Recent regulatory acts, coupled with continued changes in consumer behavior, are positioned to slice deeply into the profitability of U.S. banks-furthering the need to look for new profit streams. This places new emphasis on the age-old issue of cross-selling at banks in order to earn a larger share of consumers' wallets.

Nearly 90% of banking industry leaders noted over-regulation as the "biggest threat to their growth prospects," according to a new PricewaterhouseCoopers (PwC) survey. Dodd-Frank alone is set to restrict fees and increase compliance costs, potentially cutting profits by 12% over the next five years, says PwC. The CARD Act could also decrease the amount that financial institutions collect from interest and fees, further reducing income for large banks by $500 million to $1 billion, or for mid-tier banks, some $50 million to $100 million, notes PwC. "Some of the regulatory changes are impacting the profitability of banks," says Dave Hoffman, a partner with PwC and co-leader in the U.S. for the banking operations and technology group. "And that pressures banks on how they price and market their products."

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