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4 Hard Trends Banks Should Prepare for in 2018

Feb 14, 2018 10:00:00 AM |

Hans Pettit

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With a historic tax reform in place and an economy that continues to show signs of strength, we have a positive outlook for 2018.  As we reflect on 2017, a truth has become abundantly clear – 2017 will go on record as a time of preparation and 2018 will be the opportunity to act.

Out of all the expected trends and changes in 2018, we predict a few will have a more significant impact than others. We have isolated four essential considerations to give you the groundwork for a proactive plan to succeed this year and prepare for 2019 and beyond.


Tax Reform

Tax reform is here, and there is a tremendous opportunity for banks going into 2018. The reform has created new options for tax planning, and it is critical that you take careful steps to ensure you capture the opportunity. This is not just a cash flow solution; it is a path to more permanent relief. With a relief opportunity, it is more important than ever to act fast in the coming year. 

Regulatory relief

Regulatory Relief

With tax reform in place, there is more optimism than ever before that more regulatory relief could be on the horizon. Of course, nothing moves quickly with today’s congressional environment. Now is not the time to sleep on legislative developments. Whether regulations shrink or expand, we know they will continue to increase in their complexity and the need for more data. If you haven’t already put resources in place to better gather, store, analyze, and use data, 2018 is the year to do it. The key is starting small and expanding your capabilities over time. The only non-negotiable is not starting. Not only will the information keep you poised to navigate changing regulations; it will ensure your institution remains competitive well into the future.



Speaking of regulations, CECL is high on the list of discussion topics for many financial institutions. We know that many banking institutions are still on the sidelines. (It can be daunting to deploy resources in an area where it is so hard to see the future value.) You will have to invest in the tools, models, and approaches at some point in the near future - starting sooner than later will provide you with many benefits. It's an opportunity to build on small successes with data analytics. Plenty of examples show how data helps with loan pricing, product deployments, and customer service. The more history you build over time, the richer your useful intelligence becomes. Beginning your CECL implementation before you're required to will give you access to a deeper pool of powerful data-driven insights that will keep you compliant and – just as importantly – create an edge over those banks that continue to delay their guideline implementation process.

Industry Consolidation

Industry Consolidation

For financial institutions of all sizes, growth is a balancing act. It remains a core objective, but traditional approaches have become insufficient. We expect more industry consolidation as banks capture value from or merge with other institutions to increase customer and shareholder value, and to expand in size, product diversity, resources and geographic footprint. Given the proper framework and preparation, consolidation is an opportunity to keep up with the accelerating pace of technological change in the sector, as well as to distinguish the institution within a highly competitive environment. 

Concerted Preparation is the best (perhaps only) way to get ahead of and mitigate most of these risks.

Risk and Regulation Remain

Risk is not going away. With every new technology innovation, channel, compliance requirement, disruptor, and retiring board member, the risk grows. Concerted preparation is the best (perhaps only) way to get ahead of and mitigate most of these risks. Find a trusted partner that can help you reimagine how you use risk management as an opportunity, as opposed to a compliance exercise. The more we collaborate and introduce different perspectives, the better prepared we will be to seize our future opportunities.

In 2018, we are challenging ourselves to help solve the problem of over-complication. We want to help you better understand how to prioritize your focus so you can respond to risk and secure your institution without losing the ability to innovate.

Ask yourself where your bank is now – and if it’s where you want it to be. Evaluate your goals and appetite for risk. Then build an action plan you can execute, complete with a list of the priorities so you can keep a windshield view and a plan to move the needle on what’s most important. Cheers to what we hope was a successful 2017 – and to a 2018 that will find you balancing innovation and an ironclad plan for future growth.


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Hans serves as a partner in HORNE's financial institutions practice. He is dedicated to helping banks achieve their growth potential using reliable insights and thoughtful guidance. Hans's specialized experience includes growth opportunity planning and assessment; risk management evaluation and structuring; and internal control framework design and effectiveness.

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