Pub. 9 2019-2020 Issue 5

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S March • April 2020 17 • More than 6 in 10 respondents (62%) said digital advertising is already their banks’ most effective marketing tool, with another 10% identifying email as the most important. Disruption and the Future of Banking Lately, it seems everybody wants to get into the banking business. We asked bankers which types of companies they think are the biggest threat to their bottom lines. By a sizable margin, respondents indicated that the biggest perceived threat is competition from tech giants, such as Facebook, Amazon, Apple and Google, followed by competition from the nation’s largest banks. New fintech companies, like Acorns and Betterment, placed third and internet banks, like Goldman Sachs’s “Marcus,” rounded out the list. However, when asked about the biggest threat overall, respondents said their banks were more threatened by a cybersecurity hack (59%) or an economic slowdown (45%) than by competition from tech giants (38%). Overall Economic Outlook and Confidence and Ex - perience Indices Promontory Interfinancial Network’s proprietary Bank Confidence Index (which looks at composite expectations for access to capital, loan demand, funding costs, and deposit competition now compared to 12 months ahead) measured 50, holding steady with the prior quarter. On the metrics that make up Promontory Interfinancial Network’s proprietary Bank Experience Index (which looks at composite experiences for access to capital, loan demand, funding costs, and deposit competition compared to 12 months prior), this survey found a level of 47.5, which is an increase of 2.8 points from the previous quarter and the third consecutive quarterly increase. Bankers’ views on how economic conditions are already affecting their businesses — and how they might impact their businesses in the next 12 months — are becoming less positive on current and future conditions. A year ago, a sizable majority (61%) claimed that they were experiencing an improved economy. While the majority of respondents this quarter reported that overall economic conditions since then are the same, only 21% reported continued improvement. Fewer than half (45%) predicted conditions will be the same in a year, and nearly just as many (44%) expect conditions will be worse. Other Highlights: • Loan Demand. Four in 10 respondents (42%) saw an increase in their banks’ loan demand compared to 12 months ago, only a six-point dip from the previous quarter and a 13-point drop from the same time a year before. Seventy-one percent expect similar or improved loan demand 12 months from now. • Deposit Competition. A majority (57%) said deposit competition has increased compared to 12 months ago, but that number has dropped 17 points since the previous quarter and 28 points from the same time last year. Expectations for deposit competition are in-line with the most recent experiences. • Access to Capital. Nearly all respondents saw access to capital stay the same or improve (96%). Only 4% reported a worsening, and most expect this trend to continue over the next 12 months (94%). n Contact Bryan Harper at bharper@promnetwork.com for more information. To download the full report, visit https://www.promnetwork.com/research-insights/ bank-survey-reports/business-outlook-survey-2019-q3.