Raddon Report

2017 proved to be a good year for the U.S. from an economic perspective and for the financial industry as well, with new record highs achieved in the stock market, much stronger GDP growth - especially in the second and third quarters, and continued improvement in real estate sales and values.  The industry showed continued improvement in earnings and also continued strong loan growth. 

Anticipated loan demand is finally increasing after steadily falling since the financial crisis of 2007/2008.  Raddon’s 2017 national research indicates 28% of consumers anticipate opening a loan in the next 12 months.  This demand for loans has increased significantly from a low of 19% in 2015 and just 21% last year.  Home equities are among the products showing increasing demand.  The increase in demand is being fueled by rising home prices (up by one-third since 2009) and lower inventories of houses on the market. 

For the last decade, marketers have been obsessed with trying to reach the elusive millennial consumer. The quest is not unwarranted, as the Millennial generation continues to make its presence felt on the financial services sector with each passing year.  But with the leading edge of Millennials now in their late thirties, this group is no longer the new kid on the block.

Earlier this year, the Fed implemented two rate increases and appears poised for another increase at the end of this year.  With rising rates and improved loan to deposit ratios that have more institutions looking for funds, it’s fair to say that deposits are squarely back on the radar.  At Raddon, we’ve been talking with our clients about the implications of the changing environment and how to prepare for the coming challenges.   The first and most obvious takeaway is that:

At Raddon, we often state that age and income are the best predictors for how a household will consume financial services.  Where someone is in their life determines whether they are a young borrower or an older saver, better than their generation does.  After all, Baby Boomers might be depositors looking for retirement now, but forty years ago, they were the ne’er-do-well young borrowers discoing on Saturday Night Fever.

Bill Handel, VP of Research and Chief Economist at Raddon, identifies positive trends in today's economy and discusses some potential danger signs to look out for.

While conventional wisdom seems to suggest that mobile banking will finally end the need for brick-and-mortar locations, our latest Raddon research suggests otherwise.  Andrew Vahrenkamp explains why.

The ubiquity of Internet-capable mobile devices and the evolution of this technology in the banking realm present new challenges and opportunities for financial institutions. As financial institutions continue to make significant investment in mobile banking technology, the industry’s primary imperatives are twofold: Growth and retention.

After years of sales and lending growth, the auto party looks to be winding down; and the auto arena as a whole appears rife for disruption, with potentially profound implications for financial institutions over the near, mid and long term.