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Student loan payment resumption could shock unprepared borrowers: But it鈥檚 an opportunity for financial institutions to do some proactive outreach and strengthen their customer relationships.

$5 billion in student debt forgiveness will impact more than 70,000 borrowers, opening up an opportunity for advising them on new financial strategies.

Helping Gen Z save for retirement鈥攁nd navigate competing financial priorities such as student loans鈥攇ives banks an opportunity to form long-term relationships with young investors.

Record-high debt and record-high card interest rates are leading to missed payments

The Fed鈥檚 steep rate increases take their toll: Financial institutions are reporting the first drop in deposits in nearly three decades, and mortgage demand is flagging close to a 27-year low.

Arecession would put more than $200 billion in credit card issuer revenues at risk. Issuers must be fully prepared for weakened consumers hobbled by unemployment, depleted savings, and extra debt payments. And they should prepare for the toll that deteriorating credit card spending and loan risk could take on charge-off rates, merchant fee revenues, and interest income

Just as foretold, regulators raise long-term debt requirements for regional banks: To protect depositors in the event of a failure and bolster larger depositors鈥� confidence in these banks, they鈥檝e also effectively been deemed 鈥渢oo big to fail.鈥�

Travel and food propped up spending in Q1, but consumers are pulling back amid record-high credit card debt and inflation.

The total value of the transaction is $23.7 billion after accounting for debt and other liabilities, Walgreens said. The deal, which includes a 35-day window for Walgreens to solicit other offers, is expected to close in Q4 of this year. Catch up quick: Sycamore has discussed splitting Walgreens into three parts and selling or spinning off some of the company鈥檚 assets, per the Financial Times.

By the numbers: Credit card issuers wrote off $46 billion in seriously delinquent loans during the first nine months of 2024, a 50% jump from the same period in 2023, per BankRegData data reported by the Financial Times. Another $37 billion in consumer credit card debt was at least one month overdue.

While it promised to help with debt management, the app pushed Rogers toward extremely high-interest loans through third-party lenders.

Mortgage rates remain elevated. While the 30-year fixed rate inched down to an average of 6.96% last week, the first decline in six weeks, it鈥檚 still more than 330 basis points higher than before the pandemic, per Freddie Mac. Home prices keep shattering records. The median existing-home price jumped 6.0% YoY to a record $404,400.

Strong cardholder spending drove revenues, as did higher net interest income from revolving loan balances and card fees. Amex鈥檚 US consumer network volume increased 9% YoY, up from 7% growth in Q4 2023. Overall loan and card member receivables grew 9% YoY, compared to 13% last year. And net card fees climbed 19% YoY, versus 17% last year. What propelled card spend:.

As a result, some have had to take on debt to pay their bills, per CNN. Banks鈥� takeaways: If anything鈥檚 certain about the next four years, it鈥檚 that uncertainty will be the norm. With fluctuating markets and unpredictable tariffs, businesses and consumers alike are left searching for stability. This is where financial institutions (FIs) play a critical role.

But US outflow growth is slightly decelerating, likely due to shaky consumer financial health from factors like growing debt paired with record-high interest rates and depleted pandemic-era savings. The largest US remittance corridor is Mexico, followed by China, per the Federal Reserve. Click here to view our full forecast for US remittance outflow.

As the government issues more bonds to finance that spending, investors could demand higher yields, pushing mortgage rates higher. What about antitrust regulation? Retailers are preparing for looser oversight under the incoming Trump administration, which could unlock a wave of mergers and acquisitions in the retail industry.

But banks already do that: Fintechs like hawking stablecoins because, unless we return to the ZIRP days, stablecoins are money printers鈥攜ou give them $1, they give you a coin purportedly worth $1, and they buy interest-bearing Treasuries (or, if you鈥檙e Tether, maybe also sometimes corporate debt?). That鈥檚鈥� kind of how banking already works?

After a turbulent year of rising costs, weak loan demand, and tighter regulations, 2025 will test financial institutions (FIs) like never before. To adapt and thrive, they will reinvent themselves with bold strategies and innovation鈥攐r risk falling behind in an ever-evolving landscape. The BaaS compliance crackdown will shift market power to larger FIs.