AI Exposes Flaws in Bank Advisors' Bold Predictions

It is difficult to predict the future. When I was asked to predict the next banking crisis in 2023, I punted. I accepted the speaking engagement but failed to predict the future. 

I must have been a fool.

Predictions are high currency. I consistently see the most readership, the most listenership, and the biggest crowds for those who are known to predict, rightly or wrongly. Part is that the predictors are good speakers and writers. They are asked so often to do it, they glide across the stage like ballroom dancers.

I gave predictions another shot, this time at a smaller, more intimate event for customers of Atlantic Community Bankers' Bank. I aptly named it Predictapalooza. For a fun twist and to engage the audience, we handed out fake tomatoes for people to throw at me if they disagreed with my predictions. Spoiler: the biggest barrage came when I predicted that the dollar would no longer be the world's reserve currency.

Nobody has asked me to do Predictapalooza again. Maybe because I didn't say it with the certainty and authority that the predictors do. I delivered my predictions not with gravitas but with humor. I still have not figured out how the predictors can be so certain.

This makes it more difficult for bankers to predict the direction of their industry, their markets, and their bank. Go to a conference and you are told with high confidence that this thing or that thing will happen. And that bankers must do this or do that. I spoke with industry veteran Charles Potts about this recently. That the barrage of banking and fintech prognostications has made bankers so skeptical it is resulting in inaction, rather than measured action.

As advisors, bankers want to hear from us about the direction of the industry, and how other banks are successfully navigating the current and emerging environment. We owe it to them to be as knowledgeable as possible and apply that knowledge to our clients' situation. By no means, however, are we certain.

And I would be skeptical of anyone who claims they are.

So far the dollar remains the world's reserve currency. And by making US Treasuries the collateral behind stablecoins, the Genius Act will make my prediction even less likely.

~ Jeff

Bonus coverage: A great AI use case is to evaluate past predictions. I did so below regarding Payments, Branches, and Cryptocurrencies. Remember those bold predictions?

I also did a "where are they now" for Best of Show winners from Finovate in 2015. Ten years ago. Only four of the eight are active and operational. The other four have been either acquired or shut down. And these were the "best."

Predictions on Payments

Five-to-ten years ago (roughly 2015-2020), banking experts and industry reports made several key predictions about the future of payments. Many of these revolved around the rise of financial technology (FinTech) and digital transformation.

Here is a summary of some of those predictions, categorized as proven true or false:

 

Predictions That Have Proven Largely True

 

Prediction	Outcome & Current Reality	Source Examples (General)
Increased Disruption from FinTechs in Payments	FinTechs have significantly disrupted the payments sector, particularly with peer-to-peer (P2P) payments and non-bank money transfers, forcing traditional banks to adapt or partner.	PwC's Blurred lines: How FinTech is shaping Financial Services (2016); McKinsey's analysis of FinTech growth.
Growth of Mobile and Digital Wallets	Digital wallets have become the leading online payment method in many regions, and their adoption for in-person payments has also increased substantially, displacing cash.	Federal Reserve's Diary of Consumer Payment Choice; Worldpay's Global Payments Report series.
Decline in Cash Usage (at least in many economies)	Non-cash transactions, particularly electronic transactions, have continued to grow at a faster rate than overall payments revenue, indicating a clear move away from cash.	McKinsey's On the cusp of the next payments era; Capgemini's World Payments Report.
Momentum for Faster/Instant Payments	There has been a significant push and implementation of instant payment systems globally (e.g., the EU's SEPA Instant Credit Transfer, the US's FedNow, India's UPI). Consumers and businesses increasingly demand faster payments.	American Banker's 2015 Predictions Revisited (discusses momentum for a faster payments system); Treasury's The Future of Money and Payments.
Increased Focus on Customer Centricity	The FinTech revolution has driven banks and payments providers to focus intensely on improving the customer experience (convenience, accessibility, tailored products) to compete with tech-savvy new entrants.	PwC's Blurred lines: How FinTech is shaping Financial Services.

