bank in the short term is not necessarily good for its customers, or good for society overall.

FOUR: SMALL BANKS RECLAIM MORTGAGES

Among the many knocks on big banks these days is that they are taking too long to close mortgage loans.

Still smarting from waves of defaults on loans they made during the housing boom, large lenders such as Bank of America are being so cautious with their underwriting that loans, which are typically expected to close in 30 to 45 days, are sometimes taking twice as long. That's frustrating not just to home buyers, but also to sellers, real estate agents and especially loan officers who, after all, are paid on commission.

With the bottlenecks costing large banks some business, community banks are pouncing on the opportunity to expand their mortgage lending. A recent report from FBR Capital Markets says BofA's share of originations has plunged to 10 percent, from 25 percent three years ago.

The $2.5 billion-asset Cardinal Financial in McLean, Va., is one of those benefitting. It has hired roughly 50 mortgage loan officers over the past year and the company's chairman and CEO, Bernard Clineburg, says most are big-bank refugees who got fed up with the glacial pace of the loan process.

"Loan officers want to work with companies that can execute," Clineburg says. "The big guys are taking two, two and a half, even three months to close loans that we're doing in 30 to 40 days."

The new hires hit the ground running, too. In the third quarter, mortgage applications at Cardinal were up nearly 34 percent from the same period last year and fee income from mortgage lending more than doubled, to $11.3 million.

Other community banks that are ramping up in mortgages include TowneBank in Suffolk, Va., which recently expanded into the Richmond market by acquiring a brokerage firm there; and Washington Trust Bancorp in Westerly, R.I., which recently opened its second mortgage office in Massachusetts.

Stephen Bessette, an executive vice president at $3 billion-asset Washington Trust, says his company first moved into Massachusetts two years ago to fill a void created when nonbank mortgage lenders that once had roughly 70 percent market share in the state began closing.

In its first full year, the Sharon, Mass., office generated $109 million in loans, Bessette says, "and that's $109 million we wouldn't have had otherwise."

Now Washington Trust is aiming to capture business from large banks that seem to be de-emphasizing mortgage lending, says Bessette. Its new office in Burlington, Mass., is run by a former lender at BofA, and most of the dozen or so lenders there came from big banks.

The next target for expansion is Connecticut. Washington Trust was set to open a mortgage office in Glastonbury by the end of 2011, and Bessette says he's looking to add another office in Fairfield County sometime in 2012.

FIVE: BE THE MASTER OF YOUR DOMAIN

It is the first, and perhaps only, land rush of the 21st century: Beginning this month, the organization in charge of assigning Web site addresses will start taking applications for the newly available option to create customized domain names.

Rather than being required to use one of the current 22 generic domains, such as ".com" or ".org", registrants will have the option of investing in their own branded domains. Think ".facebook", ".apple", or in the banking industry, perhaps the likes of ".chase", ".wellsfargo", or ".anybankUSA".

Why would a bank want a vanity-plate domain? One reason is to have its own Web "island" of sorts, an online dominion it controls. Only the bank or its partners could register pages in the domain.

The security benefits could be extraordinary. Bogus sites created to scam consumers overwhelm the dot-com universe. But fraudsters would be unable to set up shop in a bank domain, and consumers could be assured that anything in that domain came from the bank itself, according to MarkMonitor, a firm that specializes in protecting brands online.

Domains are expensive, through. An initial fee of $185,000 to the Internet Corp. for Assigned Names and Numbers (ICANN) is required, and banks would have to tackle complex Web domain management services either in house or with an outsourcing partner—a big expense that probably rules out most mid-tier and community banks from taking custom domains. And certainly, banks would not want to abandon their well-established ".com" sites.

The initial application period for the personalized domains runs from January to April, and the domains should be able to go live in 2013.

Industry experts don't expect a mad dash for new domains this year. "The bottom line is there has been so much branding invested in 'dot-com,'" says Phil Blank, managing director for security, risk and fraud at Javelin Strategy and Research. "From an economic perspective, we look at it only as a new entrant possibility."

