Off to School

October 7, 2016
/   Insights

With the right technologies, community banks and other smaller players can compete more aggressively for the student loan market

The Container Factor

December 29, 2015
/   Voices

New technology to ease application shipment could make a big difference for many financial service institutions

Foolhardy Predictions for 2016

December 28, 2015

If history is any guide, it’s foolish to make predictions about the banking industry. There are too many external...

Banking with Non-Banks

December 18, 2015
/   Voices

Walmart Pay could be another step in companies outside financial services getting in on the action

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services...

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let...

It may be tempting the fates to even ask, but here are some critical questions heading into 2015: Are we poised to enter an economic boom?  Could we even be hearkening back to the ’90s—a time of raging entrepreneurialism, virtually full employment and widespread investments? And is the banking industry set to be both the primary driver and a major beneficiary?

In a way, the very idea of pondering good times is the height of arrogance. The economy is certainly doing better than it has in a while, but that’s only because it’s been barely limping along for so long. The job picture has improved over time, but only recently have there been rising pay as well. It’s still an environment more for caution than optimism.

And yet. . .

Late in December, the federal government released figures that unquestionably reveal an economy growing rapidly. We saw 5% annualized growth in the third quarter of 2014, the best news of its kind since 2003 — and there’s plenty more. Consumer spending is up (by .07% in November), personal debt levels are falling fast, and oil prices have plummeted, leaving more money in the hands of individuals. November alone saw 321,000 new jobs. And as the best kind of punctuation mark, the stock market passed 18,000 for the first time, and the S&P 500 hit a record high too.

But does this mean we’re heading back to the halcyon days when the emergence of the Internet propelled a wave of disruptive startups, jump-starting e-commerce?

First, it helps to look overseas to see what’s happening elsewhere. Japan is officially in a recession, it’s fourth in only six years, and many parts of Europe are struggling mightily to stay on course, with varying levels of success. In particular, British Prime Minister David Cameron has repeatedly warned of another major global downturn. China’s real-estate bubble was always dubious at best, and those fears are coming true. Russia has been hurt by falling oil prices, and previous powerhouse Brazil is going through major troubles as well.

All this makes for a double whammy. The developed markets of Europe and Japan are lagging at best and suffering at worst, while the emerging markets that played such a key role in helping other regions out of the downturn of 2008 can’t be counted on to do the same this time.

This may be one reason by the Federal Reserve, the most important institutional beacon for the economy at large, isn’t popping balloons just yet. A rise in interest rates, however small, might send a signal of confidence, but the Fed is still talking patience. No one knows, of course, but conventional wisdom holds that interest rates won’t go up until at least mid-2015.

So where in the financial services industry in all this?

The big banks have definitely gotten over the hangover of the recent past. The four largest U.S. banks alone paid out $122.5 billion in crisis and mortgage-related settlements, yet there are strong profits across the board. Loan sales and trading income in the third quarter of 2014 producing the biggest year-over-year revenue growth since 2009, and mergers-and-acquisitions deals are rising sharply.

The uncomfortable reality is that in this go-around, the banking industry will have to do what it does under a harsh spotlight. In the ’90s, when we last saw real boom times, the symbiotic relationship between the financial services and technology industries propelled an economy on steroids; but so much has happened since then—from the dot-com bust of 2001 to the bailouts later in the decade—that there will be scrutiny at every turn.

Back then, Fed chairman Alan Greenspan famously used the words “irrational exuberance” to send the message that the market was potentially overvalued. In this environment, we’re not likely to hear such euphemisms. Financial services institutions will be under pressure to make the loans necessary to start and grow businesses. The good news—being cautious as well as optimistic—is that the economy finally looks like one in which those loans will do what they’re supposed to do.






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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Brad Strothkamp

Neill Harris

Neill Harris is product marketing director for ATM solutions at NCR. He travels extensively to many of the world's leading banks and financial institutions, articulating how self-service technology and innovation can inform and support strategies and solve challenges.