 

Predictions That Have Proven Largely False or Delayed

Prediction	Outcome & Current Reality	Source Examples (General)
Widespread Adoption of Blockchain/DLT for Core Payments	While Distributed Ledger Technology (DLT) and blockchain were heavily touted as the immediate future for core payment system infrastructure (especially cross-border), their widespread, day-to-day use for large-scale, primary payment systems has been slower than predicted. Instant payment systems (like FedNow and SEPA Instant) were often built on established rail upgrades, not DLT.	KPMG's 10 predictions for the future of payments (2020, still predicting DLT as the primary means); Bank for International Settlements (BIS) papers discussing DLT and central bank initiatives.
Disappearance of Cash in the U.S.	While cash usage has declined in the U.S. compared to its global counterparts, it has proven resilient, especially among certain demographics and for small-dollar transactions. The prediction of cash "plummeting" in the near term has not fully materialized.	Federal Reserve's Diary of Consumer Payment Choice (notes cash's resilient "floor of support" in North America); Forrester predictions cited in Payments Dive (often predicting a plummet that has not fully occurred).
Banks' Immediate Loss of Most of Their Payments Business	While FinTechs have captured market share, the prediction that a very large percentage of traditional banking's business would be lost to FinTechs by 2020 often overstated the pace. Banks have largely retained their core role by either modernizing, acquiring FinTechs, or forming partnerships.	PwC's Blurred lines: How FinTech is shaping Financial Services (2016, predicted "More than 20% of FS business is at risk to FinTechs by 2020").

---

Source Citation Note:

Sources for these predictions and outcomes are generally found in industry reports and analysis published by major consulting firms, such as McKinsey & Company, PwC, Capgemini, and KPMG, as well as reports from central banks and regulatory bodies like the Federal Reserve and the Bank for International Settlements (BIS).

• For a specific example of a prediction review: The American Banker article 2015 Predictions Revisited: What the Seers Got Right and Wrong is an example of an industry publication specifically tracking and reviewing past predictions.

• For a specific example of early predictions on disruption: PwC's Blurred lines: How FinTech is shaping Financial Services (2016) heavily emphasized the risk to incumbents and the disruption in payments by 2020.

• For a specific example of ongoing payment trends: The Federal Reserve's Diary of Consumer Payment Choice reports and other studies provide concrete data on shifts in cash vs. digital payments in the US.

 

Predictions on Branches 

This is a fascinating look back at the rapidly evolving banking landscape. Based on reports and analyses from the 2015-2020 period, banking experts made several predictions about the future of bank branches.

Here is a summary of expert predictions from five to ten years ago, categorized by what has proven generally true and what has proven generally false or more nuanced, along with representative sources.

---

 

Predictions That Have Proven Generally True

Prediction	Supporting Evidence in Practice (True)	Source Examples (2015-2020 Context)
Net Decline in Physical Branch Count	The overall number of physical bank branches in the U.S. has continued to decline year-over-year, with the rate of closures often increasing in the mid-to-late 2010s, and accelerating due to the pandemic.	A 2018 analysis noted a net loss of over 5,400 bank branches since 2012, with the closure rate nearly doubling between 2015 and 2018. The NCRC noted a loss of over 13,400 branches since 2008. (Self Financial, NCRC)
Shift from Transactional to Advisory Role	Branches are increasingly being repurposed from high-volume transaction centers (like teller lines) to centers for complex advice, sales, and relationship building (e.g., mortgages, wealth management).	A 2021 review noted that the move toward branches focusing on an "advisory focus" rather than a "transaction focus" was a confirmed trend in the industry. (The Financial Brand)
Increased Integration of In-Branch Technology	New and remodeled branches feature more self-service options, such as Interactive Teller Machines (ITMs) and digital signage, replacing some of the functions of traditional tellers.	Experts noted the acceleration of "migration of transactions to self-service... including leveraging interactive teller machines, or ITMs." (BAI via Coconut Software)
Reduced Branch Size and Optimized Footprint	Banks began reducing the square footage of new and remodeled branches to lower real estate costs, preferring smaller, more efficient, and strategically located sites.	Data shows that the average new branch location for the largest banks had decreased its square footage significantly (e.g., 46% reduction from 2000 to 2023 YTD), moving away from large strip-center or first-floor office branches. (Cushman & Wakefield, though the data extends past 2020, the trend started earlier).

