Greetings!
As this October comes to an end, the World Series is underway, the football season reaches its mid-point and we count down to end of the quadrennial presidential election season in the US. In addition, this year it brings with it both strategically interesting times in the banking industry as rates are forecasted to come down – the reduction pace is up for much debate - and an earnings season, that so far has been fairly favorable for those that have reported. The question at this stage is ‘while we can read the signs for market consolidation, are the directions clear enough and are they accurate?’
The pace of the merger activity has certainly picked up in 2024.
In comparison with the prior year, however, it feels as though the ability to articulate the real value from that activity is still a little murky. Undoubtedly, we are heading into a forecasting period for 2025 where there will be renewed optimism for an increasing number of strategic combinations. But is the positive financial picture for many would-be acquirers strong enough to take on the pending rules proposals or will we continue to see the chasm of growth and innovation in the industry continue to widen?
We continue to monitor the industry’s thought leaders as it relates to these key questions:
- What will the true impacts be from pending regulations on bank compliance efforts to keep up?
- How will institutions innovatively address the curve-driven intensity of competition, especially when often targeting the same prospective customers?
- What will the execution balance sheet strategies look like in order to continue deposit gathering at higher levels of funding cost?
- How will smaller institutions continue to obtain needed levels of capital while making necessary levels of franchise investment?
- How effective will banks be understanding needed marketing and product innovation - more tied to actual vs. perceived customer behaviors - not only to grow but to retain high value business without overpaying for it?
- How will the disparate economic impacts to consumers and small businesses across the range of banking market realities continue to get addressed, with more banks focusing on segments that deliver high growth?
How each institution successfully addresses these realities in their 2025 plans will make or break their ability to stay relevant as this train won’t be stopping any time soon. Recalling an underlying theme from a past strategic planning session credited to Thomas Edison, ‘Vision without execution is just hallucination’.
Hoping for the successful execution of your company’s vision in 2025.
Cheers,
