By Fred Johnson
The idea that uncertainty is the only certainty is almost a cliché. But it’s reinforced Sunday as I travel to CUES’ CEO Institute I at the University of Pennsylvania’s Wharton School in Philadelphia.
In what can only be described as a "Planes, Trains, and Automobiles" moment, I get a cab at the airport. The cab driver gets out, puts my bag in the trunk and gets in. I put my other carryon on the back seat and—standing outside with the back door still open—take off my sports jacket—only to have the driver pull away! I whistle; other cabbies yell. The cab stops after going about 100 feet, and other cabbies really give him "the business," offering me a bit of travel advice at the same time.
Ignoring their advice, I get in my cab and arrive at Wharton with 15 minutes to spare, well primed for the week’s theme: strategic planning and especially capitalizing on uncertainty.
On Monday, Richard Herring, finance professor and co-director of the Wharton Financial Institutions Center, is a hit with his presentation, “Changing Nature of the Financial Services Industry.” It covers four dominant trends:
- Competition for equity capital intensifies pressures for higher risk-adjusted returns.
- Technological advances heighten strategic uncertainty.
- Mergers and acquisitions reshape the competitive landscape.
- Regulation is increasingly risk-sensitive.
Dr. Herring says this is the “best of times” for insured commercial banks and trusts. Unlike credit unions, their ROAs are at an all-time high of 130 basis points, compared to an all-time low in 1989 of approximately 10.
“Bankers should be happy,” he says. “So why are they nervous? Because of a declining share of the financial sector from a share in 1952 of 47% to today’s 20%.”
CUES President/CEO
Read more from CEO Institute I.
