10 Things to Watch that could Impact Banking in 2017

Dec 27, 2016

Editor's Note: The following is an excerpt from a
recent AZ Business Magazine article. 

Banks put a tremendous number of man hours and pour a staggering amount of resources in analytics so they can better understand, navigate and predict their risk environment. But there are some things that just cannot be predicted and banking leaders have to sit back and take a wait-and-see attitude.

Here are 10 things a few of Arizona banking leaders say to watch for in 2017. 

  1. Dodd-Frank implications. Jack Barry, president and CEO of the Arizona Region, Enterprise Bank: “Increased regulatory oversight. We are still seeing significant implications of Dodd-Frank and that continues to have a big impact on the industry.”
  2. Interest rates. Scott Berg, chair of the Banking and Financial Institutions Practice, Quarles & Brady LLP: “Apart from the recent federal elections, interest rates could have the biggest impact on the industry in 2017. If interest rates rise, particularly significantly, although this would generally be good for the banking industry, there could be an adverse effect on many consumers and small businesses, who currently pay low interest on their borrowings, resulting in a wave of defaults.”
  3. Federal Reserve. Kevin Classen, president at West Valley Market, FirstBank: “A Federal Reserve decision to move interest rates from current levels could have a meaningful impact on the banking industry in 2017. Interest rates are currently at historically low levels and affect nearly all parts of banking from loan production to earnings.”
  4. Innovation. Curt Hansen, chief operating officer, National Bank of Arizona: “Rapid innovation and change driven by financial technology companies and how depository institutions partner, compete and manage associated risks will be interesting in 2017.”
  5. Politics. Chris Sailus, vice president and Northeast Arizona division manager, Washington Federal Bank: “Uncertainty. The political environment will be a question mark for some time, until we see the regulatory stance. Just as important interest rates; the expectations of the market and the direction from the Federal Reserve move from Fed meeting to meeting. Moving rates up too quickly can cause detrimental effects in consumer and commercial lending, and potentially ruin a recovering housing market.”
  6. The economy. Brian Schwallie, Arizona market president, U.S. Bank: “In 2017 it will continue to be the rate environment and some of the economic challenges the country continues to face.”
  7. Cybersecurity. Joe Stewart, Arizona market president, and Patrick Joyce, Arizona commercial lending manager, Bankers Trust: “Cybersecurity is an issue that will continue to have a big impact on the industry.”
  8. Mobile banking. Mike Thorell, president and CEO, Pinnacle Bank: “Mobile Banking will continue to have the biggest impact on banking for some time to come. Banks of all shapes and sizes will have to reinvent themselves to adapt to the technological appetite of the American public.”
  9. Over-regulation. Candace D. Wiest, president and CEO, West Valley Bancorp, Inc. and West Valley National Bank: “Regulatory burden is going to continue to be a problem in terms of costs, the business lines we will have to give up, the talent we need to be in compliance compared with the talent available. [It can be difficult for community banks to compete with big banks in this area.]”
  10. Ed Zito, president, Alliance Bank of Arizona. “We can expect to see continued growth and slightly higher interest rates. We also can expect more bank mergers and branch consolidations as the banking industry at large grapples with the ‘ideal’ online/offline balance to meet the changing expectations of customers.”

 Photo of a bank branch

Our Ashland branch features "smart", deposit-accepting ATMs and incorporates the latest in bank technology design, while still providing face-to-face, personal service.