Thanks to two major X factors -- the fiscal cliff and new bank
capitalization standards -- 2013 could be the most eventful period
for the banking industry since the crisis years of 2008 and
Due to its historically low interest rates, the banking
environment since the Great Recession has been kinder to borrowers
than depositors. That could change in 2013, but not because savers
are likely to see higher bank yields. Instead, borrowers may
encounter their own tough spot as lending standards tighten, which
could result from a number of events.
Beyond this, several issues threaten to bring major changes to
other realms of banking. Here are eight key things to watch.
1. The regulatory tightrope
U.S. banking regulators recently delayed implementing Basel III
bank capital requirements, which were due to go into effect on
January 1, 2013. These are international standards for the reserves
that banks need to keep on hand to cushion themselves against
market fluctuations. Higher reserves make the banking system safer,
but they could also restrict the ability of banks to lend. How
regulators walk this divide could have a profound effect on either
the stability of banks or the availability of loans -- or both.
Would-be borrowers take note: You might want to get your loan
before new standards are put in place.
2. The online rate war
Bank rates generally have been falling, but online banks recently
have bucked the trend by actively competing with one another to
offer higher rates.
are all examples of online institutions offering savings account
rates of around 1 percent. The MoneyRates
America's Best Rates
survey found that online bank rates turned upward in the third
quarter of 2012, and if these banks continue to compete with one
another, savers in these accounts could benefit from higher savings
and money market rates in 2013.
3. The continued rise of fees
A slow business environment and more complex regulations are
leading many banks to raise fees, and free checking is becoming
more scarce, according to the latest MoneyRates.com Bank Fees
Survey. For now though, online banks are a notable exception to the
trend toward higher fees.
4. The widening gap between traditional and online
The reason online banks are able to offer higher rates and lower
fees is that they have a significant cost advantage over
traditional banks that support extensive branch systems. Nothing is
going to change that financial reality in 2013, so expect the gap
between traditional and online banks to continue to grow as online
institutions move to press their advantage.
5. The expiration of unlimited NIBTA insurance
As part of the Dodd-Frank Act, unlimited insurance was temporarily
provided for non-interest-bearing transaction accounts (NIBTAs),
which includes most checking accounts. This unlimited insurance is
set to expire at the end of 2012. This not only means that amounts
above $250,000 in NIBTAs will no longer be covered, but also that
such amounts will now be combined with savings and other accounts
that the depositor has at the same bank for determining the
insurance limit. This could cause some wealthy and business
customers to do some redistribution of accounts in late 2012 or
6. The march of consolidation
The acquisition of ING Direct by Capital One will become effective
in 2013. While this is not your typical bank acquisition -- the
combined entity is expected to be the fifth largest in deposits in
the U.S. -- it is perhaps the poster child for a trend of
consolidation that you can expect to see more of in 2013. Customers
often don't like the changes that come when their bank is taken
over, and some ING customers have protested the deal. However, with
more than 7,000 FDIC-insured institutions trying to adapt to new
business and regulatory realities, expect continued bank
consolidation in 2013.
7. The disappearance of neighborhood branches
Even when banks don't merge, look for them to save money by cutting
down on the number of branches. As electronic banking has gained
traction, the scope of many branch systems has become obsolete.
This type of fundamental business change can have sweeping effects.
For example, beginning in the mid-1990s, the number of gasoline
stations in the U.S. declined by 19 percent in just 13 years -- the
result of tightening margins for station owners. Given that banking
no longer has to be conducted in person, the reduction in the
number of bank branches could follow an even steeper decline.
8. The ascent of fiscal policy
Forget Fed watching. The fiscal cliff is the No. 1 X factor for
2013. Averting a crisis could lead to a stronger economy and higher
bank rates, while failure to do so could plunge the economy back
into recession. All of this attention on fiscal policy may lead to
a continued focused on government spending for the rest of the
Change is the primary theme running through most of these
issues, which signals that many banks may struggle to stick to a
business-as-usual approach in the year ahead. That means that even
customers who have been happy with their accounts for years may
find themselves looking for a new bank in 2013.