But even if banks lack any immediate plans to capitalize on branded domains, they should consider the need for defensive measures to defend their names from being hijacked by third parties. ICANN promises a rigorous review for copyright holders, and there is a process to shut down interlopers.

Still, as part of this process, the complaining company must pony up to buy the domain in question. "There are ways for copyright owners to object to say we don't want that company or this person to have this top-level domain," says Mercedes Tunstall, a banking attorney with the Ballard Spahr law firm in Washington, D.C. "But when that occurs, they do have to eventually put their money where their mouth is."

SIX: THE QUESTION OF PAYING INTEREST ON DEPOSITS

In October 2010, Dan Geller projected that banks might stop paying interest on deposits and instead start charging to hold them. The notion seemed far-fetched to many at the time.

But Geller, an executive vice president at Market Rates Insight in San Anselmo, Calif., was vindicated this past summer when Bank of New York Mellon began charging its customers 0.13 percent on deposits over $50 million—a move Geller says is a first in U.S. banking history.

The bank's announcement triggered a flurry of questions in the market. Was this the harbinger of a new wave of fees? How long would it be before Main Street customers with more modest savings would have to pay for the privilege of keeping their money safe?

The collective wisdom of financial pundits was to tut-tut the anxious, pronouncing such a scenario extremely unlikely. But as the economy limps into another year, and banks remain awash in cash that is earning them hardly any return, the idea no longer seems as wild as it once did.

Few customers know as well as bankers do that holding money isn't free. Until the Dodd-Frank Act prompted a change last year, the FDIC based a bank's insurance assessments on its deposit base. (Now the assessment is based on assets, but between the price of hiring staff and processing transactions, idle deposits still can be a drain.)

The Federal Reserve has offered the industry a lifeline of sorts for the past several years by paying interest on excess reserves parked at the central bank. Those reserves earn the banks a return of 25 basis points, which, given FDIC assessments and general business expenses, is better than nothing. Just.

So, it must have come as a nasty shock to bankers in the fall to learn that the Fed had started exploring the possibility of reducing the interest paid on reserves. The minutes of the September Federal Open Markets Committee meeting showed that its members were briefed on the issue. After hearing pros (it could help stimulate bank lending) and cons (it could disrupt money markets; to what degree is difficult to predict), the committee asked for more information on the potential impact and put off taking action. The subject could be raised again when the committee meets this month.

Meanwhile, current market conditions continue to push the interest rates that banks pay on consumer deposits toward zero.

"Because perceived loan demand is so soft, banks have to constantly lower the interest rates on loans in order to stimulate demand," Geller says. "This puts tremendous pressure on net interest margins."

Of course, making up the difference by offering a negative interest rate on deposits wouldn't be a great PR move. But the fact is, many bank customers are effectively earning negative interest already when account maintenance fees are factored in.

Geller says the recent consumer rebellion over fees on debit cards—pressure that prompted Bank of America to reverse its plan to charge $5 a month for customers who made purchases with their debit cards—actually increases the likelihood of negative interest. Consumers are much more sensitive to fees these days than to the dwindling interest paid on deposits.

If the Fed removes its buffer, taking interest rates on deposits into negative territory could become banks' only option, Geller says. "There won't be any other place to go."

SEVEN: THE BREADBASKET ECONOMY

There's a healthy debate going on as to whether the current boom in agriculture is a bubble just waiting to burst. But here's an idea that would extend the good times in farm country long into the future: as emerging markets around the globe start realizing their economic potential, and as birth rates in those regions trigger a population explosion, the United States is in a unique position to become the world's breadbasket.

"The next 25 years is going to be characterized by real supply-demand issues all related around population growth and lack of food, and I think the U.S. has the opportunity to become the equivalent of the Saudi Arabia of food," says Meredith Whitney of Meredith Whitney Advisory Group.

It's anyone's guess as to whether this long-term prediction will be as prescient as her famous call on Citigroup or as humbling as the one she made on municipal bond defaults.

Either way, the Midwest may deserve some extra attention from banks these days. While the East and West coasts have long offered better growth opportunities for banks (fueled in part by the technology boom and the crisis-inducing housing bubble), these markets are now heavily burdened with many of the industry's most vexing problems, including intense branch saturation and a concentration of sludgy real estate assets.

