Where Do We Go From Here?

1997 Sees Banking Industry At The Top
A new Gallup Organization survey just released shows that the banking industry not only broke all records for bank profits in 1997, but it also hit the top of the charts in public confidence.

Over 1,000 people having accounts in financial institutions were called in late October and early November and asked whether they had confidence in the safety and security of the banking and financial system. In 1996, 84% said they had confidence in our industry. Last year that percentage jumped to 90%.Some experts felt the numbers might be different because of the immense changes in the way we now do business. At-home and over-the-phone banking and the selling of non-traditional products were three of the factors that some felt could affect the perception of financial institutions.

Along with the "feel good" report about consumer confidence came the welcomed lender confidence, which also bodes well for the banking industry.

Leaders in the banking industry are hopeful that when Congress sees the survey results, they'll be more likely to grant new product and service powers. Rep. James A. Leach, R-Iowa, who is chairman of the House Banking Committee remarked that the survey creates a very hospitable environment for banks.Of course, others are cautioning that next years number's could come down for three distinct reasons: because of the year 2000 computer problem, government requirements to reduce emissions causing global warming and the situation in Southeast Asia. The opposing position to that pessimism is that the financial industry has more capital and a newly designed system better positioned to weather problems.In light of the extremely optimistic outlook of the Gallup survey, BANKERS' HOTLINE asked Boris Melnikoff, Corporate Security Director of Wachovia Corporation and former chairman of the ABA Security Committee what he thought all this good news would mean for the security area of the financial institution.

He said, "I think losses are going to take off into the wild blue yonder! Bankers will become so comfortable with the way things are going that they'll forget all about due diligence and caution. Remember, as profits go up, so do losses. The bigger the loan, the bigger the risk.

"The security officer has always had a tough time convincing management to install firewalls and safeguards. Never before has organized crime and even the street-corner crook had so many tools at their disposal. They will be delighted with the results of this Gallup survey because they'll anticipate their "profits" going up too!

"The security officer's just got harder. It's easier to sell the need for security devices and procedures when times are tough and you have to be careful not to take an unnecessary loss. With the changes in the industry, the increased emphasis is on technology rather than on people, the security officer's job has become more complex and the security officer has to be more knowledgeable than ever before.

"When times are good, financial institutions get lulled into a false sense of security and safety. This is no time to reduce our vigilance."

Copyright © 1997 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 12, 12/97