Automation, the Pandemic and the Fed 

Posted by CopyTeam

The prodigious bank ledger used to be one of most important components of America’s financial system. Hand-written entries detailed every account holder’s deposits, withdrawals, loans and payments.

A lot has changed since then. In fact, in just the last decade, banking has become as much a technological innovation as it has a money manager. Even 21st century holdovers like checks and debit cards are gradually being replaced by more immediate transactions. Moving forward, we can expect increased activity in the areas of automation (bill paying, auto saving), personalization (fraud alerts, apps for budget tracking, spend forecasting) and real-time payments (Zelle, Venmo, CashApp).¹

If you’re not keeping up with banking trends, now may be a good time to get on board. Not only do “set and forget” functions make it easier to pay bills and save regularly, but these things become even more important when we retire. For example, if you are a “snowbird” with homes in different states, online banking and e-bills can help you stay current without having your mail forwarded. The same is true if you decide to travel extensively. Even abroad, you can pay your bills anywhere that provides a secure Wi-Fi connection. Moreover, today’s banking innovations provide ways to ensure we don’t forget to pay bills or overdraw on our accounts. If you’re looking for other ways to consolidate and simplify your financial activities in retirement, we may be able to help.

If you decide to “retire” your investments and consolidate cash accounts, bear in mind that both the National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corp. (FDIC) insure deposits up to $250,000 per account holder — per each qualified account type — per each insured institution. This means that even if your bank were to fail, the federal government ensures that your money is protected.²

After the Great Recession, Congress passed legislation that required banks to hold more capital on reserve for account holders. However, during the pandemic, the Federal Reserve loosened those requirements for lending purposes, allowing a greater cash infusion to help boost the economy. Now that the U.S. is on the road to recovery, the Fed announced in March that it would not extend the relaxed requirements past March 31.³ 

So, what trends lie ahead? One thing is for sure, the use of technology spiked due to the pandemic and although more people have become used to and more accepting of digital banking, the demand for personalization is stronger than ever. Looking forward, the banking industry will likely still encounter new challenges, opportunities and breakthroughs so it’s essential to keep a close eye on things, monitor the market and focus on customers’ behavior to quickly adapt to arising circumstances.

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¹ Liz Frazier. Forbes. March 22, 2021. “Digital Banking Trends Evolve In 2021, But Customer Needs Stay The Same.” https://www.forbes.com/sites/lizfrazierpeck/2021/03/22/digital-banking-trends-evolve-in-2021-but-customer-needs-stay-the-same/?sh=2dc8b9d91cd3. Accessed March 23, 2021.

² Melissa Lambarena and Chanelle Bessette. NerdWallet. Dec. 7, 2020. “How NCUA Insurance Works.” https://www.nerdwallet.com/article/banking/ncua-insurance-keeps-credit-union-deposits-safe. Accessed April 14, 2021.

³ The Tribune. March 19, 2021. “Fed to end relaxed capital requirements for large banks.” http://www.tribtown.com/2021/03/19/ap-us-federal-reserve-bank-regulation/. Accessed March 23, 2021.

Content prepared by Kara Stefan Communications.

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