Banks will cut branches, infrastructureThe industry is overcapitalized and has excess capacity. In order to get returns, you will see banks rationalize their infrastructure, whether it is consolidating or closing branches, or exiting markets. The outlook is margin pressure with low interest rates. Banks can’t really control that but they can control how many branches they operate.

—Peyton Green, senior research analyst, Sterne Agee & Leach

There will be more bank open platformsA few years ago payment companies (e.g. PayPal, MasterCard) started opening up their networks to independent [software] developers. Now, banks are also beginning to embrace the open platform idea. Credit Agricole, a large bank in France, opened an online app store, where its customers can download financial management apps developed by the bank and third parties, and propose new ideas. At Celent, we believe that bank open platforms and co-creation with customers will be important sources of innovation going forward.

—Zilvinas Bareisis, senior analyst, Celent

M&A will surpass regulatory concerns for directors and officers insuranceEver since the credit crisis, the single largest directors and officers insurance claims driver from both a frequency and severity standpoint has been suits and investigations from the FDIC or other regulatory bodies. From 2008 to 2010, mergers and acquisitions was the third largest measurable category. In 2013, we anticipate M&A related claims will surpass regulatory claims as the single largest claims driver.

—Dennis Gustafson, senior vice president, AH&T Insurance

Globalization will slow; new business models will emerge2013 will bring an interruption of secular trends likely to startle many—particularly the extent consolidation and globalization slow or even unravel. Look for: Unfreezing of securitization markets, with significant off-balance-sheet funding to optimize bank capital. Likely to have high impact: Increased differentiation, and emergence of meaningful new business models—perhaps even serving the unbanked (1 in 12) and underbanked (1 in 5) U.S. households.

—Ranu Dayal, senior partner, The Boston Consulting Group

M&A will pick upThe long-anticipated increase in M&A activity will finally occur. Unfortunately, the increase won’t come from voluntary transactions. Rather, it will come as indebted holding companies are forced to sell their bank subsidiaries as they reach the end of a 20-quarter trust preferred deferral period [many banks deferred dividends on trust preferred securities starting during the crisis in 2008], or [as banks] are unable to repay debt secured by the stock of their subsidiary banks.

—Joel Rappoport, partner, Kilpatrick Townsend & Stockton LLP

Boards will pay higher base salaries and less long-term stockCompeting pressure from bank regulators to eliminate risk and shareholder demands for pay/performance alignment will ultimately drive changes in executive compensation programs and practices over the next few years. For example, the Federal Reserve is pressuring the largest financial companies to significantly reduce upside in long-term plans. Stock options are out of favor with both regulators and Institutional Shareholder Services. The impact of these new perspectives and rules will result in revisions to the pay mix (e.g. increased salaries and/or incentive targets, greater focus on restricted stock).

—Susan O’Donnell, managing director, Pearl Meyer & Partners

There will be higher standards in 2013Heightened standards is the byword for 2013—that’s the direction coming from the global standard setters, and banks of all sizes will do well to pay attention. Visible independence of thought is more critical than ever – directors have to provide a credible challenge to the bank executive management team. It also means being proactive in setting the board agenda. Board reporting has to evolve beyond data dumps to clear, concise and timely information.

—Kathryn Dick, managing director, Promontory Financial Group

Banks will close branches, invest in electronic banking and consolidateThe significant deterioration in branch economics will reshape the landscape of banking in 2013. We estimate that the current level of interest rates and regulatory reductions in deposit fees has made a significant number of branches unprofitable. As a result, bank managers will accelerate the closing of branches, increase investments in electronic banking platforms and consolidate smaller banks.

—Fred Cannon, director of research, Keefe, Bruyette & Woods