The banking industry endured yet another tumultuous year in 2011. Global finance remained fraught with danger. Regulations and market conditions squeezed profits. Customers pushed back on attempts to introduce new fees. And banks weren't even able to suffer in solitude, as the Occupy Wall Street movement literally hit banks where they live.
So what will 2012 be like? Will it mark a return to profit growth for banks, or a slide back into the crisis atmosphere of 2008? Will customers be treated to higher deposit interest rates, or higher fees? Or will a wild card such as technology dominate banking news in 2012?
Here are six banking trends you have a good chance of seeing in 2012:
1. New fees arrive -- quietly
After a media firestorm, Bank of America and others backed away from plans to charge debit card fees last year. However, addressing the PR crisis doesn't solve their P&L (profit and loss) problem. Big banks especially need to replace revenues lost to regulation and market conditions.
Having learned their PR lesson, look for banks to introduce new fees more quietly, primarily by raising existing fees, cutting back on free checking accounts, or raising the minimums needed to qualify for free services. Some banks have already raised interchange fees on smaller debit card transactions to make up for revenues lost to the caps on larger transactions.
2. Services become more restricted
If banks cannot recoup lost revenues from debit card interchange fees, look for banks to make those debit cards available to fewer customers, or to stop processing transactions from smaller retailers.
3. Branches disappear
Bank branches used to define a bank's geographic reach and market penetration. Now, those branches represent a high-overhead resource that is becoming outmoded in an increasingly online world. Some banks have already begun cutting branches, and this trend will likely accelerate in 2012.
4. Banking becomes more mobile
Mobile access to bank accounts saw a 45 percent increase in just the first half of 2011. Still, those users represent only a fraction of the mobile device owners in the U.S., the number of which has reached 90 million and continues to grow rapidly. This is the kind of trend that feeds on itself. As mobile banking customers become more plentiful, banks develop more and better applications for their devices, which in turn encourages more people to try mobile banking.
5. More customers embrace online banking
Whether via mobile devices, laptops, or good old-fashioned desktop computers, more and more customers will switch to online banking. As noted above, this trend will be encouraged by an ever-growing range of capabilities, but there is more to the story than that. Improving security measures will reassure customers that it is safe to bank online, and the trend toward charging for paper statements will give customers an added incentive to make the switch.
6. Electronic banking stirs the regulatory pot
The dust from the last round of banking reforms hasn't fully settled yet, and already those regulations may be outdated. Why? Blame the two technological trends listed above. New delivery systems for banking services will require new forms of oversight, but just where will this come from? The convergence of banking, telecommunications, and Internet companies will challenge traditional regulatory jurisdictions.
7. Rates (finally!) start to rise
The economy seems to be improving and inflation is above 3 percent. Add to that the fact that savings account rates are near zero and it seems that interest rates are more likely to rise than to fall in 2012. Higher CD, savings, and money market rates would be good news for depositors, though higher mortgage rates would represent the downside of this development.
There are many uncertainties to how these trends will play out. But with a still-unsteady U.S. economy, ongoing financial distress in Europe, and intense profit pressure for bank business models, you can bet it will be an eventful year.