Thanks to two major X factors -- the fiscal cliff and new bank capitalization standards -- 2013 could be the most eventful period for the banking industry since the crisis years of 2008 and 2009. Due to its historically low interest rates, the banking environment since the Great Recession has been kinder to borrowers than depositors. That could change in 2013, but not because savers are likely to see higher bank yields. Instead, borrowers may encounter their own tough spot as lending standards tighten, which could result from a number of events. Beyond this, several issues threaten to bring major changes to other realms of banking. Here are eight key things to watch.
1. The regulatory tightrope
U.S. banking regulators recently delayed implementing Basel III bank capital requirements, which were due to go into effect on January 1, 2013. These are international standards for the reserves that banks need to keep on hand to cushion themselves against market fluctuations. Higher reserves make the banking system safer, but they could also restrict the ability of banks to lend. How regulators walk this divide could have a profound effect on either the stability of banks or the availability of loans -- or both. Would-be borrowers take note: You might want to get your loan before new standards are put in place.
2. The online rate war
Bank rates generally have been falling, but online banks recently have bucked the trend by actively competing with one another to offer higher rates. Ally Bank, American Express and CIT Bank are all examples of online institutions offering savings account rates of around 1 percent. The MoneyRates America's Best Rates survey found that online bank rates turned upward in the third quarter of 2012, and if these banks continue to compete with one another, savers in these accounts could benefit from higher savings and money market rates in 2013.
3. The continued rise of fees
A slow business environment and more complex regulations are leading many banks to raise fees, and free checking is becoming more scarce, according to the latest MoneyRates.com Bank Fees Survey. For now though, online banks are a notable exception to the trend toward higher fees.
4. The widening gap between traditional and online banks
The reason online banks are able to offer higher rates and lower fees is that they have a significant cost advantage over traditional banks that support extensive branch systems. Nothing is going to change that financial reality in 2013, so expect the gap between traditional and online banks to continue to grow as online institutions move to press their advantage.
5. The expiration of unlimited NIBTA insurance
As part of the Dodd-Frank Act, unlimited insurance was temporarily provided for non-interest-bearing transaction accounts (NIBTAs), which includes most checking accounts. This unlimited insurance is set to expire at the end of 2012. This not only means that amounts above $250,000 in NIBTAs will no longer be covered, but also that such amounts will now be combined with savings and other accounts that the depositor has at the same bank for determining the insurance limit. This could cause some wealthy and business customers to do some redistribution of accounts in late 2012 or early 2013.
6. The march of consolidation
The acquisition of ING Direct by Capital One will become effective in 2013. While this is not your typical bank acquisition -- the combined entity is expected to be the fifth largest in deposits in the U.S. -- it is perhaps the poster child for a trend of consolidation that you can expect to see more of in 2013. Customers often don't like the changes that come when their bank is taken over, and some ING customers have protested the deal. However, with more than 7,000 FDIC-insured institutions trying to adapt to new business and regulatory realities, expect continued bank consolidation in 2013.
7. The disappearance of neighborhood branches
Even when banks don't merge, look for them to save money by cutting down on the number of branches. As electronic banking has gained traction, the scope of many branch systems has become obsolete. This type of fundamental business change can have sweeping effects. For example, beginning in the mid-1990s, the number of gasoline stations in the U.S. declined by 19 percent in just 13 years -- the result of tightening margins for station owners. Given that banking no longer has to be conducted in person, the reduction in the number of bank branches could follow an even steeper decline.
8. The ascent of fiscal policy
Forget Fed watching. The fiscal cliff is the No. 1 X factor for 2013. Averting a crisis could lead to a stronger economy and higher bank rates, while failure to do so could plunge the economy back into recession. All of this attention on fiscal policy may lead to a continued focused on government spending for the rest of the year. Change is the primary theme running through most of these issues, which signals that many banks may struggle to stick to a business-as-usual approach in the year ahead. That means that even customers who have been happy with their accounts for years may find themselves looking for a new bank in 2013.