Banking In The 20th And 21st Centuries

By Joseph Humeston

For the banking industry, the 20th Century has been one of whirlwind change, marked by dramatic advances, setbacks and opportunities. The great depression of the 20s and 30s resulted in the closure of many banks and led to the creation of the Federal Deposit Insurance Corporation, by Congress, to insure depositors against loss.

The 30s also brought about reforms and regulatory structures. Post-World War II promoted exuberance through the 40s leading to a sedate 1950s and socially active 1960s.

By mid-1970s as the nation was reinventing itself both socially and economically; the banking industry was doing likewise. The Community Reinvestment Act of 1977 was established by Congress for the purpose of requiring regulated financial institutions to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered.

The go-go 80s brought new powers and rapid growth, only to see the decade end and new one begin in depression. The 90s brought about a banking industry enjoying solid profits and change. The latter half of this century brought about a host of bank mergers, interstate branching and consolidation.

Over the last 100 years, the banking industry has evolved into a powerful force that continues to be the backbone of the world’s finest financial arena.

Banking in the 21st Century will continue to see bank mergers and consolidations with cross-industry mergers like the Travelers/Citibank consolidations forming CitiGroup. Competition will be a force, which will require bankers to offer their products and services to a widening audience, often at less cost than traditional bricks-and-mortar branches.

As technology becomes more user-friendly and as customers become more familiar and comfortable with technology this trend will continue – our customers will demand it. The need for a community bank will continue, however, as customers still want the opportunity of discussing their financial needs with a banker they recognize.

(Joseph Humeston is senior executive vice president of Newtown Saving Bank. He wrote this in collaboration with John Martocci, CEO.)