From Homebuying to M&A, Optimistic Outlook for Banks and Credit Unions

Financial services sector exceeding expectations, inspiring high-value M&A deals and consumer confidence in the housing market and banking services

The banking industry is experiencing a wave of good cheer halfway through the year. Positive economic news, good business prospects and consumer sentiment, and an improved rate environment have unexpectedly buoyed banking this year. “Bank economists are expressing guarded hope that business lending will hold steady in 2024, marking a shift in sentiment after a year of industry turbulence,” according to American Banker. “If you went back a year or longer, every economist out there, including the [Federal Reserve], were forecasting we’d be in a recession by now, but we haven’t seen that,” says Sayee Srinivasan, the ABA’s chief economist.  

Even more, upcoming stress tests on banks are expected to “show they have ample capital to weather any renewed turmoil,” according to Reuters reporting. In another boon for banking, M&A deals reached their highest valuation, despite more subdued activity this year. “Bank merger-and-acquisition activity remains relatively light,” according to American Banker. “But the deals that came together in recent months were, in aggregate, substantially larger.” As of mid-June, the 27 bank deals tracked by S&P Global Market Intelligence were worth $5.45 billion, a total that “eclipsed the $5.2 billion combined deal value over the preceding five quarters.”  

Not only are consumers reporting confidence in their overall finances, housing in particular got a bump in TD’s recent survey. Nearly three out of four first time homebuyers are optimistic about the current housing market, and while rates remain a concern, 40% of home buyers agreed that now is a good time to purchase a home. “With home prices temporarily edging downward following their all-time high in 2023, TD’s Annual First-Time Homebuyer Pulse found that of those looking to buy a home in the next year, 74% respondents felt optimistic about the housing market” and 97% said they “started taking initial steps in the homebuying process.” 

In the best news for banking, ABA’s recent consumer survey finds 87% of Americans with bank account report they’re ‘very satisfied’ or ‘satisfied’ with their primary bank and 96% rate their bank’s customer service as ‘excellent,’ ‘very good’ or ‘good.’ “This national survey demonstrates that banks across the country continue to meet customer needs and exceed their expectations,” says ABA president and CEO Rob Nichols. That’s not to say banks should sit on their laurels. To maintain high approval, bankers should proactively engage with customers to provide tailored support and use meaningful marketing to attract new customers with new lines of business.  

If you’re a financial services leader wanting to deliver better banking experiences, get in touch with the experts at Adrenaline. And, don’t forget to subscribe to Believe in Banking to stay up to date with the latest news impacting the banking and credit union industries.