banking in 2020: the view from here fei meeting... · banking in 2020: the view from here fei of...
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BANKING IN 2020:
THE VIEW FROM HERE
FEI OF NORTHEASTERN WISCONSIN
OCTOBER 24, 2019
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8 TRENDS SHAPING BANKING
1
National trends impact financial services in Wisconsin
Consumer Channel Preferences
Bank & Branch Consolidations
Spending at Megabanks
Rise of Non-Bank Competitors
Regulatory Environment
Fraud & Operational Risk
Fintech Partnerships
Service Provider Consolidation
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CONSUMER CHANNEL PREFERENCES
2
Consumers prefer digital channels to open accounts…
MAJORITY OF CONSUMERS PREFER DIGITAL ACCOUNT OPENING
Source: Novantas study (Oct 2019)
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CONSUMER CHANNEL PREFERENCES
3
…and increasingly to transact…
BRANCHES NOW CONDUCT ONLY HALF OF ALL BANK TRANSACTIONS
Source: Associated Banc-Corp
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016 2017 2018 2019
Branch ATM Digital
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CUSTOMER PREFERENCES DRIVING BRANCH CONSOLIDATIONS
BANK & BRANCH CONSOLIDATIONS
4
…leading to fewer banks, fewer branches
Sources: Barclays State of the Industry (Oct 2019); FDIC
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2Q19 WI BRANCH ACTIVITY
BANK & BRANCH CONSOLIDATIONS
5
Wisconsin consolidation continues as well
Source: SNL Services
WISCONSIN ACTIVITY
Bank Deals: Year-to-date through September 2019, 16 bank acquisitions announced—more than in 2017 and 2018 combined
Branch Activity: Branch closures continue to exceed branch openings by a wide margin
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CREATION OF THE LARGEST U.S. BANKS
BANK & BRANCH CONSOLIDATIONS
6
Four “megabanks” emerged from the financial crisis
Sources: Federal Reserve, General Accounting Office
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MEGA BANK TECHNOLOGY SPEND DWARFS REST OF INDUSTRY…
SPENDING AT MEGABANKS
7
Tens of billions spent on technology, customer experience
Sources: Barclays State of the Industry (Oct 2019); S&P Market Intelligence; McKinsey
…COMBINED WITH MARKETING, SIGNIFICANTLY SKEWS RESULTS
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RISE OF NON-BANK COMPETITORS
8
Non-banks impacting competition in commercial…
NON-BANKS GAINING IN COMMERCIAL LENDING
Sources: Centerview Partners; FDIC, Federal Reserve
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RISE OF NON-BANK COMPETITORS
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…and in retail banking
SUMMIT CREDIT UNION
Assets: $3.2 Billion
Deposits: $2.2 Billion
2018 Net Income: $39 Million
Full-Service Branches: 34
ASSOCIATED BANC-CORP
Assets: $33 Billion
Deposits: $25 Billion
2018 Net Income: $323 Million
Full-Service Branches: 240
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REGULATORY ENVIRONMENT
10
Dynamic environment on many regulatory fronts
SELECT REGULATORS FOR MID-CAP BANKS REGULATORY THEMES
Consumer Protection
Community Reinvestment
Capital Adequacy
Risk Management
Bank Secrecy & Money Laundering
Public Company Disclosures
Vendor Management
IT Security
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FRAUD & OPERATIONAL RISK
11
Significant challenges for the entire industry
RISK THEMES
Threats to Bank Customers
Direct Attacks on Banks
Payment Systems Risk
Internal Security
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CORE PROCESSORS
FINTECH PARTNERHIPS
12
Complex technology ecosystem, even for mid-sized banks
PAYMENTS VEHICLES
PRODUCTS/CUSTOMER EXPERIENCE EFFICIENCY & RISK
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SERVICE PROVIDER CONSOLIDATION
13
Fiserv/First Data deal impactful for WI and WI banks
Source: Fiserv/First Data investor presentation Jan 2019
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BANKING IN 2020:
THE VIEW FROM HERE
FEI OF NORTHEASTERN WISCONSIN
OCTOBER 24, 2019