Q&A with Mark Jorgenson

Q: Has the election season started to impact bank lending or borrower inquiries?

A: There has been no visible effect at this point, although anything that contributes to a feeling of uncertainty will undoubtedly cause some borrowers to put off longer term decisions until the uncertainty wanes.

Q: What’s at stake for banking generally in the presidential and congressional outcomes?

A: Regardless of what happens in the election, we will continue to push for such things as the modernization of CRA (very few updates since 1977) and crafting legislation that recognizes and rewards those financial institutions that engage in prudent risk management activities.

Q: During COVID-19, how well are small businesses in particular keeping up with their loan commitments?

A: There is no question that small businesses in many industries are under significant stress.  With loan deferments and various government support programs – such as PPP – the full impact of the pandemic is somewhat masked at this time.  There will be much more to this story down the road if an effective vaccine is not discovered in the near term or if these support programs expire or are discontinued. 

Q: Banking has made long strides toward digital and online operations. What further changes do you anticipate for consumers with the online experience?

A: Every financial institution is seeing a double digit percentage decline in terms of in-bank transactions, with a notable migration to digital banking.  Customer preferences and demands will continue to change and banks that have an ability to invest significantly in technology will develop many new digital tools that will accelerate this transition.  We will see a much greater use of such technologies as artificial intelligence, and these advances will continue to make banking more responsive and convenient for customers.  Banks cannot, however, ignore the importance of the “human touch,” and those that do the best job of melding the human component with digital innovations will be winners.

Q: With the perspective you have on community banking nationwide, what’s your sense of the collective health of that banking tier, as opposed to the largest banks?

A: The entire banking industry is on much firmer ground than was the case in 2007.  Enhanced capital and liquidity levels along with better regulatory oversight have made a difference.  The need to keep up with changing customer needs and preferences will be challenging for smaller banks that have an inability to invest in the necessary technology to address these changes.  We will likely see banks partnering with Fintech organizations in order to become more nimble when it comes to providing new digital solutions.

Q: What are you seeing in terms of consolidations? Is the pace holding, picking up or slowing down?

A: Consolidations will definitely continue as banks contend with regulatory burdens and technology development demands, but I would expect the pace of consolidations will slow.  Again, the banking industry in the United States is strong, and the diversity of its financial providers contributes to that strength.