The ball has dropped in Times Square, and 2015 is officially in the books. Now it’s time to look forward and consider what the future might hold.
U.S. News spoke to four financial and banking experts to find out what’s on the horizon for the banking sector in 2016. Here are 10 trends they told us to watch.
1. Fewer people will head to branches.
Mark Hamrick, senior economic analyst for Bankrate.com, says the number of Americans foregoing branch visits is on the rise.
“Four in 10 Americans haven’t visited a branch in the last six months,” he says, citing Bankrate’s Financial Security Index survey last month. “That number’s risen from 18 months earlier.” If the trend holds true, even more people will be doing their banking online, on their phone or at ATMs in 2016.
2. The digital and branch experience will merge.
As mobile services expand, banks will be looking for more ways to integrate banking on a phone with banking in a branch, says Byron Vielehr, president of the Depository Institution Services group for Fiserv, which provides technology solutions for banks and financial institutions.
“Banks will be looking to connect the digital experience to the branch experience,” Vielehr says. “For example, you may start an application online, realize you need help and then finish it the branch.”
3. Branches will start to go digital.
Mobile banking won’t only be something for consumers in 2016. The banks themselves may start to use mobile technology in their branches. Vielehr says some branches are “unshackling” tellers from the counter and giving them tablets so they can meet with customers more informally and comfortably either in the lobby or private offices.
Other branches are adding technology by installing self-service kiosks or video ATMs that provide the opportunity to chat with a remote teller. Vielehr even tells of one bank in Switzerland that has installed an automated safety deposit system that allows customers to check their deposit boxes without ever talking to a live person.
4. Investment options at the bank aren’t likely to expand.
One area not likely to change this year concerns bank participation in investment options such as health savings accounts and IRAs. Kevin Boyles, vice president of retirement planning provider Ascensus, says institutions could be missing a golden business opportunity, particularly when it comes to HSAs.
“The trend we’re seeing is that HSAs are growing rapidly, and that’s not going to abate anytime soon,” Boyles says. He estimates that only 2,300 of the nation’s 12,000 banks and credit unions offer HSA options, and that number isn’t likely go up, meaning many banks are foregoing their share of a growing market. “[Financial institutions] will keep living with the status quo.”
5. Savings account interest rates should go up, but you won’t get rich.
The recent Federal Reserve decision to raise interest rates may mean bank accounts get a boost, but savers shouldn’t get too excited yet, says WalletHub.com analyst Jill Gonzalez.
“Unfortunately, savings accounts are not tied one-to-one to the prime rate [set by the Federal Reserve],” she says, “but it’s probable banks will increase saving account rates.”
The Bankrate CD forecast for 2016 projects a modest increase in CD rates to 1.02 percent for one-year CDs and 2.21 percent for five-year CDs.
6. Banks could start charging for convenience.
Banks are under pressure from regulators and the public to keep fees down, but that doesn’t mean they won’t find ways to tack on new charges in 2016. Fees for convenience services, such as remote check deposits and expedited payments, top the list of new charges consumers could see in the coming year, according to Vielehr.
“Our mantra at Bankrate is it pays to shop around,” Hamrick says. “You can still find accounts that have little or no fees.”
7. Online banking will remain popular but won’t replace branches.
In the face of fees, Gonzalez says some consumers may be tempted to do just that – shop around. “We have seen that online-only banks have less fees,” she says. “We might actually see an increase in the popularity of online banks.”
However, brick-and-mortar bank branches shouldn’t worry about mobile or online banking replacing them completely. A Federal Deposit Insurance Corp. report last year found that visiting a teller remains the most common way for people to access their account.
8. Mobile payments will continue to make in-roads.
Despite the onslaught of ads touting the benefits of services like Apple Pay or Android Pay, only 22 percent of mobile phone users made a mobile payment with their device in 2014, according to a Federal Reserve mobile financial services report last year. That could be changing in 2016.
“Retailers have been a little slow to sign on,” Gonzalez says. “They have been waiting for the big-box retailers to [pilot the technology].” Now that big merchants are successfully accepting money via smartphones, smaller companies may be ready to jump aboard the mobile payment bandwagon.
9. Regional banks will get in on mobile deposits.
“Before a few years ago, people thought they’d always have to go to branches to deal with checks,” Vielehr says. Now, people can simply snap a photo of their check to have it instantly deposited, a service over half of mobile banking customers used in 2014, according to the Federal Reserve.
The ability to make remote deposits has been limited mainly to large, national banks, but look for the services to expand in the coming year. Gonzalez estimates regional banks and large credit unions should be ready to roll out the technology in the next 12 months.
10. Chip cards may finally see some action.
Another technology that may finally be ready for prime-time is chip cards. While there was much ado about banks switching over to chip cards last year, you probably haven’t noticed anything different in the checkout, even if you have a new card.
That’s because some merchants may not have the right chip software for payment terminals, Hamrick says. Once merchants begin updating their systems, you can expect to start inserting your card into the terminal rather than swiping it.
