With nearly 30 years of experience and a corner-office vantage point, John Everett makes calculated banking industry projections.
2020 Projection: Banking remains strong, but it must remain adaptive with new technology and prepare as the next recession looms.
SBJ: Describe banking in 2020 in one word.
Everett: Steady. Right now, you’re seeing the economy growing at a 2%-3% clip every single year. That’s expected to maintain at least one more year. This has been the first true decade ever where the economy has grown and there has not been a recession. That has enabled the banks to position themselves coming out of the Great Recession to get their balance sheets in a really good spot.
SBJ: How are branches evolving to meet the demands of the times?
Everett: What we’re seeing in Springfield is that the days of five drive-thru lanes and teller windows and lobbies are gone and probably will be forever gone. It will be much smaller drive-thru and lobby experiences.
SBJ: How is that changing the workforce?
Everett: The staff that we’re probably adding the most are staff that goes to you, goes to your business, goes to your home versus saying, “You have to come to our place.” This is more in the deposits side of banking that is starting to replicate the lending side. Now, we’re having to work just as hard on the deposit side.
The more and more technology has rooted, the harder it is to move a relationship from one bank to another. Deposits are continuing to grow as an industry; however, most of those are located in your top 20 banks in the nation which hold 80-some percent of deposits. It’s incredibly challenging now to get deposits, and that’s where I think banks are being far more proactive of going into that business like a lender would on the loan side. As an industry, loan-to-deposit transactions are very high because the deposit market is difficult to make. If I make a loan tomorrow, I’ve got to make a deposit to fund that loan.
SBJ: What’s the goal for the banking workforce?
Everett: We need to be proactive out there looking for people and investing in them. In some markets, we look in high school for these kids and grooming them and giving them opportunities to come in here. Then, post graduation, we bring them back in. In these smaller towns, they are looking for good jobs close to them and we can provide that. As an industry, we are doing a better job of promoting it.
SBJ: What’s next for banks in the area of cybersecurity?
Everett: We are a target and have always taken that very seriously. You need to be investing your dollars in this area. Also knowing what the (Federal Deposit Insurance Corp.) and other regulators are focused on. If they’re focusing on it, you need to be focused on it. The amount of money we spent on the (information technology) side has doubled or tripled in the past few years.
SBJ: What are your top concerns for 2020?
Everett: A recession will happen. I do think it is imminent, but I do think banks are well positioned for it. I am worried about the lack of availability for affordable housing. The price of housing has far exceeded the growth in wages. Where a lot of jobs are, housing is tremendously expensive and it is very hard to have a good, livable wage. In Springfield, the lack of affordable housing is causing an issue and will continue to cause issues until wages catch up or until the housing market goes down a little bit. That may be what eventually leads to the slowdown in our economy.
SBJ: What are your thoughts on home loan assistance programs?
Everett: If you have nothing invested in something, you’ve got nothing to lose. That is my issue with the investment program. What are your options when bad times hit? That’s what’s so scary when people go in with little to nothing down on a home, business or farm. To buy a $200,000 home and put 10% down, that’s $20,000 and that doesn’t happen anymore. Most people build equity. You can’t count on that. If the recession hits … no one has equity and no one can move to another house. A lot of people who have bought homes in the last 10 years do not have much equity in homes. They will be in those homes for a while.
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