And if Whitney is right about the rise of a food-based economy, then agriculture—which some big commercial banks were happy to leave while they pursued sexier businesses like investment banking—would be a major growth area, and some banks might want to consider reclaiming their stake in it.

EIGHT: GOING PSYCHO(GRAPHIC)

A bank looking to set up a branch somewhere generally looks at the ages, incomes and educational makeup of various neighborhoods to determine the best fit. But now they have the ability to consider a vast amount of additional details—from shampoo choices to musical obsessions.

Some of the new data has the potential to be more important than the usual basics. Such extremely specific information about a consumer's daily life are what researchers call psychographics, and many companies are using it to supplement the mundane demographics of yesteryear and better hone in on their target markets.

"Psychographics is really taking all that data and paper trail you leave behind and really painting a picture of who you are," says Brandon Norrell, a director of sales for Buxton, a customer analytics firm in Fort Worth, Texas.

Buxton, a pioneer in customer analytics, has been gathering this kind of data for companies for 15 years, but Norrell says in the last five years there has been a surge in demand across all industries. Just in the last year, Buxton has picked up a notable amount of financial services clients looking to use this information to strategically place a branch or to better market a new product or service.

Norrell says much of the new interest is from community and regional banks, which are eager to pick up customers fleeing the big banks. "These organizations are realizing that they need to be more strategic in customer acquisition. And they need to set themselves apart and make the most out of their marketing dollar."

So rather than a bank just sending out offers for a free checking account to everyone in a particular area, it can target households that mirror the psychographic data of the bank's most valued existing customers.

Buxton collects all this nuanced data from many sources. Besides its own array of surveys, the company tracks magazine subscriptions, media usage and other spending habits. It works with Experian of Costa Mesa, Calif., which gets little bits of information every time someone swipes a credit card or scans a grocery store "Bonus Club" card. It also draws on Experian's Simmons National Consumer Study, which surveys more than 25,000 households annually. This study uses psychographic data to label customer groups in a way that can help marketers—for example, dubbing them "mobile professionals," "mall maniacs" or "weekend cooks."

While some elements of the National Consumers Study are publicly available, banks can buy more thorough data from Experian, and then have someone on staff sort through it all—or pay a company like Buxton to do it.

But Norrell points out that it's not beneficial to just start trying to analyze this psychographic data for trends without having a specific question in mind.

Like, how much might a "status striver" be willing to pay for a cool designer deposit account?

NINE: SERVICES FOR NONCUSTOMERS

One of the industry's major challenges is how to trim the cost of servicing low-profit customers. Some banks already are inviting these customers to leave by ramping up fees. Given this forced exodus, the idea of allowing noncustomers to use branches for some transactions might sound odd at first. But what if a bank could still earn fees by providing basic services like payroll check-cashing without adding to the ranks of unprofitable checking account holders?

Last year Carver Federal Savings Bank in New York turned to a new community check-cashing service as a means not only to recruit unbanked consumers into its fold, but to attract those who might never use the bank for anything other than cashing their regular payroll or government-issued checks. Utilizing a check-cashing risk management service from Atlanta-based Chexar Systems, Carver adapted branch services to include noncustomers, providing an alternative to payday lenders and other check-cashing outlets.

The tactic is not just for community banks. Larger ones like Regions Financial are doing the same.

The rates customers pay are not always cheaper. For example, the state of New York caps charges at 1.86 percent of the face value of a check, resulting in similar fees at banks and nonbanks. But in many other states, "banks on our systems tend to be cheaper than the check-cashers," says Chexar CEO Drew Edwards. Banks have an advantage here, because their cost of funds is cheaper, and they already have the settlement infrastructure in place, he says.

Historically banks have eschewed the risk of accepting and cashing third-party checks, requiring either a checking-account relationship or a five- to six-day hold when they do take the checks. But in Chexar's case, it assumes that risk; it supplements automated verification systems with hands-on risk professionals to assess checks on a real-time basis. This allows consumers to exchange their checks for cash on a single visit.

