|Savings levels and rates should rise in 2007
Automation, security, and integration
Today's transactions are quicker
and faster than ever before.
Consumers hit ATMs for quick
cash and purchases are made
with plastic in a fraction of
the time it takes to write a
"Younger people don't carry cash," Leggett says. "Everything is plastic."
Look for more
automation in 2007 as debit
cards start to become "the
means of payment that people
will use," says Leggett.
Consumers are going to be using
ATMs and debit cards even more
than this year, he says. And
look for a larger number of
ATMs on the landscape.
also notice extra security measures
when they bank online. "Regulators
are looking at passwords for
online banking," says Elmendorf.
"That's spurred banks to
look at security," he says.
The result: Banks are studying
measures to make it more difficult
for someone else to log in and
use your name and password.
Hart also predicts more integration as consumers get checking, savings, investing and credit cards from one institution. And that could have some positive results as consumers use that leverage to ask for what they want from the financial institutions, he says.
Expect the merger trend to continue. In 2006, mergers "picked up a bit," says Elmendorf. "It will continue to pick up and could accelerate a little in 2007. It's a tough banking environment."
One reason is that while banks still had profitable quarters -- record profits in some cases -- that trend has shifted, says Elmendorf.
The outlook for the small-balance customer is not exactly clear. "More cookie-cutter products and less interest in the low-balance customer, as well," says Gail Hillebrand, senior attorney for Consumers Union. Plus, "new fees for low-balance customers who have no place to go."
But John Hart, vice chairman of Emigrant Bank, doesn't believe that consumers will see much negative fallout from the merger trend. Instead, increased competition for customers should lead to more "democratization" when it comes to finances, with "the small saver getting the same price" as those big-balance counterparts, he says.
New loan products
Consumers are using more money from unsecured bank loans and some credit unions are experimenting with new loan products.
Balances on unsecured bank loans were up 4.1 percent in the first half of 2006, while credit card balances actually fell 2.2 percent, according to data from the FDIC.
Some credit unions
are experimenting with loans
that are similar to the common
payday loan products but with
much lower interest rates. If
the idea catches on, you may
also see some credit unions
giving payday loans "a
run for their money," says
Linda Sherry, spokeswoman for
Consumer Action. "There
has been some thoughtful thinking
about things like that,"