Willimantic-based Savings Institute Bank & Trust Co. was one of the first banks in the state to start exchanging images through Avon-based COCC’s image exchange program. Such technology is expected to give banks increased opportunities to save money and do business faster in the new year.
Changes in technology and rising interest rates will change the way banks do business in 2006, according to some industry experts. If banking leaders in 2004 and 2005 were focused on legislation having to do with Check 21, 2006 will be about increased implementation of imaging technology.
The technology will give banks increased opportunities to save money and do business faster, said Bob Bessel, spokesman for Avon-based COCC. With changes in technology comes confusion for many bankers.
“It’s overwhelming,” Bessel said, adding that he expects many banks to outsource the work of implementing the new available technology to companies like COCC. “We expect it to be a good year for that,” he noted.
Banks that have already implemented check imaging are seeing big returns on their investments. In May of last year, COCC helped Willimantic-based Savings Institute Bank & Trust Co. become one of the first banks in the state to start exchanging images through COCC’s image exchange program. The Savings Institute and other banks that have implemented check imaging have been very successful, Bessel said. And although check imaging is a big deal for banks, backroom imaging will take steps forward in 2006. If banks start imaging most of what used to be on paper and filed – such as receipts and signature cards – they can save time and money.
“All of these banks are going to reap the benefits,” Bessel said.
He added that he also expects to see more banks implementing unified interfaces, or computer systems that allow bankers to log on once and have access to all the systems they have rights to, instead of having to log on multiple times to use the different programs. COCC also hopes to provide more holistic solutions to security issues, allowing systems to communicate with one another instead of being completely independent of one another, Bessel said.
“It all needs to work together,” he said.
Another trend expected in 2006 is that regulators will want more analysis of risk, so banks may have to deal with an increased need for more detailed risk assessment.
‘Serious Challenges’
Bill Bromage, president of Webster Bank, said he expects rising interest rates to have an effect on banks during the coming year. There is the prospect of the yield curve getting flatter and putting more pressure on banks, he said. Banks in 2006 will need to develop their business plans with regard to that possibility.
Bromage also predicted trends toward increased e-commerce and Internet banking in 2006, he said. The coming year will hold some similarities with 2005. The consolidation of banks slowed considerably in 2005, and Bromage said he expects that to continue as banks are under increased pressure from rising interest rates, and as there are fewer players in the market.
“I think [consolidation of banks] will return, but not necessarily in the near future,” he said.
Economically, there should be strong growth in 2006, according to a long-term economic forecast released by the Washington, D.C.-based Mortgages Bankers Association. The association is projecting strong economic growth through 2007, with gross domestic product growing at a trend rate of about 3.5 percent in real terms annually.
MBA also predicted that real GDP growth will average 3.5 percent in 2006 and 3.5 percent in 2007, that the unemployment rate will decline from the current level of about 5.4 percent to 5.2 percent by the middle of 2007 and that existing-home sales will come off record levels and fall by 7 percent in 2006 and a bit more than 1 percent in 2007. At that pace, sales in 2007 will be at the record level first set in 2002.
Closer to home, business executives across Connecticut hope lawmakers in 2006 can begin to address issues like job creation, which they say will have a significant impact on the state economy. Late last year, the Connecticut Business & Industry Association released a survey in which business leaders said the state Legislature must make creating jobs its top priority.
“This is one of several recent regional surveys showing that Connecticut’s economy is facing serious economic challenges that must be addressed,” said John R. Rathgeber, CBIA president and chief executive officer, in a prepared statement. “The business community and Connecticut residents are concerned about the same things – jobs and taxes. State leaders must do everything in their power to encourage job-creating investments and get our businesses moving ahead, so they can create good job opportunities for our citizens.”
Fifty-three percent of the respondents to the survey rated Connecticut as either poor or fair for investment and job creation. Forty-eight percent said the situation is worsening. Eighty-three percent of respondents said the state is doing a fair or poor job of addressing the overall costs of doing business in Connecticut.
“As the public focus has shifted to the economic challenges facing our state, business leaders believe that our elected officials will respond,” said Rathgeber. “It’s critical that their response centers on making Connecticut’s business climate more competitive in the global marketplace.”
