Banking in the Future (Part II)

This weeks blog is part two of a two part series on the future of banking. This week’s blog talks about how public entities will bank in the future last weeks blog (which you can read here on our website) was about the bank branches of the future.

What will the future of banking mean for public entities and higher-ed institutions that currently handle large cash and check transactions? When the new technology fully comes on stream, your finance office will effectively become an internal bank branch, with all banking transactions—including cash—going though your own finance office.


Larger banks and third-party technology companies (FinTech firms) will expand direct technology to handle all banking needs. A good example already underway is the use of remote scanners. The ability to scan checks and make direct deposits are just the “tip of the iceberg.” ATM-style technology will be placed in your finance office to accept and count cash with immediate deposits to your bank account(s). Weekly carrier services will be established to pick up and service such machines, much like the old lockbox service that was once commonplace.

In addition, most payment transactions will be moved to cyberspace with checking becoming primarily obsolete within the next 10 years. By 2025, credit card and near-field technology will be the sole source of payment by consumers, led by tech-savvy millennials.

Banking in the Future (Part II)

Banking representatives will be available to handle credit needs as well as institutional treasury services and technology with their physical presence covering broad regional areas.

Given advanced technology and the ability for banks to streamline customer services and better adapt to new banking regulations, the costs of banking will be more direct and reduced from what it is today.

As we have been stating over the last two years, the landscape of banking is changing and will look much different in the years to come. Banking will be more direct, have higher dependency on technology, be easier to use, and be done at a lower cost.

At three+one, we help public entities and higher-ed institutions prepare to embrace and use the expected advances in technology. We are constantly monitoring and evaluating the high-tech marketplace to forecast what enhancements are most likely to become industry standards in the coming years.

Bank Branches of the Future

Bank Branches of the Future

This weeks blog is part one of a two part series on the future of banking. This week’s blog talks about bank branches, while next week’s blog will talk about how public entities will bank in the future. 

The bank branches of the future will look like this:

1.) Their physical locations will be strategically located in highly populated areas.

2.) Self-serving kiosks, with large flat screens, will replace teller windows and accept cash (to a certain level) and checks and offer instructions on how to make loan payments directly. Voice commands will be available in addition to touch-screen commands. These kiosks will also allow users to have direct contact with a virtual banking representative for all banking-related questions.

3.) On-hand bankers will be present to help with personal and small business lending or private wealth questions.

4.) Some bank branches will be available to service retail clients exclusively. Overall, bank branches will be reduced by 75% over the next 10 years. Most branches in smaller cities, towns, and rural areas will be community banks.

We Hope to See You at Some of our Upcoming Presentations:

Upstate NY College Collaboration Presentation: June 27

NYS County Treasurers’ and Finance Officers’ Association – July 20

GFOA of SC – October 16 – 19


Have any questions or comments for the author? Reach out below!

Joseph Rulison

Where’s the Love?

Where’s the Love?

We know the public banking environment is changing due to increased regulations—a result of the Dodd-Frank Wall Street Reform Act—as well as low interest rates and increased technology. But my question is, “Are some public entities feeling the pain more than others?” The answer is yes. Most notably our towns and villages.

There are four main implications the public banking paradigm shift is having on towns and villages across America:

1.) fewer banks are choosing to service towns/villages because of their small size

2.) banks are closing branches in towns/villages throughout New York and the rest of the country

3.) banks are passing along substantial hard fees to towns and villages because of their lack of profitability

4.) banks that do service towns and villages offer them deposit rates as low as 1 or 2 basis points because of the increased costs associated with carrying their deposits.

Although all public entities are either feeling the pain of these implications or are about to, some of the biggest challenges are being felt in towns and villages because, in many cases, they’re not big enough to solicit services from many banks. Large institutional banks (those with $50+ billion in assets) are reconsidering the value of public clients mainly because of the low profit margin public clients offer them due to current regulation/collateral requirements.

While community banks may be in a better position to take on these deposits, they have a difficult time providing services to towns and villages mainly because they also have regulatory requirements they must deal with. In addition, towns and villages cannot receive deposit rates of any material size from community banks because there is usually only one such bank near them and thus competition—and any sense of obligation—for community banks to provide higher rates to towns and villages just isn’t there.

While it is true that the conference of regulatory requirements around holding public deposits on large banks has created an opportunity for community banks to take on public funds, towns and villages across the country are simply not feeling the love.

At three+one, we advise towns and villages to mount a coordinated effort with their respective county in order to leverage the various banking services they need and thus save their constituents money and increase their own interest income. A consolidated banking services contract between towns and villages within a county—and with their county—could increase banking efficiencies, provide all these public entities with higher deposit rates, and save their taxpayers substantial amounts of money.

Budget: What Amount for 2017?

Budget: What Amount for 2017?

Preparing for the next fiscal year is always top of mind. Predictable patterns coupled with the “unexpected” are always a challenge. Tax caps and other restraints hamper your ability to plan, long before your plan is made public.

As a result, more than ever, you need to prepare a detailed cash flow forecast that incorporates the constants—anticipated revenues, payroll, benefits, vendor, capital outlays, etc.—while still planning for potential surprises.

One source of revenue that has dried up over the last several years has been income earned from your bank deposit accounts.

Two months ago, I attended a state Government Finance Officers Association (GFOA) conference in which the number one question to bankers was: “Can you pay me more on my deposits?”

Given recent economic reports and a presidential election, I do not expect more than one or two rate hikes for the remainder of this year. Even if there is a 25 to 50 basis-point rise, deposit rates increases will be minimal given the risk and compliance overhead costs and/or liquidity requirements resulting from recent federal regulations.

So what should you expect in 2017 for deposit and/or interest revenue? Little to nothing?

For entities that do not proactively manage their deposit or banking relationships, deposit revenues will stay at the same rate as 2016.

Those entities that are being more proactive—with tier liquidity management and sound banking relationships—can expect a 30 to 50 basis-point increase in deposit revenues, which could result in tens or hundreds of thousands of dollars in new income.

My advice is simple: perform a liquidity analysis on your entity’s operating and non-operating funds. With a comprehensive 360-degree analysis (including cash flow and the marketplace perspective) you can uncover and quantify low or non-performing dollars and use them to negotiate with your current or future financial providers.

At three+one, our cashVest service provides proprietary reports and data that can be used internally—and externally with your banks and/or RIA—to achieve higher revenue on your deposits while keeping regulations, safety, and liquidity top of mind.