How the election will impact 2021 payments strategy

Let’s begin by stating the obvious: This will not be a normal election season. As it has for so many aspects of everyday life, COVID-19 has radically altered the basics of voting—from a huge uptick in advance and absentee ballots to the near-elimination of traditional campaign rallies.

We know that markets hate uncertainty—and that’s one thing in ample supply these days. Uncertainty creates hesitancy to invest in initiatives that could be upended based on the election outcome. This is especially problematic in our current environment, with so many critical issues clamoring to be addressed.

While attempting to avoid the partisan fault lines, let’s consider how November’s election results could alter the payments landscape for banks and credit unions in 2021 and beyond.

In a Highly Regulated Industry, Regulation Matters

It seems clear that the coronavirus pandemic will prompt some form of legislative and/or regulatory action impacting financial services. Bear in mind that the Federal Reserve has already restricted dividend payouts and share buybacks for the nation’s largest banks in an effort to preserve capital. Recall also that the Dodd-Frank Act was passed in response to our last economic downturn. Some type of banking reform almost certainly would have been passed in 2009 even if the GOP had controlled Congress and the White House, but it might have looked quite different.

 

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