Savings levels and rates should rise in 2007
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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 check.

"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.

Consumers may 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.

Mergers
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," Sherry says.

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