Recently my father moved into an assisted living facility. He came to the realization that he could not live independently much longer. He is mentally acute, but struggles to walk without the assistance of a walker or cane. While it is frustrating for a man who has always been strong and independent, he managed to set those feelings aside and do what needed to be done. I am very proud of him for making this courageous move.
The different stages of life require many changes. Success is determined by how well we adapt to those changes. In this way, businesses are much like people. They, too, have life stages that require adaptation. How businesses navigate through necessary changes determines their success and often their survival. Over the past 10 years, the business of commercial banking has undergone changes that no banker would have anticipated. Through it all, the vast majority of the banking community has survived. To those who successfully weathered the storm, I say “congratulations!” That is truly a testament to your management, business plan and likely conservative practices.
What is the next stage for the business of banking? If we are honest, we are all hypothesizing, but let me tell you what I think will be the next stage. I believe interest rates will rise, which will cause all bankers to manage their balance sheets differently. Most bankers have already anticipated this and have adjusted their investment portfolios accordingly. Quality commercial loan demand should continue to improve, as more certainty appears to be in the economy than we have seen in a very long time. Questions remain regarding tax reform and health care costs, but the economy continues its slow growth, and businesses are taking notice. They have been sitting on significant amounts of cash for quite a while, and they are now beginning to invest some of it in growth. Hopefully that will convert to higher-paying jobs, which will further boost the economy.
Technology is going to continue to move forward at warp speed. Robotics continue to replace menial tasks in every area of business. Banking, insurance and health care may be the last to see significant changes, but they are coming. Much of what we do is filling out forms, which should be easily adaptable to robotics. Who knows what the next delivery system will be?
I continue to hope that the regulators will sustain some period of reasonableness. But just when I think it will begin, somewhere a decision is made that is contrary to the best interests of bank customers. Many of those decisions seem to continue to come from the Consumer Financial Protection Bureau. They must be reined in. Additionally there are mixed signals from the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. One quote appears to set the stage for some calmness, and then the next makes it appear that they are getting ready to pile on more burden. It has become very difficult to anticipate what a regulator will command.
Lastly is Congress. I sense that there is a bipartisan awareness that the pendulum has swung too far, and that banks are being smothered with needless and senseless regulation. Congress never acts quickly, but I believe over the next several years it will eliminate some of the overkill it cast upon the banking business and its customers. If this is to happen, it will require the efforts of bankers being very active in their grassroots efforts with elected officials.
Just as my father is making the adjustments necessary to his life, it is incumbent on bankers to continue to make adjustments in order to survive. I am confident that bankers will succeed. The bankers who have guided their organizations through the past 10 years are the best of the best, and they will guide their organizations through the coming changes.
-S. Joe DeHaven