Chexar backs more than 20 types of checks, including hand-written payroll checks from small businesses. It also allows almost any size of check ("from $500 to $500,000," Edwards says).

Chexar's system is not new. It was developed seven years ago as the core platform for El Banco de Nuestra Comunidad, a now-defunct banking venture that was created to offer services to the local unbanked Latino community. Now with the demise of overdraft and debit interchange fees, the Chexar platform makes the idea of reaching out to noncustomers more palatable.

It also could help make it easier to retain some low-balance customers. A large segment of inactive small accounts belong to customers who only opened the accounts to qualify for apartment rentals or utility services. They prefer living cash-in-hand, rather than balancing checkbooks that could lead to costly overdrafts.

Offering services to noncustomers requires not only a new platform, but a new mindset, Edwards says. For years, banks have trained tellers on cross-selling and customer retention. Tellers often were barred from even making change for noncustomers walking in off the street.

But in the wake of the revenue threat from the Dodd-Frank Act and its Durbin amendment, "every bank out there is re-evaluating its product set," Edwards says. "What banks are positioning themselves for is, 'We'll do all those things you were doing at a payroll store, but in a friendly environment. We are a bank and we're part of the mainstream.'"

TEN: CODDLE FIRST-TIME DEFAULTERS

Before the financial crisis, customers who defaulted on loans usually got the heave-ho from banks.

But many people who got into financial trouble in recent years are a different sort than defaulters of the past.

Banks need to recognize this, and improve how they handle these customers, says Adam Schneider, interim executive director at the Deloitte Center for Financial Services. Otherwise, they risk losing valuable relationships for good.

One in every 10 bank customers experienced a negative credit event for the first time in their lives between September 2008 and May 2011. A Deloitte survey indicates that economic conditions beyond customers' control—rather than irresponsible behavior—are among the top reasons for their financial difficulty.

Schneider says that a lot of these first-time defaulters are likely to be last-time defaulters, not chronic offenders. "It's not in their core value system to do this and not correct it."

If banks identify these first-timers and devise a program to help them—"one that is kinder and gentler and not quite so harassing"—this could be a tremendous opportunity to generate loyalty, Schneider says.

Banks are not doing well in that regard so far. In the Deloitte survey, 63 percent of first-time defaulters said they would be unlikely to borrow again from the same institution. They often rated interactions with lenders during their default experience as poor when asked about specific behavior, such as the willingness to listen to concerns and offer constructive solutions. Even among those who had their loans forgiven, 22 percent reported being very dissatisified with how their lender dealt with them.

Schneider says government intervention already is forcing changes that will improve the customer experience. A consent order that major mortgage lenders signed this past spring requires them to provide defaulters with a single point of contact, for example.

So now is an ideal time to rethink, and revamp. "The servicing of defaulting loans," Schneider says, "is very much under change."

ELEVEN: STUDY YOUR CUSTOMERS' DNA

The theory behind the "transaction genome" is simple.

Consumers leave behind a lot of information with every credit and debit card transaction. This information—which includes how much customers spend, at which stores, when, and for what items—builds up over time, creating a data trail so personal and unique it is the equivalent of a fingerprint.

And some believe this fingerprint can be used to predict future buying trends.

Like scientists mapping DNA to determine which chromosomes correspond with which traits, numerous companies have piled on to untangle the complicated web of card transactions.

The testing of what they call the transaction genome is still nascent, but some banks have started tapping into basic aspects of this genome to cross-sell their own products or present offers from merchants. In most cases, banks then get revenue when their customers redeem the merchant offers.

"We are trying to see the entire picture of the customer from this little part of their life," says Alan Mattei, a partner with Novantas. "Two things we want to do with this data is identify places where we should be offering products to people more proactively, or enticing them in with some kind of an offer."

Technology first developed by big data companies like Amazon and Google, whose search engines comb billions of bits of information to enable consumers to get the best results from an inquiry, are making detailed transaction analysis possible.

T8 Webware, of Cedar Falls, Iowa, which provides online banking and personal financial management to smaller banks, has been taking a look at transactional analytics. It plans to introduce online personal financial management tools, for instance, that T8 believes can determine which of a bank's customers are most likely to go for discounts on sandwiches from the local deli, based on other food vendors they have bought similar items from before.