---

 

Predictions That Have Proven Generally False or More Nuanced

Prediction	Supporting Evidence in Practice (False/Nuanced)	Source Examples (2015-2020 Context)
"The Death of the Branch" (Complete Extinction)	While closures have been significant, the prediction that all or nearly all U.S. branches would close by a near-term date (e.g., by 2030 or 2034) has not materialized.	Reports around 2020 and later surveys consistently show that a large majority of consumers (e.g., 94% in a 2020 study, 72% in a 2023 survey) still use a bank with physical branches, value having a nearby location, and prefer in-person for complex activities like loan selection or problem resolution. (WBR Insights/Coconut Software, TD Bank via The Financial Brand)
Massive Decline in Customer Reliance on Physical Banking	While digital use surged, the physical branch remains important for a substantial portion of the population and specific interactions.	Even with the rise of digital tools accelerated by the pandemic, a significant portion of consumers (e.g., 84% in a 2023 survey) reported visiting a branch in the past year, and many (41-52%) prefer in-branch interaction for complex issues or financial planning. (WBR Insights/Coconut Software, TD Bank via The Financial Brand)
Smaller Banks Will Quickly Disappear Due to Branch Costs	Community banks have shown greater resilience in performance than some predictions, leveraging their traditional relationship model.	A 2020 FDIC study noted that community banks proved resilient after the 2008 financial crisis, showing faster growth in return on assets, stronger asset quality, and higher loan growth rates relative to non-community banks in the 2012-2019 period. (FDIC)

---

Source Citations and Context

The predictions were often driven by the dual trends of increasing mobile adoption and the post-financial crisis need for banks to cut costs and consolidate, leading to a focus on "optimization."

• Net Decline & Branch Redefinition: The trend of bank closures and the re-imagining of the remaining branches into "advisory hubs" were commonly cited and have been consistently supported by FDIC data and industry analysis (e.g., Self Financial, NCRC, The Financial Brand).¹

• The "Death of the Branch" Narrative: While sensationalist predictions of near-term zero branches circulated, the persistence of consumer demand for physical locations for certain needs (especially advice and problem resolution) has demonstrated a more nuanced, "blended model" where digital and physical channels coexist (WBR Insights/Coconut Software, Cushman & Wakefield).

 

Predictions on Cryptocurrency 

During the period of approximately five to ten years ago (roughly 2015-2020), banking experts and financial authorities often expressed a mix of skepticism and cautious optimism regarding cryptocurrencies, particularly Bitcoin. Their predictions have played out in varied ways.

Here is a summary of some of the predictions that have proven true and those that have proven false, along with sources that reflect the sentiment of that era:

 

Predictions Proven True

Prediction	Outcome	Source Reference
Extreme Volatility and Speculative Bubble	Cryptocurrencies, especially Bitcoin, have demonstrated extreme price volatility with significant spikes and slumps, confirming their nature as highly speculative investments rather than stable currencies for exchange.	Bank for International Settlements (BIS) 2018; Brookings Institution (Prasad, 2021); European Central Bank (ECB) (2022)
Use in Illicit Activities	The anonymity offered by early cryptocurrency transactions made them the preferred medium for illicit activities, including fraud, scams, and ransomware payments.	Brookings Institution (Prasad, 2021); Chainalysis (cited in MDPI, 2023)
High Transaction Costs/Scalability Issues (for early Bitcoin)	As Bitcoin grew in popularity, issues like slow transaction times and high fees became prominent, making it cumbersome for daily use as a medium of exchange.	Brookings Institution (Prasad, 2021)
Importance of Underlying Blockchain Technology	While skeptical of the currency itself, many experts acknowledged that the underlying distributed ledger technology (DLT), or blockchain, was ingenious and had potential to transform payment services and financial settlement processes.	Bank for International Settlements (BIS) 2018; International Monetary Fund (IMF) (Lagarde, 2018)

 

