CARLSBAD, Calif. — Changes in regulation, the economy and technology have brought the industry to a crossroads, where banks are facing challenges on multiple fronts. Among them: how can they replace the roughly $12 billion in annual revenues now lost to regulations limiting overdraft and debit card fees? How much money should they spend on building branches that are becoming increasingly obsolete? How much risk should they take on by trying to expand lending in new markets or to new customer groups, while the overall economy remains slow?

Some of the country's most senior bank executives gathered this month to publicly ask those questions of each other — while admitting that they had few firm answers.

"The fundamental model of what is consumer banking has really changed. We all went into the crisis and we spent five years kind of in the bunker, rebuilding and figuring out how to survive … but the world didn't stop while we were dealing with our balance sheets and recovering loans," Bill Demchak, the president and incoming chief executive of PNC Financial Services (PNC), said last week.

Demchak, who was speaking at American Banker's annual Best Practices in Retail Financial Services Symposium, said he hoped his remarks would "cause a dialogue" among retail bankers about the changing economics of their industry.

"Internally you talk a lot about it," he told a crowd of about 300 bankers, analysts and other industry members gathered for three days at the Park Hyatt Aviara in Carlsbad.

PNC has solved its short-term growth problem by buying Royal Bank of Canada's U.S. retail operations, which Demchak has previously called an investment that will take several years to fully pay off. But in his speech, he focused on industry-wide challenges, particularly the task of figuring out how to get more revenue from customers who now pay less in penalty fees and who expect most of their basic banking services to be free.

The increasing popularity of online and mobile banking services is both a blessing and a curse to bankers trying to solve this problem; while better technology has allowed banks to eliminate some branch costs associated with serving customers who would rather bank by smartphone, several bankers pointed out that the industry needs to figure out how to start charging for that technology.

"There's a generation coming that's going to use financial products and services differently … and we have to figure out how to serve them profitably," said Cathy Nash, the CEO of Citizens Republic Bancorp (CRBC), which is selling itself to FirstMerit (FMER).

"It's not just about free checking anymore," she added.

The same rueful refrain echoed from speaker after speaker at the conference, whether the topic was branches or technology or how to work with the Consumer Financial Protection Bureau, the new regulator with which all of the attendees have become intimately familiar over the past year.

"Change is happening at an accelerated pace … and a lot is being influenced outside our industry," John Stumpf, the CEO of Wells Fargo (WFC), said during a speech.

Stumpf's presentation was eventually disrupted by protestors angry about Wells Fargo's home foreclosures, in a reminder that banks and their customers have yet to fully escape the lingering fallout of the financial crisis. But despite that dramatic hour, the bankers at the conference spent were clearly focused more on the future than the past.

Perhaps the most pressing challenge is figuring out how to make quality loans at a time when demand remains sluggish.

Banks "are hungry for loan growth, because there is not as much demand," Andy Harmening, a senior executive vice president and head of the regional banking group at Bank of the West, said in an interview.

His company, a unit of France's BNP Paribas, is working to expand its lending to small businesses. It is automatically "relooking" at all small-business loan applicants it initially rejects, "to make sure that if there is a way to do the loan, that we do," he said. "It's very important to understand what is behind your approval process, to make sure you're doing the right thing, study the data, and see if that can lead to additional lending opportunities."

Like a number of other banks, the $63 billion-asset Bank of the West is looking outside of its traditional markets for loan growth. The bank said earlier this year that it plans to open commercial loan offices in several U.S. cities, including Denver and Chicago, and that it intends to hire roughly 50 bankers with expertise in lending to middle-market companies.

Some banks are beefing up in wealth management or adding other revenue-boosting services to their menus — a strategy that's easiest for big, diversified banks, which already have the knowledge and the infrastructure to provide those services.

For example, the Chase consumer bank is "lucky enough to be part of JPMorgan Chase (JPM) — it's something that allows us to serve more complex needs … [and] we have an attractive footprint," Ryan McInerney, the company's CEO of consumer banking, told attendees. In terms of wealth management, "we've learned really how to serve clients and their investment needs out of the branches."

Other banks are relying on recent acquisitions for eventual growth. Capital One, for example, is expecting its recent purchases of ING Direct and an HSBC credit card portfolio to give it new sets of customers and a new cachet among younger, tech-savvy users of online banking.

"There will be comparatively winners and losers over the next five years, about how banks differentiate themselves in the eyes of customers," Jonathan Witter, Capital One's head of retail and direct banking, said in an interview. "I'm a big believer that if you win with the customer and you're not reckless, the financial model will ultimately take care of itself."