In reaching out to 100 executives at regional and community banks in the United States with assets of between $1 billion and $20 billion, we sought opinions from a cross-section of institutions. The results from KPMG’s 2016 Regional and Community Banking Industry Outlook Survey show that regional and community banks are well positioned to grow and learn from the past. The focus for Regional and Community banks in 2016 should be on kick-starting growth, improving management of regulatory risk, deciding whether they are going to be buyers or sellers in a fluid M&A market, and enabling the “branch of the future.”
Key Survey Findings:
A sizable portion of survey respondents remain cautiously optimistic about maintaining growth in the next few years. The banks we polled say they are upbeat about the headway they are making in transforming operations, making inroads with new customer segments, and developing new products and services.
Only 8 percent of survey respondents believe a bank smaller than $1 billion in assets can survive. That size may vary depending on geography, but almost 5,400 of today’s banks fall below that asset size. In fact, there are still about 1,700 banks below $100 million in assets.
Many fewer executives this year said they would “very likely’’ to be a buyer through mergers and acquisitions this year as compared to last year. Instead, many more told us this year that they are “somewhat likely’’ sellers than said so last year.
Executives in the regional and community banking sector must rely on creating ideas for change, because change is happening all around them at lightning speed. To help reach these goals, KPMG offers a series of ideas that these executives may want to contemplate:
If getting bigger is a key to success, then agility regarding change management will be essential.
Many regional community banks may believe mobile connectivity is something only for the biggest banks, but consider this data-- the amount of time Americans spend on their mobile devices daily has increased by seven times since 2010 and there are now 6 billion smartphones in use across the globe, each one more powerful than the “supercomputers’’ of just a decade ago.
A common critique of the banking industry is that it is a captive of inertia.
Smaller banks will need to do a better job of everything from mobile offerings to virtual tellers to faster and less-manual onboarding.
Banking organizations that encourage independent thinking and creation of ideas for new products and services have proven to be among high performers. Banks of any size can no longer rely on one executive group to be innovators.