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My Thoughts on 2019 and the Banking Industry

November 9

I was recently interviewed about what I believe will be key issues in the financial services industry for 2019. There are many topics that I believe are going to be critical in the banking world next year and limiting it to five was difficult. I wanted to take a moment to share my thoughts about these key 2019 financial services topics.

  1. Brick & Mortar Self-Serve Technology – 2019 will be a big year for automation in the banking world. Technology will be the biggest impactor on financial institutions in the coming years, and I believe 2019 will be the tipping point year. The capabilities are there, and if they’re built and deployed properly like we have done, it could work really well for FIs. We know in order to sustain our branch footprint and growth, we have to find new and innovative ways to allow people to interact with us. We have built custom technology to allow our members to make cash and check withdrawals, apply for new loans or open new accounts, and even get a new or replacement debit or credit card in a branch at self-serve kiosks. Our staff is there to assist and educate of course, but as people become more comfortable with the process, this will become routine. Just like ATMs were many years ago or mobile banking just a few years ago. We are rolling out more self-serve options in all our locations and have had very good feedback. Many other FIs are doing this or on their way. I think next year we will start to see this more and more become the new norm.
  2. Rising Interest Rates – Most economists agree rates will continue to rise in 2019. Historically, these rate hike cycles are followed by a short crisis, a recession or worse. There were several of these cycles in the 80s, the tech bubble in the late 90s, and of course the housing crash ten years ago. There are lots of opinions out there on the economic forecast, some with pretty extreme outlooks. We’ve just come out of a very long period of years with record-low interest rates. Our economy, I believe, is also in a stage of being very over-valued.  We’ve got a lot of ingredients that could make for a significant downturn. Some believe the bubble will be corporate debt or the energy market, some believe it could be auto loans or real estate loans. Some even believe it could be all of these. The question is how severe and for how long.
  3. Payment Systems – Another area we will see significant changes in 2019 is payment systems. It is only a matter of time before Silicon Valley shifts their focus in a serious way towards disrupting the financial services industry. It’s been coming for some time, but when it really takes hold, it will be huge. Amazon is working on a person-to-person payment tool, Apple is developing a credit card with Goldman Sachs. These are just a few of the threats to financial institutions. People live on their smartphones so this is an obvious area for the tech giants to focus. At Nutmeg, we’ve invested a lot of resources into keeping ourselves ahead of the tech curve with our products and services. Our Mobile Banking App allows users to manage all their accounts and loans.We offer Mobile Pay services (Apple Pay, Android Pay and Samsung Pay). We also offer a Card Manager App that allows users to control their credit and debit cards.
  4. Data, Data, Data – Access to data continues to be easier for FIs and more and more are capturing the opportunities it provides. The end goal of course is the same as with any tool – to create long-lasting relationships with clients. All FIs want their customers or members to use more of their services, use their accounts and loans, and stick around a long time. Leveraging data to reach people with the right solution at the right time is much more attainable than ever before. Relationships and trust are still the goal. If you reach someone with the right offer at the right time, you’re creating value for the person and their family. It feels more personal and engaging. 2019 will continue to surprise us with new developments, but underlying it all will be data, data and more data.
  5. Remove the Friction – Financial Institutions must continue to focus on making themselves easy to work with. So often the focus goes to ensuring staff is creating engaging and memorable experiences, and this is of course extremely important. But the digital experience needs to be a top priority. It’s not enough to have an electronic service. It has to be easy to use. And if you really want people to use it, it has to be easier than the traditional options. Depositing checks electronically is very easy. But until a year or so ago, the process for many FIs was clunky and adoption was slow as a result. Now, it’s super-fast and has reduced the traditional methods of depositing. We will start to see this more and more as other electronic options continue to become super easy. But FIs MUST continue to focus on these experiences and ensuring that the ease of use is exceptional.

I’m excited about the future of our credit union and all the work we do to stay relevant and provide valuable services to our members. Looking forward to a great 2019!


John Holt
President & CEO