Predictions Proven False or Partially False

Prediction	Outcome	Source Reference
Crypto will Go to Zero / It's a "Ponzi Scheme"	While some prominent figures predicted Bitcoin's value would crash to zero (e.g., Nobel laureate Eugene Fama's prediction), the overall cryptocurrency market cap has grown dramatically (reaching over $2.5 trillion in late 2021), and Bitcoin has established itself as a recognized, though volatile, asset class.	Chicago Booth (Fama, cited in Capitalisn't); MDPI (Prasad, 2021); ECB (2022)
Banks Will Be Displaced by Decentralized Systems	While there has been disruption, traditional banking and central banks have not been replaced. Instead, financial institutions have largely remained on the sidelines initially but are now increasingly exploring and adopting the underlying technology and, in some cases, offering crypto-related services. Central banks are also exploring Central Bank Digital Currencies (CBDCs).	Bank for International Settlements (BIS) 2018; Brookings Institution (Prasad, 2021); ECB (2022)
Lack of "Legitimacy" as a Financial Instrument	Initial skepticism labeled Bitcoin as merely a tool for money laundering. However, some major financial institutions and investors (like BlackRock's Larry Fink, who previously called it a money-laundering index) have since reversed their positions, calling it a "legitimate financial instrument" and seeking to incorporate it into mainstream finance (e.g., through ETFs).	Chicago Booth (Fink, cited in Capitalisn't)

Citations and Further Reading:

• Bank for International Settlements (BIS). V. Cryptocurrencies: looking beyond the hype. Annual Report 2018, Chapter V (Published in June 2018).¹ (Reflects expert caution on scalability, efficiency, and role as money.)

• Brookings Institution. Prasad, Eswar. Bitcoin: The brutal truths revealed. (Published June 16, 2021).² (Discusses volatility, illicit use, and scalability issues.)

• Chicago Booth / Capitalisn't. Why This Nobel Economist Thinks Bitcoin Is Going to Zero. (Published January 30, 2025 - but discusses prior Fama and Fink predictions from earlier years).³ (Cites early high-profile skepticism that proved largely false on the "zero" price point.)

• European Central Bank (ECB). Decrypting financial stability risks in crypto-asset markets. Financial Stability Review May 2022, Box B. (Reflects the view that crypto's size and complexity grew significantly since late 2020, and highlights high volatility.)⁴

• International Monetary Fund (IMF). Lagarde, Christine. The Future of Currency in a Digital World. Finance & Development, Vol. 55, No. 2. (Published June 2018). (Reflects a more measured expert view, advising to "keep an open mind... not only because of the risks they pose, but also because of their potential.")

 

Source: Google Gemini AI

 

Finovate Fall 2015 Best of Show 

Prompt: ### FinovateFall 2015 Best of Show Winners and Their Current Status (as of October 2025)

 

The FinovateFall 2015 conference, held September 15-16, 2015, in New York City, featured 70 live fintech demos. Attendees voted for the Best of Show winners based on innovation and demo quality. The eight winners were announced on September 17, 2015, in alphabetical order. Below is a table summarizing each company, a brief recap of their demoed technology, and their status today. Many have evolved, been acquired, or pivoted significantly over the past decade.

 

|---------------|---------------------------------------------------|-----------------------|

| **Blockstack.io** | Private, hosted blockchain platform for financial services and enterprises to build apps via APIs and SDKs. | Acquired by Digital Asset in 2015 for blockchain settlement tools; the original entity is no longer active. (Note: This is distinct from the later Stacks blockchain project, which rebranded from Blockstack in 2021.) |

| **Dyme**     | Text-messaging-based savings tool to help users build habits and fund goals in real-time. | Shut down; the San Francisco-based company (founded 2014) ceased operations after participating in accelerators like Bank Innovation INV. (A separate, unrelated Dutch fintech named Dyme, focused on AI savings apps, was acquired by RISK in 2024.) |

| **Dynamics** | Programmable payment cards with Stripe, EMV, and NFC interfaces for enhanced security and functionality. | Active and operational; headquartered in Pittsburgh, PA, it specializes in battery-powered interactive cards (e.g., Wallet Card™) and partners with Mastercard, JCB, and banks like Emirates NBD for connected payment solutions. |

| **Finanteq** | SuperWallet app integrating m-commerce, remote services, and mobile banking for banks. | Active; Polish fintech (Lublin-based, founded 2014) with 100+ employees, now part of eLeader Group. Offers mobile banking platforms, ranked among top Polish fintechs by Deloitte, and publishes on 2025 trends like BNPL and cybersecurity. |

