5 Bold (and not so bold) Predictions for Banks in 2016

1) Retail banks will continue to shut their doors, but at a slower pace.

The sky is falling.  The sky is falling.  The hysteria surrounding the death of the retail bank is palpable and I am as guilty as anybody for perpetuating it.   Truth #1:  Banks are closing their doors.  Truth #2:  It's probably not at the pace that you expect.  In the past six years, the number of retail banks has dropped 5%.  (Ironically there are still more branches than there was in 2005.) The trend of branch closings will continue as banks restructure their offerings, but it will not be as drastic as you expect.

2) Google or Apple will launch a bank.

"Today's the Day." 

Famed treasure hunter Mel Fisher spoke these three words daily as he combed the ocean floor searching for gold doubloons.  This went on for many years, and he was always wrong—until he wasn't.  On July 20, 1985 he was correct.  Fisher found the Nuestra Senora de Atocha and recovered an estimated $450 million worth of treasure. 

Likewise, Google and Apple have been rumored to join the financial institution rank-and-file for many years.  Both companies have the brand power, deep pockets, and technology expertise to make it happen.  Is 2016 the year?  Perhaps.

3) A top-20 bank will have its data compromised and it will be made public (and there still won't be too much of an outcry)

In 2014, Target was publicly vilified by the media for its holiday season data breach.  It made headlines all over the country "How could this happen?"  That same summer, JP Morgan Chase had a breach even though they spend nearly $250 million a year investing in security. Home Depot was next.  The home improvement giant revealed that hackers had stolen 56 million credit card accounts.  This time the news cycle moved a bit faster and the headlines weren’t quite as robust.

In 2016, a large bank will have its data hacked and it will get pushed through the news cycle.  Events like this are becoming commonplace—a ho-hum occurrence.   The bank will recover quickly.

4) Mobile payment adoption will exponentially increase.       

According to a 2015 Accenture report, 14% of people regularly use mobile as a form of payment.  Adoption has been glacially slow with both Google Wallet and Apple Pay having limited success despite their deep pockets.  The greatest narrative has been Starbucks.  Currently 21% of Starbuck's in-store transactions are made through a mobile device.  That's double what it was two years ago with a key reason being convenience.

With the widespread adoption of smart phones, the comfortability of using apps for services (Uber), and the time consuming aspects of EMV terminals at retail stores, people will see mobile as a viable alternative and will use it.  We are in the "Early Adopter" stage with rapid deployment ahead.  By the end of 2016, the number should be closer to 20% and put on your seatbelt, it's only going to get faster.

5) FinTech's bubble will burst.

Signs of this are happening as we speak.  What quickly becomes obvious after the bubble bursts, isn't quite as easy to see while in the midst of it.  In the past 12 months, venture capitalists have sunk over 7.6 billion into fintech companies according to Pitchbook.  Braintree was just bought for $800 million by Ebay.  Simple was bought by BBVN for $117 million.  According to Finovate, there were 46 fintech unicorns with 37 closing in quickly.

The proverbial canary in the coalmine could be Square.  Leading up to their ballyhooed IPO, shares were valued in the range of $11 to $13.  After opening at $9 a share it was obvious that investors were wary.  On the flipside, it closed 2015 at $13.  All of which makes me question the valuation of many of these fintech companies.