Was it just a coincidence or some kind of a 'karmic connection'? A giant 200 feet sinkhole appeared in Guatemala City last month. A few days later the Regulation II of the Dodd-Frank Amendment, slashing debit interchange fee by half, came into existence.
The debit interchange 'blow out' starts from Oct 1, 2011 for banks with more than $ 10 B in assets.
Retail bankers must have had the same feeling as the residents of Guatemala; a huge abyss which nobody knows how to fill!
The post 'great recession' era has been one of 'great regulations' in the US banking system. The CARD Act, Durbin, Dodd-Frank Amendment have all carpet bombed the retail banking landscape. Every bank's financial report is splattered with tens/hundreds of
millions of dollars in 'lost revenue'. While we still can't comprehend the exact numbers, it looks like the combined regulatory 'sinkhole' confronting the retail bankers adds up to $ 60 Billion.
Clearly, bank CEOs have to figure out how to address this enormous challenge in retail banking; after the relentless battering on Mortgage, Investment banking and credit losses they are still reeling under.
One school of thought feels that the 'easy revenues' from interchange on Credit/Debit cards, Overdraft fees, 'innovative fees' was too good to last. Now banks have to really prove they are worth existing and do add genuine value to the economic system.
The coming months will separate the cliched 'men from the boys'.
Disaster recovery time continues....