| **Hedgeable** | Digital wealth management platform with active, gamified investing for millennials. | Shut down; New York-based robo-advisor (founded 2009, ~$80M AUM in 2018) terminated services and deregistered with the SEC in August 2018 to pivot toward blockchain tech via a spin-off (Hydrogen). |

| **HelloWallet** | Retirement Explorer tool for employees to model retirement outcomes and optimize benefits. | Active; Washington, DC-based (founded 2009), acquired by KeyBank (undisclosed date). Now a KeyBank company offering personalized financial guidance via app, integrated with employer benefits and partners like Vanguard. |

| **SaleMove** | Engagement platform with OmniCall for face-to-face-like live interactions between online consumers and businesses. | Active (rebranded); New York-based (founded 2008), rebranded to Glia in 2020. Provides unified customer interaction management (messaging, video, AI) for financial services, serving banks, credit unions, and insurers. |

| **Soundpays** | Ultrasonic/sonic waveform recognition for app-based engagement in noisy environments (e.g., payments/proximity marketing). | Active; Toronto-based (founded 2015), focuses on inaudible soundwave tech for real-time mobile engagement. Recent activations include Houston Texans NFL partnership and app launches like @The Lightshow for fan experiences. |

 

Source: Grok AI

The Death of the Community Bank

In June of 2008 I gave a speech titled "The Death of the Community Bank" and in that speech I made predictions. Recently I was cleaning out my files and I ran into the hard copy slide deck that accompanied the speech. 

If I ignore where I was wrong then I am as guilty of willy-nilly prognostications that I sometimes think industry pundits engage in. So, below is a list of predictions I made and if I was right or wrong, or somewhere in between.

Prediction: The General Bank will become extinct. Much like the General Store fell victim to the supermarket and the lumber yard fell victim to Home Depot, I predicted the community bank that did not pick targeted customer niches or develop product expertise will meet it's doom. The anecdote I used was how the Stephen's Island Wren was rendered extinct by a lightkeeper's house cat. That might be an exaggeration, as many feral cats feasted on the flightless bird as well. Much like competitors nip at community banks' customers. 

Result: Mixed. A mid-2020 survey performed by Cornerstone Advisors showed that 51% of retail customers that opened a new bank account within the last three months did so at a large, national bank. Eighteen percent of that group opened an account at a digital bank. Two percent opened an account at a community bank. When I made that speech in 2008, there were approximately 8,500 FDIC-insured financial institutions and today that is around 5,000, a 40% decline. However, last year's top 5 total return to shareholders post had two traditional community banks on that august list. So there are community banks that bring discernable value to their shareholders and other constituencies. They can have the operating discipline and service to their constituencies to earn their right to remain independent. And I had ING Direct as an example of who might be the lightkeeper's cat to the community bank. A bank that was purchased and is now, well, extinct.

Prediction: Community Banks with < $10 billion in total assets will continue to lose market share. Here was my chart to support the prediction...

It was a pretty alarming slide. 

Result: I was right. I ran the numbers again. Banks and savings banks with greater than $10 billion in total assets control 86% of all FDIC-insured assets and 85% of deposits for the most recent quarter. The days of getting in the ring and slugging it out for market share with other community banks are done. Strategies cannot ignore big banks any longer.

Prediction: Banks with < $500 million in total assets must have superior net interest margins (NIMs) to deliver financial performance. Here is the slide that accompanied the prediction...

Result: Mixed. Banks with less than $500 million in total assets delivered a 3.82% NIM at the median for 2019, while banks above that size was 3.67%. So smaller institutions continue to enjoy a NIM advantage, but not to the extent they did in 2007. And the ROA for <$500MM banks was 1.08% versus 1.22% for the rest in 2019. I used 2019 because of the NIM compression caused by PPP loans and the outsized impact that had on smaller institutions. And I did not filter for Sub S banks, so the ROA difference was probably greater. Having said that, the ROA difference was only 14 basis points. With a narrow advantage on NIM, size is a factor to drive down costs to elevate the performance of smaller banks to that of larger banks.

