If you’re holding onto land at the corner of an intersection, thinking that you’ll one day sell it to a bank, Charles Gummer has some advice for you: “Give In-N-Out Burger a call.” Gummer, Texas market chairman of Comercia Bank, spoke yesterday at a Success North Dallas event on the future of banking. More banks and more branches, he said, won’t be a part of it.
In fact, explosive growth in the use of mobile devices, combined with tough new financial regulations, will spark another consolidation wave in the industry—and a need for fewer locations.
At the end of 2010 there were 6,676 different banks, Gummer said. This compares to 1960, when there were 13,126. Back then, the top 10 banks controlled about 19 percent of all assets. At the end of 2010, the top 10 banks controlled 77 percent.
New financial regulations, which involve a loss of fees and price controls, will give an advantage to larger banks, which can leverage economies of scale, Gummer said. This will enable them to gobble up more market share.
“Exponential growth” in mobile payments also will transform the industry, he said. Today, approximately 1.8 million mobile payment transactions are executed each year. By 2018, that number is expected to hit 2.5 billion—shutting banks out of the process.
Gummer said the outlook for small businesses is “very bright,” as banks will be competing to provide business loans to balance out their portfolios. He also said he expects M&A activity to pick up, due in part to aging baby boomer company owners, many of whom will be looking to sell.
The Comerica executive, who’s set to retire himself in about three months, closed his presentation by offering six suggestions for the business professionals in the audience:
• Check your credit annually.
• Check your credit card statements mid-month for accuracy and security purposes.
• Buy a smart phone. If you don’t have one, you’ll be left behind.
• Rank a list of your competitors by the age of the owner, and investigate acquisition possibilities.
• Solidify relationships with your banker, so you’ll be prepared to move when opportunities come up.
• And perhaps most important, he said, write your government representatives and tell them you’ll hold them accountable for their actions.
Success North Dallas was founded in 1988 by networker extraordinaire Bill Wallace, chairman and CEO of Wallace Cos. Inc. Among those attending the breakfast event were Finley Graves, dean of UNT’s College of Business, and former Addison Mayor Joe Chow, who, Wallace announced to the crowd, plans to file papers in the next day or two for his run for U.S. Congress.