The final day of SourceMedia´s Best Practices in Retail Financial Services Symposium came down hard on the lifeblood of banking in the new era: deposits. Fittingly, the weather metaphors that have been the go-to descriptor of all that´s gone wrong continued. "The deposit business is more important than ever but there will continue to be some real headwinds," says Sherief Meleis, managing director at Novantas.

The sting in those headwinds won´t come from a lack of volume; it´s expected to grow at about seven percent over the next year, providing that the money The Federal Reserve has recently printed flows in, and that consumer lending resumes. (Novantas discards the stock market and personal savings rate as real deposit drivers.)

And though margins are expected to remain tight for a year or more--with as much as 70 to 80 basis points permanently removed from the system-banks are expected to manage through this. Rather, Meleis and several panelists concluded, the big news is that the free checking business model, which derives its profits by harvesting lots of fees from customers at the low end and spread income from those at the high end, will be wiped out.

Here´s why: consumers and regulators are fed up with NSF fees, and are likely to put the squeeze on banks that make their money that way. And customers with lots of deposits are increasingly likely to be lured by higher-yielding online accounts. "If that happens, the economics of the free checking product are completely broken," Meleis says.

Tom Dyck, evp of retail deposit products at TD Bank, continued on the theme of accountability raised earlier in the conference, calling on bankers to look for a new deposit business model, and in the process, to restore their lost integrity.

"It´s hard to believe that banks that have created a model around overdraft processes as a way to sustain their revenue growth have a future in that model," Dyck says. "And it doesn´t have a high degree of integrity....Banks that are aggressively going after that business are the ones that are hurting the industry."