Prediction: Community banks must solve for the profitability of fee-based lines of business to generate superior results. Here is the slide I used to support the contention...

Result: Mixed. If I put a column in the above chart for third quarter 2019 fee based products profit contribution was -6%. This is from my firm's profitability outsourcing service, which is mostly community banks. In a low rate environment, deposits are less valuable and therefore less profitable. In terms of fees, community banks have not solved for making this a contributing element to their profit picture, yet they remain profitable. Imagine if they did operate fee-based lines of business profitably. That would be an ROA/ROE accelerator. 

Prediction: Senior management will migrate to being strategists, coaches, and leaders rather than tacticians. Here is the slide I used on how leadership should spend their time courtesy of The Breakthrough Company by Keith McFarland.

Result: I was wrong. Although I do not have statistics, only observation. I often hear the "day job" comment regarding strategy execution. In my view, senior managers spend their time more like the first line supervisors in the slide above rather than how the then CEO of Chico's suggest they should spend their time. Could this be a factor in how slow we've moved in adapting to customer needs? Are we spending more time solving for tactical issues rather than moving us closer to our aspirational future?

How do you spend your time?

But the big mea culpa is in the title of this post. As I write, community bankers across the country are helping struggling small businesses with PPP loans, much like they did in the spring to quickly distribute this critically needed funding jolt. In the words of FDIC Chair Jelena McWilliams, community banks were the economic first responders during the pandemic. So in terms of the Death of the Community Bank, I WAS WRONG.

And thankfully so. Let's work together to keep me wrong.

~ Jeff

Evolution of Banking: Three Slam Dunk Predictions

The sheer number of strategic initiatives and technologies in the banking industry makes it very difficult to predict outcomes with any certainty. Not that me or other industry pundits don’t try.

I have been noticing some trends that are providing insights on our direction, evolution, and ultimate picture of our future.

Future Picture was coined by the US Military for defining flight mission success, and was brought to business prominence in Air Force pilot James D. Murphy's 2005 book, Flawless Execution.  Using his example of envisioning what success would look like, a bank’s Future Picture should be a detailed description of successful execution of strategy. I challenge bankers’ to describe their Future Picture.

It can be highly subjective and difficult, particularly in an era of unprecedented change. But I would like to share three strategic directions where the train has either left the station, or is boarding.

1. Branches must be larger to survive. According to my firm’s profitability database, branches generated revenue (defined as consumer loan spreads, deposit spreads, and fees) as a percent of branch deposits of 3.50% in 2006. Today, that number is 2.08% due to the interest rate environment, the regulatory environment (reducing deposit fees), and customer behavioral changes. Therefore, the average deposit size of branches grew, to over $60 million at the end of 2015 (see chart). This trend is not likely to change, as bankers are more apt to prune their network and increase overall branch profitability. And the customer. Don’t forget them. They use branches less, although many still identify branch location as important to bank selection.

2.  Technology expenditures will grow faster than overall expenditures. I recently performed this analysis for a client, identifying the “Data Processing” expense as a percent of total operating expenses for all FDIC insured banks as identified in their call report. Surprisingly, it represented only 4% of total operating expense.  Note this excludes IT personnel expense. But the number is growing faster than overall operating expense (see chart), meaning that IT expense is becoming a larger proportion of operating expense. It is disappointing that this trend is slowing so banks can meet their budgets and profit objectives, regressing back to old habits of cutting IT projects to make budget. But overall, banks are seriously evaluating technology to improve efficiencies and their clients’ banking experience.

3.   Robotics are coming. It was only recently I began to believe this. But there are opportunities being evaluated and implemented to automate repetitive processes to reduce overall costs, minimize risk, and speed the process. A couple examples where automation and/or robotics are ripe to improve processes include reviewing remote deposit checks, currently eye-balled by humans. Not scalable. The x-point evaluation could more quickly and effectively be accomplished by a robot. Another area where automation is coming is BSA case evaluation, where the bank’s BSA application identifies potentially high-risk client activity and a program goes through several standardized checks to clear the case or elevate it for human intervention, reducing the overall number of cases needing human review.

These aren’t the only changes. Just the ones that I believe are coming, no matter who tries to stop them.

So why try to stop them?

~ Jeff