Are Banks Completely Stressed Out?

Last week—six years after the enactment of the Dodd-Frank Wall Street Reform Act of 2010*—31 of the largest U.S. banks received passing grades on the Federal Reserve’s “stress test “ requirements. The purpose of this test was to ensure that the largest banking institutions were able  to stand on their own in case of another financial crisis without any added support of the federal government.

Does this mean that the Fed is done telling the banks just how “high to jump”?

The answer is “no.” In fact, it should be considered the “new normal” for banks.

I expect the following trends to continue for banks:

  1. The Fed will continue raising the ratio of capital to liquidity requirements on the largest banks as a form of control against economic risks.

  2. Banks will continue to be sensitive to the level of deposits they gather and the deposits rates they offer. Operating cash will be pursued while non-operating and reserve deposits will be shunned.

  3. Banks will focus more on lending and transactional services than on deposit products.

  4. The level of risk and compliance sensitivity will be paramount in managing client relationships on all levels.

  5. Client selection will be based on revenue  and cross-sale potential. In addtion, banks will reverse from the call center approach to in-person bankers in order to deliver more complex solutions and improved technology.

  6. Bank charges for services will transition from “soft costs” to “hard charges” for greater transparency. The net effect will actually benefit both sides of the banking relationship.

  7. Banks will partner or purchase third-party financial tech companies to streamline technology advancement and offer an enhanced client experience.

The banking industry is not an easy business to be in these days. The pressures banks feel are a result of more intense and more complex government regulations.

Bankers are an important part of day-to-day business activity and they deserve our support and understanding. They are the backbone of the U.S. economy.

If we all had to deal with the ever-changing rules and regulations from Basel III, the Dodd-Frank Wall Street Reform Act, the Volker Rule, the Durbin Amendment, etc., we would be ready to take a permanent vacation. However, our banks have done an outstanding job in an industry that we all need and use on a 24/7 basis.

*Note: In July 2010, when Dodd-Frank was signed into law, it was 2,300 pages in size—with additional regulations to be established going forward.  Six years later it is over 20,000 pages and still counting!

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