By and large, we’ve been focused on survival in the last three years. Strategic planning work was more tactical than strategic, and true time horizon compressed to months. As the bottom appears firmer and stability looms, it is time to refresh our perspective on the future. Below are some of my thoughts.

1. New regulatory framework changes fundamental profit dynamics and segment attractiveness.

Dodd-Frank, The Consumer Financial Protection Bureau and intense focus on compliance have markedly impacted the profitability of various lines of business. Retail banking is under intense pressure as consumer protection laws eliminated products that accounted for roughly 1 / 3 of bank fee income and replaced those with higher compliance costs and mandatory pricing ceilings. Banks are already engaged in reshaping their retail transaction product line in response to these sea changes. I anticipate more creative solutions to the checking quandary will emerge this decade, using technology and shifts in distribution strategy.

Similarly, the lifting of Reg Q on the business side will permanently alter the profitability dynamics of the business checking product, currently the single most profitable basic product for most banks.

These and other regulatory pressures will compel our industry to reemphasize relationship banking in order to turn unprofitable products into profitable relationships, to develop new services that will fill the profitability void, and to use technology as the glue that binds customers to their bank.

1. Consolidation and consortia.

We are at the outset of a new wave of consolidation. The strong are acquiring the weak and the tired, and the FDIC is facilitating weeding the non-viable players. Remaining smaller institutions will find ways to access economies of scale by joining forces and buying power. Even in our own Forums groups are beginning to consider increasing purchasing power through buying consortia, and leveraging effective and specialized back office operations by renting them to others. More such arrangements will emerge as the cost to operate rises through both technology investment requirements and markedly higher regulatory compliance costs.

1. Segmentation shifts.

Some segments will grow and become more attractive during the decade, while others will shrink and become more competitive.

The small/micro business sector accounts for 26 million businesses today, and is expected to grow and is expected to increase (repetitive) by 7 million by 2020. Most of the growth will come from small and micro businesses with revenues under $ 1 million and less than 5 employees. The growth of this segment is fueled by both baby boomers and young people striking out on their own, leveraging outsourcing, partnering and others’ economies of scale, which reduces their capital requirements. Main Street micro businesses can operate today largely on variable cost basis. They do have a wide range of financial needs, and often prefer to mingle their business and personal finances. Note that typically only 30% of banks’ business customers also do their personal banking at the same company.

Finding ways to profitably serve this segment will be an important competency going forward. Today the cost of attracting, servicing and retaining these customers is often prohibitive. Technology can alter these profitability dynamics, as will innovative product suites that are specifically aimed at this segment.

Consumers’ needs will be changing as corporations continue to shift health care and retirement costs to their employees. They will have to better manage their financial lives and will need products and services to help them do so. Different generations will deal with this challenge in various ways. The baby boomers, for example, will shift our population mix to 15%+ over 65 years old by 2020. They are less interested in retirement and more interested in finding ways to live actively, possibly even in another career or a micro business. Their major concern is to maintain adequate income to cover day-to-day expenses, health care costs and additional activities as well. Gen Y, or the Digital Generation, has different concerns. They are living through the current recession and many are become more financially conservative. They also have meaningful resources at their disposal, as the oldest will turn 40 by the end of the decade. They are in the process of establishing families and building wealth. They have high service expectations and are generally interested in new technology, self-service and 24 / 7 availability. For them, internet and mobile access is essential, and customized self-service options preferable. Their primary concern is financial security in the future, having lived through these uncertain times and realizing that government support is waning.

Middle market companies have traditionally been a most attractive banking segment. They are heavy credit users and typically also use many treasury management services. I anticipate that the competition to win this segment’s banking business will stiffen as growth will occur mostly in the small business population, which, in turn, will put pressure on margins and profitability.

1. The impact of technology.

Technology is revolutionizing our business as we speak. Cloud computing and mobile technology will cause a shift away from laptops and desktops and into mobile devices and tablets. Further, cloud computing and the rapidly growing social networks created a new market dynamic. Products and prices are far more easily compared, which renders many traditional marketing methods obsolete.

Cloud computing allows users to connect to remote computing resources, both public and private. It is esoteric now but is expected to enter mainstream “apps” next year. Apps are different from traditional computing. They typically are built to accomplish a specific task and can connect to remote date and services via the cloud. Apps are dramatically different from traditional software, and will present exciting innovation opportunities for banks both through cloud technology as well as smart phones.

One of the advantages of clouds is its ability to increase business agility since it can turn fixed computing costs into variable ones which fundamentally changes the profitability profile of the activity.

Mobile technology is also highly impactful. There are more than 4 billion global cell phone users today per IDC, a market research firm. More smart phones were purchased in 4Q10 than PCs. The trend is clear: we are transitioning into mobile and tablet technology with millions of apps. I can’t envision all the implications of this shift on our business, but I do know they are profound and not too far ahead in the future.

One possible and scary implication is the phone companies usurping the payment business. Money can be both digital and mobile, and in some parts of the world a cell phone based payment service has evolved into an electronic payment system, cutting banks out of the game altogether. On the positive side, the information we have on our customers’ financial behavior can drive and improve our marketing techniques.

In summary, this decade is fraught with opportunity and risks. The regulatory stranglehold we’re in pressures our industry to find creative solutions that work for both customers and shareholders. Technology and market dynamics offer us opportunities to completely overhaul our business model while remaining customer- and relationship-centric. We can continue to pursue relationship banking and needs-based selling while leveraging

technology and reshaping how we use our branches. Gen Y, X and millennials are rediscovering the value of community. They are establishing closer ties with friends, family and neighbors. As they refocus closer to home, community and supercommunity banks are facing new generations who value what they have to offer. As customers get far more information they ever had and are far more connected to each other than in recent decades, banks have a golden opportunity to become again the epicenter of the customers’ financial lives by building relationships on the customers’ terms without giving the bank away.