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Finance Execs Maintain Cautious Optimism for 2014

A recent survey of senior leaders at banks, credit unions, and other financial institutions all across the country finds many have fairly high hopes for the economy in 2014, even as headwinds threaten to blow the recovery off course.

Out of more than 900 respondents to Fiserv’s 2014 Boardroom Series Outlook Survey, 50 percent expressed “somewhat” or “very optimistic” expectations for economic growth this year, with another 42 percent expecting the year to follow more or less the same track as 2013. A combined 9 percent said they are “somewhat” or “very pessimistic.”

Virginia Heyburn, VP for insights and advocacy at Fiserv, said the findings offer further proof that financial institutions are holding on to hope for their future prospects as they shed past problems.

“Much of the distress has worked its way out of the banking system, and [financial professionals] can finally look forward instead of in the rearview mirror,” Heyburn said. “Banks and credit unions have done a remarkable job of cleaning up their balance sheets. Institutions are more nimble and efficient than they were six years ago when the crisis hit, so they’re in a much more advantageous position to leap forward to start growing.”

As far as where that growth might occur, responses were largely split along asset size. Consumer lending and banking rated highest among institutions with less than $1 billion in assets, while corporate and small business lending will be this year’s focus for larger firms.

While Heyburn says it’s no surprise that financial institutions would prioritize lending with loan-to-deposit ratios still so low, she emphasizes the need to push growth across all categories.

“This is a challenge because they have to differentiate and specialize at the same time. That means practicing segmentation to target certain customers with certain products but also differentiating across all of their products and services to stand out,” she said.

That’s not the only challenge ahead. Survey comments provided by participants illustrated growing concern about continued dysfunction in Washington, the effects of persistent long-term unemployment, uncertainty over monetary policy at the Federal Reserve, and the potential for a stock market correction.

And then, of course, there are the effects of regulations and legislation changing the landscape.

“Not surprisingly, financial professionals are worried about regulation and rated it highest among factors that would impact their institutions in 2014,” Fiserv said in a report detailing the findings. “The challenge of keeping pace with consumer technology adoption—driving demand for more, better and faster digital services—was second, while competition from other financial institutions was third.”

Meanwhile, although non-traditional financial providers attract headlines with the competitive threat they pose to the industry, finance professionals don’t seem to be sweating it—“competition from non-traditional financial providers” ranked last on the list of factors that might impact business.

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