2010 will continue to be a tough year for the banking industry. Just how tough might become more clear during tomorrow night's State of The Union Address. Still, there are revenue growth opportunities out there including:
1. Turning new deposits into revenue growth opportunities. Today's American Banker includes an article on deposit growth at banks, stating that deposits grew at an average rate of 8% in the fourth quarter versus the third quarter at large banks - a continued massive increase in deposit inflows into the banking system. Turning these new customers and new dollars into opportunities for revenue growth will be a challenge. Strong onboarding processes coupled with incentives for debit use are a must. In addition, banks need to break down traditional barriers between their retail banking and investments businesses to make it far easier and more seamless to move money into higher yielding, higher return instruments as rates rise and the market continues to rebound. And, of course, growth in consumer and business lending at these banks would help, but economic and other pressures will continue to dampen demand and dampen the appetite for lending at many institutions. Having said that, consumer confidence is beginning to rise - and I see opportunity #2 being:
2. Meeting consumer lending needs of good (but not great) credit customers. Demand for consumer credit will be most robust where credit has been restricted in recent months - through credit line reductions, changes in terms, and the like. Many consumers and small businesses - even those with good credit histories - are being alienated by their credit providers. Those individuals and businesses with stellar credit will likely have more options going forward, but there's good money to made lending to others who have good credit histories but perhaps some circumstance that modeled them into a category for cutback or term changes recently.
3. Retirement planning - and the investment and wealth management strategies that go with this. This remains a huge opportunity. Witness BofA's announcement this week that it will launch a $20 million ad campaign "help2retire" targeting the retirement market. The sheer size of the market makes it attractive (more than $24 trillion in assets), but recent turmoil on Wall Street makes the opportunity even more attractive as it leaves the door open for banks to regain some of the business lost to investment firms over the last 20 years. I could go on - there are many other opportunities out there.
Let me know what you think and what other opportunities you see for 2010.