Survey: bankers support some Fed reforms, but not all
- Key insight: More than half of bankers in the survey supported the idea of the Federal Reserve considering a wider range of data when setting monetary policy. Reforming the central bank’s balance sheet is also fairly popular.
- Expert quote: “The idea that the Fed is going to communicate less, I think, would cause some level of anxiety about just how much less and whether that drop in communication results in banks not knowing things they otherwise would. It’s potentially a substantial change to the way things are, so it makes sense that some banks would look at that and say ‘Yeah, I don’t know about that at all.'” — Rob Blackwell, chief content officer, IntraFi Network.
- Forward Look: The survey highlights growing concerns in the industry about competition from stablecoins as well as a rosy outlook on the broader economy.
Bankers, by and large, support the idea of policy reform at the Federal Reserve, though opinions are mixed as to what those changes should look like.
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More than 80% of bank executives polled in a recent survey from the fintech firm IntraFi said they support some kind of policy reform at the central bank, but only one category of change garnered support for more than half of the participants.
The survey comes as newly minted Fed Chair Kevin Warsh moves forward with the “regime change” he promised to bring to the institution. Earlier this month, he announced the
Of the 402 bank leaders — most from community banks — polled in IntraFi’s
Other changes were less popular among the respondents. The Fed’s shift toward less giving less communication about the path and process for monetary policy only garnered support from 18% of respondents.
Rob Blackwell, chief content officer of the IntraFi Network, a reciprocal deposit company, said the broad aversion to reduced communication is logical and expected.
“The idea that the Fed is going to communicate less, I think, would cause some level of anxiety about just how much less and whether that drop in communication results in banks not knowing things they otherwise would,” Blackwell said. “It’s potentially a substantial change to the way things are, so it makes sense that some banks would look at that and say ‘Yeah, I don’t know about that at all.'”
Blackwell is the former editor-in-chief of American Banker.
The least popular option presented in the survey was whether the Fed should be more willing to cut interest rates in the face of rising inflation. Only 13% of bankers supported that idea.
In the months leading up to his confirmation to the Federal Reserve Board, Warsh had broadly made the case that a more accommodative stance of monetary policy would be appropriate. As a result, many market participants began underwriting lower interest rates. In April, roughly half of federal funds rate futures contracts priced in at least a 25 basis point reduction by the end of the year, according to the CME Group’s FedWatch tool.
Rising inflation from the
Bankers in the survey had a more sanguine outlook for the rate environment during the survey, with 55% expecting economic conditions to remain unchanged a year from now; the balance of respondents evenly split between those expecting improved economic conditions and those forecasting a deterioration. Overall, 68% said they expect no change to the federal funds rate before the end of the year, 29% expected a hike or two and 3% called for a cut.
The survey was conducted between June 30 and July 15, largely before the resurgence of military hostilities between the U.S. and Iran as well as the rollout of a new set of tariffs.
The survey results also showed rising concerns about emerging technologies and the adverse impact they could have on the banking sector. Specifically, 63% of participants said stablecoins are somewhat likely or very likely to impact bank
“When this issue was first coming up two years ago, I think there was a lot less concern about how stablecoin rewards would impact deposits,” Blackwell said. “Now that we’ve had an entire year since the GENIUS Act passed and now the CLARITY Act has happened, you can see that the anxiety has grown. This issue has become center stage.”
Such concerns trickled down to banker outlooks on deposit competition and overall funding cost expectations. Just under half of respondents said they have seen more competition for deposits during the past year, compared to just 6% that said they saw competition decline. This trend is expected to carry through to 2027, with 56% saying they anticipate even greater competition 12 months from now.
On the funding side, 45% of respondents said they expected costs to rise over the next year, despite the fact the same amount of respondents said funding costs were lower this year than last.
“The battle for deposits is real and has been for a while, and that just seems likely to be getting worse no matter what happens,” Blackwell said.
The survey also polled bankers for their view on the impact of AI tools on the banking industry. The area of greatest concern, according to 52% of respondents, was the potential for deposits and payments relationships to be shifted elsewhere by AI agents.
“If you ask Siri or Alexa to move your money, they can’t do that yet. What happens when you’re in a world where your AI agent can move money easily just by you asking it to, or just by typing in a simple query?” Blackwell said. “The risk there is that you, as a banker, are losing that deposit relationship.”
Other concerns in the survey were a loss of trust in bank advice at 21%, a loss of product cross-selling opportunities at 11% and a loss of fee income at 4%. Only 12% said AI posed very little risk or would mostly help banks.
