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 industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

Industry Perception, Optical Delusion

January 14, 2013
/   Insights

In Washington, they talk a lot about ‘optics.’ This has nothing to do with regulatory scrutiny, or government mandates on eyeglasses. It has to do with perception—how something looks, the way a particular story...

Social Banking: Blessing or Curse?

August 1, 2012
/   Insights

While the topic of Facebook and banking has generated plenty of heat (though not necessarily a lot of light), the debate seems mostly focused on two broad issues: The much-maligned IPO, and the notion...

Mobile Banking Engagement: Data from Digital Insight

June 24, 2013
/   Spotlight

Intuit Financial Services has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several...

Some of the most significant news in the Federal Deposit Insurance Corp.’s Quarterly Banking Profile ranks dead last in the lengthy list of news nuggets highlighted in the introduction. It has to do with bank failures.

It’s not a surprise that the subject typically ranks low in the report, since there’s plenty of good news to tout upfront. As the media will surely promote, net income rose by more than a third over the year-ago quarter, non-interest income rebounded, large-denomination deposit balances surged, loan losses improved across all loan categories and, in big picture terms, full-year earnings turned out to be the second-highest ever. For the record, it’s not all rosy—there’s been a reduction in equity capital, which can be attributed to the decline in securities value. It as economic reports go, it seems positive overall.

This is why the news of banks going under needs to be seen in context. According to the report, which analyses the last quarter of 2012, eight insured institutions failed during this period. That’s the smallest number of failures in a quarter since the second quarter of 2008.

That’s fully four and a half years ago, but it’s significant for another reason. As the Business Cycle Dating Committee of the National Bureau of Economic Research pointed out late that year, this was around the time the recession took hold.

There’s other news related to this area: The new FDIC reports states that the number of insured commercial banks and savings institutions reporting financial results actually fell from 7,181 to 7,083 and 88 institutions were merged into other banks. The number of institutions on the FDIC’s “Problem List” fell for the seventh consecutive quarter, this time from 694 to 651, and the assets in them declined from $262 billion to $233 billion

But then there’s this nugget: The year 2012 also marks the first in FDIC history in which absolutely no new reporting institutions were added.

It’s easy to attribute too much importance to a single report; three months from now the news might be very different either way. In fact, as this blog noted at the time, the FDIC report from two quarters ago fit into the narrative of ‘cautious optimism.’

As this new snapshot in time reveals, we still have reason to be cautiously optimistic. There is no question that for many different reasons—economic contraction and (hopefully) expansion, changing consumer and other market expectations, the evolving role played by technology in everything from the back end infrastructure to custom mobile applications—we’re in a time of transition, and we’re going to stay that way.

The banking industry has long been associated with gradual change, and that seems like an anachronism in a time of technology-fueled rapid upgrades and instant gratification. It’ll be interesting to see how many failures and other trends might be in the FDIC quarterly profile a year from now. Any predictions?



Insights’s perspective on industry news and trends



Must-read news and insights from financial industry leaders



Compelling voices and contributed content from around the web

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.

Brad Strothkamp

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.

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.