Forecast Sees 2,500 FIs Disappearing Over 10 Years

SAN DIEGO-Another 2,500 financial institutions will voluntarily merge over the next five to 10 years, according to one analyst.

And that "right-sizing" is only going to mean more flux with which to deal, according to Raj Shivdasani, president and CEO of Harland Financial Solutions.

"On the external side, the economic recovery continues, but it is slow and shaky," said Shivdasani, who spoke with Credit Union Journal during the company's Connections Conference here. "[Federal Reserve Chairman Ben] Bernanke talks about a need for the Fed to create escape velocity-taking measures to create self-propelling momentum in years to come. I believe the recovery that started in 2010 will continue, unemployment will start to fall in 2013, and interest rates will remain low possibly for two more years."

However, Shivdasani warned, if at the turn of the year the mandatory spending cuts go into effect and the Bush tax cuts are allowed to expire, the result will be a "huge jolt" on the U.S. economy and will bring up danger of recession.

There has been a slowdown of mandated financial institution closures, but Shivdasani said the pressure on FIs continues: "There are regs, regs and more regs, fee income, loan demand, capital requirements, risk management…"

Many people talk about the "new normal," Shivdasani continued, noting the term generally applies to businesses having to "stay ahead of the curve."

"Everyone is looking for efficiency via integration and automated workflows," he said.

One change that will drive greater integration of banking solutions, said Shivdasani, will be the Oct. 25 release of Windows 8. "Harland will be looking at cloud capabilities," he said.

One Provider's Six Areas of Focus Headline Headline Headline

SAN DIEGO-It's no surprise where Harland Financial Solutions's clients are looking for guidance. "With the recovery still slow, our clients are looking for assistance in several areas, especially generating more and more profitable loans," said Sam Kilmer, VP-market development. "Other focuses include segmentation and share of wallet.

"Meanwhile, said Kilmer, Harland is focused on six topic areas: compliance, mobility, payments, advisory banking, scalable efficiency and "smart sourcing."

Compliance is a "major topic," he said, due to the ever-growing requirements FIs face.

"Technology matters, as many institutions are moving toward enterprise risk. Fraud is a related issue," he added.

The concept of "mobility" includes mobile banking and capture, plus mobile account opening, employee-assistance in branch with tablets, and self-service banking. The next trend? He said consumers want P2P (person-to-person) transfers and mobile banking capabilities at all FIs.

The payments space is huge, Kilmer said, because "beyond the value of payments there is a consideration for new revenue opportunities, in turn creating higher loyalty.

"Advisory banking and personal relationships are not new, Kilmer noted, but what is new is a combination of process changes and technology. He said the goal is to bring all channels together to promote a consistent experience.

While cost control and survival were the overall focus for FIs in 2009-10, Kilmer said scalable efficiency is getting much more attention.

"Banks and credit unions are now looking beyond cost control to review of workflows. This involves people, processes and technology. One thing we are seeing more and more is near paperless lending.

"Smart sourcing, he explained, includes shared services, single sourcing, technology outsourcing, business process outsourcing. In some cases compliance issues can be handled by software, he noted.