Retail bankers are stuck at multiple crossroads, trying to determine the future of their businesses with conflicting sets of directions.

Big changes in regulation, the economy, consumer behavior and technology have brought the industry here, leaving bankers to ponder big questions: How can banks replace the roughly $12 billion in annual revenues now lost to regulations limiting overdraft and debit card fees? How much money should they spend building branches that are becoming increasingly obsolete? How much risk should they take lending in new markets or to new customer groups while the overall economy remains slow?

In March, executives from banks large and small gathered on the West Coast at American Banker's Best Practices in Retail Financial Services Symposium to ask those questions of one another—and admitted that they had few firm answers to share.

"The fundamental model of what is consumer banking has really changed," said Bill Demchak, the president and new CEO of Pittsburgh-based PNC Financial Services Group. "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."

Demchak 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 attending the three-day forum at the Park Hyatt Aviara in Carlsbad, Calif. Now the time has come for a broader exchange of ideas, he said.

PNC solved its short-term growth problem by buying Royal Bank of Canada's U.S. retail operations. But like everyone else, Demchak and his team are focused on 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 anyway, several bankers pointed out that the industry must find a way to start making customers pay for the convenience.

"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, who as CEO of Citizens Republic Bancorp helped engineer the Michigan-based company's sale to FirstMerit of Akron, Ohio. "It's not just about free checking anymore," she added.

The same refrain of resignation and resolve echoed in one discussion panel after another, whether the topic was branches or technology or how to work with regulators at the Consumer Financial Protection Bureau.

"I support the values that are being espoused by the CFPB," said Wells Fargo CEO John Stumpf in his keynote address. "Who wouldn't want a level playing field? Who wouldn't want customers to understand what they are buying?"

To the dissenters, he added this warning: "For those who think that, 'As long as I disclose it, I have a safe harbor,' those days are over ... The CFPB is not going away." But Stumpf also struck a sympathetic note to bankers who are struggling to make sense of their rapidly evolving environment.

"Change is happening at an accelerated pace ... and a lot is being influenced outside our industry," he said.

As if to hammer home the point, Stumpf's presentation was disrupted about 25 minutes in by protestors who had crashed the conference and were angry about Wells Fargo's home foreclosures. Though resolved soon enough, the episode was a strong reminder that banks and their customers have yet to fully escape the lingering fallout from the financial crisis.

Aside from that bit of drama, leaders in retail banking spent most of the three-day conference expressing many more worries about the future than about the past.

Banks "are hungry for loan growth, because there is not as much demand," observed Andy Harmening, a senior executive vice president and the head of the regional banking group at Bank of the West. His company, a unit of France's BNP Paribas, is working to expand its lending to small businesses. It is automatically taking a second look at any small-business loan applicant 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," Harmening added.

Some banks are expanding into wealth management or other revenue-boosting services—a strategy that seems to be 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. It's something that allows us to serve more complex needs," Ryan McInerney, the company's CEO of consumer banking, said in a keynote address. Noting that Chase already has an attractive footprint, McInerney said that in terms of wealth management, "we've learned really how to serve clients and their investment needs out of the branches."

Other banks are staking their growth prospects on recent acquisitions. 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 new cachet among younger, tech-savvy users of online banking.

Capital One is not currently considering charging retail customers for technology-based services like mobile banking, but Jonathan Witter, the company's head of retail and direct banking, says the flexibility in pricing for business-banking products could serve as an example of how more fee revenue could be generated on the consumer side.

"We need to as an industry make it clearer both what value customers are getting for the products and services they consume and how they are paying for it," Witter said.

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