Its founders and engineers were brought up in northern Iowa's rich biosciences education culture, and they use a modified version of something called the Hidden Markov Model, which can isolate genes in living things such as plant species, to tease out important information hidden in consumer transactions.

"There are only 180 characteristics in a transaction description, and we have been able to get rid of some of the [Markov] algorithm to make analysis faster," says Wade Arnold, the CEO of T8.

Arnold says some of the information strands come from the International Organization of Standardization number (ISO), but also include such things as the unique merchant code and card routing numbers.

1st Advantage Federal Credit Union, of Yorktown, Va., is testing a product called KulaX, developed by Micronotes, of Cambridge, Mass. It analyzes the transaction data of the credit union's customers and attempts to predict which are most likely to buy specific financial products. It does this by launching a short questionnaire, with a targeted offer, at the end of an online banking session. In early results, 1st Advantage has seen its conversion rates jump to 10 percent from less than 1 percent with static banner ads or other methods. "The cool thing for us is how many more leads we get from this than direct mail," says Jim Craig, vice president of marketing for 1st Advantage.

In contrast, FreeMonee does regression analysis of data from card transactions, stripped of identifying information like the customer's name. The company says this analysis can predict a customer's likelihood to buy a product from a particular merchant. Based on this assessment, it essentially offers customers cash to spend at a particular merchant, so confident are they the customer will buy more than the gift amount.

"The consumer transaction footprint changes all the time, it is more of a system than a static piece of data," says Andy Laursen, vice president of development for FreeMonee of San Mateo, Calif. Part of the problem transaction genomists are trying to tackle is that bank data is very wide, but not very deep-bankers know where customers are buying, but not necessarily what. By contrast, the merchant has only a deep vertical view. Transaction fingerprinting hopes to marry the two views, in a way that makes bankers comfortable their customers' privacy is not violated.

TWELVE: KEEP THINGS FLEXIBLE

How exactly should banks respond to the onslaught of new regulations when the details are not yet defined? How can they keep up with fast-changing consumer behavior? Or manage for unforeseen risks? Consultants and technology providers often claim to have the right answers, even when they're all saying different things.

But for now, the best strategy for bankers—who often talk about how much they loathe uncertainty—might just be to embrace it. As NICE Actimize CEO Amir Orad likes to advise his clients, worry less about making the perfect choice, and focus more on making choices that allow you to stay flexible.

Amid such rapid change, "you'll never have the right system," says Orad, whose firm makes compliance, risk management and anti-money laundering software. "What you need to have is a flexible system in place, because you probably don't know what's coming next, and you don't have a clue what's coming after that."

This advice easily applies to other key areas of concern to bankers, like the disintermediation threat posed by Google and Facebook, or the many rules still to be written as regulators implement the Dodd-Frank Act.

It's unreasonable to think bank management teams can correctly predict how it all plays out. But it's reasonable to expect them to have a flexible strategy that allows them to respond to change as it present itself.

Staying nimble can be especially challenging for the largest banks. But even these institutions are taking steps to improve their response times.

Michael Goodson, a senior executive in the banking practice at Accenture, points to a client that recently laid plans for installing an enterprise-wide analytics system. Rather than sweating every last detail of a project that will take years to implement, the firm decided to get on with it, starting installation after some key decisions had been made and leaving the rest to be determined later. "It's the idea of being directionally correct rather than precise," Goodson says. Tweaking the finer points as the project moves along will increase the cost. But, Goodson says, "It's a lesser cost than trying to spend all the time up front trying to design all the lowest-level detail."

Goodson is starting to see other evidence of banks recognizing the value of flexibility. Some, for instance, are relying more on outsourcing so they can more easily dial up, or down, capabilities in cyclical businesses like mortgage lending. Others are revamping, or at least considering revamping, their procedures so that they can fast-track investments in innovative projects, bypassing the usual approval process for capital expenditures. The intent is to speed up the timeline for developing, piloting, and then either killing or rolling out a new idea.

In other words, flexibility begets flexibility.

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