Attending S&P Global Market Intelligence’s Community Bankers Conference is always a treat, but it’s even sweeter when it’s your very first conference — as it was for me! As one of the newest additions to the Vertical IQ Customer Success team, I wasn’t certain what to expect from the trip, but these two days in Dallas, Texas, with our partners at S&P were jam-packed with valuable insight into the state of community banking, right from the bankers themselves.
It’s likely no surprise what topics were top of mind: inflation, rising interest rates, international and domestic political turbulence, and commercial real estate woes, to name a few. But one thing that stood out to me was the consistent use of one word: resilience. Throughout each session, there was a feeling of optimism about the outlook for future profitability, and this conference offered different ways that community banks can respond to the market forces that continue to reshape the industry.
The economy, the consumer, and the banking industry have all faced challenging circumstances in the past few years, yet somehow everything continues to persevere. Here’s what we learned about “Banking on the Possible” at this year’s conference.
The consumer is feeling the pinch
To avoid a recession, the US Federal Reserve has looked to ease benchmark interest rates this year if inflation subsides to policymakers’ long-term goal level. While the consumer has stayed resilient throughout the “soft landing,” rising interest rates have hit some populations harder than others.
The Fed’s effort to try to cool the post-pandemic economy without spiking unemployment or reigniting inflation has America’s struggling populations feeling the bulk of the strain. All of this serves as a reminder to community bankers that they need to keep a finger on the pulse of their communities and local economies, and that there’s always more to the headlines than meets the eye.
Concern for CRE
The ghost towns of unoccupied office space that we’ve seen since COVID have only seemed to grow. For instance, according to RetailStat, there were 3,000 fewer drug stores open for business at the start of 2024 compared with the same period in 2019.
But while the rise of online retailers and increased competition have pushed some businesses out, others have stayed put. Simon Property Group Inc., logged occupancy at its U.S. malls and premium outlets of 95.5% as of March 31, as well as increased rent per square foot. The reason? Chairman, CEO, and president David Simon attributes this growth to “resilient consumer spending.”
Simply put, commercial real estate (CRE) will continue to change, and we will continue to keep our eye on it. It’s also important for bankers to bear in mind that the economy starts and stops with the consumer.
International impacts
International factors are a high-flying red flag right now for the economy. Geopolitical turmoil creates ripples throughout the world, yielding not only societal impacts in the U.S., but also economic ones. Sizeable disruption internationally can move the inflation needle at home and also spell higher costs for international purchases.
The Fed, however, prides itself on autonomy from the U.S. federal government. Its focus is on long-term objectives, not short-term political goals. For this reason, t it’s presumed that the upcoming presidential election should not have dramatic economic impacts.
But keep in mind: Staying on top of these current events and providing your clients with meaningful economic knowledge can be a differentiator between being just a client’s banker or being a client’s trusted advisor.
It’s clear that the margin for error is slim for banks right now – which means you need the know-how and expertise to differentiate yourself. Industry Intelligence, enriched with powerful analytics from our partners at S&P, can give you the latest on local economic conditions, help you sustain enduring customer relationships, and future-proof your organization. See you next year!
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