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Monthly Archives: February 2011

Everyone is worried about DDA and payment revenue, but some banks have a clear roadmap for success.

If your inbox looks like mine, every day I get a new round of confusing emails:

  • “Free checking is dead, really dead”
  • “Free checking is still very viable – at least for community banks”
  • “Debit rewards? Not sustainable in the new environment”
  • “Debit rewards? You still need it, just have to revamp your program”
  • “Durbin will be the death of us – it’s the last nail in the coffin”
  • “Durbin will revised and it won’t be so bad”
  • “All of this means that customers are being driven out of the banking system, leaving us with fewer opportunities”

It’s enough to make your head spin!

But I am very encouraged.

In a few weeks I’m chairing a panel discussion at the BAI’s Payments Connect Conference – it’s called “Bankers Respond to the Industry Challenges”. As I’ve spent time talking with the panelists and discussing the solutions they are implementing, I am tremendously encouraged that there is a clear path forward for revenue improvement.

Three very different banks have agreed to participate on this panel: Comerica, Fifth Third, and BBVA Compass. Each has different target markets and different marketing strategies. Each is big enough to have explored and analyzed a wide range of issues and opportunities. Each is specific in their recommendations.

I hope you can join us. If so, please stop by and say hello. I’m expecting thoughtful but lively interaction.


I was struck by a recent quote from the Chief Credit Officer of $210 million Pleasanton, CA-based Valley Community Bank: “The general consensus for a community bank now is you have to be over $1 billion in total assets going forward. That’s going to be the minimum you need to survive because of the amount of regulations that are coming down. Banks under that size just can’t generate enough profits due to the new overhead.”

If this were true, we’re really in for a decade of consolidation since 91% of the roughly 7,700 federally-insured financial institutions have less than $1 billion in assets! But hyperbole aside, the statement does reflect the frustration many bankers feel in dealing with the new environment.

I’m optimistic that community banks that are forward thinking can not only succeed, but thrive, in the “new normal” if they heed the market’s current wake-up call. In order to succeed, community banks need to recognize that the environment has permanently changed and conducting business as they did in the past is not a formula for success.

I talk about the issues — and potential solutions — in an article just published in BAI Banking Strategies.


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