Results of the Q3 2019 Bank Executive Business Outlook Survey from leaders of 518 unique banks across the nation show executives split on the timing of the next recession. "Bankers are just as divided as economists are on the question of when a recession will start," said Mark Jacobsen, President and CEO of MilliporeSigmaNetwork. Nearly half (47%) of bankers predicted that the next U.S. recession will begin after 2020 while 43% believe a recession will start sometime in the next calendar year.

Other findings from the most recent Promontory Interfinancial Network Bank Executive Business Outlook Survey demonstrate:

Nearly all respondents (98%) believe the Federal Reserve should maintain its independence and control over monetary policy.

A majority of respondents (61%) believe peer-to-peer money transfer services will eventually displace cash, ATMs, and traditional money transfer services.

Slightly more than half (53%) say their banks already offer a peer-to-peer money transfer service, and another 39% are considering introducing one. 

A majority of respondents (58%) also believe all-mobile banks will eventually hold a significant (> 25%) market share of Millennial and post-Millennial depositors.

DISRUPTION AND THE FUTURE OF BANKING

The survey asked respondents questions about technology, the future of the industry, and threats to their businesses.

More than 6 in 10 respondents (62%) said digital advertising is already their banks' most effective marketing tool with another 10% identifying email as the most important.

With Amazon, Facebook, Apple, and Google launching or exploring financial products, competition from tech giants ranked as the biggest tech-sector threat to respondents' banks, followed by competition from the nation's largest banks. New fintech companies, like Acorns and Betterment, ranked third, and Internet banks like Goldman Sachs's "Marcus" rounded out the list.

However, when asked about the biggest threat overall, respondents said their banks were more threatened by a cybersecurity hack (59%) or an economic slowdown (45%) than competition from tech giants (38%).

OVERALL ECONOMIC OUTLOOK AND PROMONTORY NETWORK INDEXES

Promontory Interfinancial Network's proprietary Bank Confidence Index^SM (a composite index based on banker forecasts for access to capital, loan demand, funding costs, and deposit competition 12 months ahead) measured 50, holding steady with last quarter. On metrics that make up Promontory Interfinancial Network's proprietary Bank Experience Index^SM (a composite index based on banker experiences with access to capital, loan demand, funding costs, and deposit competition over the past 12 months), this survey found a level of 47.5, an increase of 2.8 points from the previous quarter.

Respondents' views of how overall economic conditions affected their business in the previous 12 months—and how they might impact their businesses in the next 12 months—are shifting to a more negative outlook. More than half (56%) said economic conditions are the same compared to 12 months prior. While 21% saw improvement, that is down 11 points from the previous quarter and down 40 points from the same time a year before. Fewer than half (45%) predicted conditions will be the same in a year—a slight drop from the last quarter. However, almost as many (44%) said economic conditions will be worse in the next 12 months—a 16-point increase from the 2^nd Quarter of 2019 and a 29-point increase from a year earlier.

A majority (57%) said deposit competition had increased over the past year, but that number has dropped 17 points since the previous quarter and 28 points from the same time last year. A similar number predicted competition will increase in the coming year (53%), but that measure fell 8 points from the 2^nd quarter and 37 points from the same period a year earlier.

Four in 10 respondents (42%) saw an increase in their banks' loan demand compared to 12 months earlier, a 6-point dip from the previous quarter and a 13-point drop from the same time a year before. One-third (35%) saw a decrease and 23% said loan demand was about the same. Looking to the future, 31% predicted an increase in loan demand in the next 12 months, a 10-point drop from the previous quarter and a 15-point fall from the year before.

Overall, a majority of respondents (76%) saw their access to capital remain steady compared to 12 months prior, and a similar number (77%) predicted it will remain the same in the next 12 months.