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Innovations in Banking - US - November 2014

“Innovation comes in many forms, including products and services customers can see and internal changes that can improve operational efficiencies and profitability. While they may not be able to address everything at the same time, banks need to continue to push the innovation envelope, not only because that’s what their competitors are doing, but because it is what consumers want.”
– Robyn Kaiserman, Financial Services Analyst

This report answers the following key questions:

  • Where are the opportunities for innovation in the banking industry?
  • How can innovation help banks ensure the relevance of branches?

Banks are under pressure to innovate – or at least they feel like they are. Young consumers are demanding more mobile features and less traditional banking options are offering them to them. Banks are responding by offering their own mobile features and also introducing new innovations in areas such as branch design and communications. Some have become actively involved in training young people in financial literacy and have developed innovative educational initiatives that will not only produce better-educated customers but begin building a relationship young people will carry with them as they become adults.

While there seems to be little danger that established customers will leave their traditional banks, there may be real danger that nontraditional banking alternatives will attract their fair share of new young customers as they enter the banking world. This is the reason traditional banks need to be concerned and to continue to expand their technological and service offerings; if they don’t, they face the prospect of attracting fewer of the people they need for their future customer base.

This report builds on the analysis presented in Mintel’s Retail Banks and Credit Unions – US, February 2014 and Payments – US, October 2014 reports.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Direct marketing creative
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                    • Market drivers
                      • The number of young people is growing
                        • Figure 1: US population growth, 2009, 2014, 2019, by generation
                      • Growth of mobile technology ownership
                        • Banks are closing branches
                          • Figure 2: Number of offices (including branches) of FDIC-insured savings and commercial banks, June 30, 2005-14
                        • Leaders
                          • Online-only banks
                            • Mobile banks
                              • Branch innovators
                                • Communication innovation
                                  • The consumer
                                    • The majority of consumers still use a traditional bank for their checking accounts…
                                      • Figure 3: Checking account ownership, by age, September 2014
                                    • …and savings accounts
                                      • Figure 4: Savings account ownership, by age, September 2014
                                    • Mobile banking apps appeal more to men than to women
                                      • Figure 5: Downloaded mobile app, by gender, September 2014
                                    • Most people want more security
                                      • Figure 6: Interest in banking products/services, September 2014
                                    • Innovation may win young customers
                                      • Figure 7: Attitudes toward banking innovations, by age, September 2014
                                    • What we think
                                    • Issues and Implications

                                        • Where are the opportunities for innovation in the banking industry?
                                          • Issues
                                            • Implications
                                              • How can innovation help banks ensure the relevance of branches?
                                                • Issues
                                                  • Implications
                                                  • Trend Application

                                                      • Inspire Trend: Transumers
                                                        • Inspire Trend: Click and Connect
                                                        • Market Drivers

                                                          • Key points
                                                            • Number of young people is increasing
                                                              • Figure 8: US population by generation, 2009, 2014, 2019
                                                            • Growth of mobile technology ownership
                                                              • Banks are closing branches
                                                                • Figure 9: Number of offices (including branches) of FDIC-insured savings and commercial banks, June 30, 2005-14
                                                            • Competitive Context

                                                              • Key points
                                                                • Nontraditional bank options
                                                                  • Online-only banks
                                                                    • Capital One 360
                                                                      • Ally Bank
                                                                        • Mobile banks
                                                                          • Simple
                                                                            • Moven
                                                                              • Walmart/GoBank
                                                                              • Customer Satisfaction with Innovation

                                                                                • Key point
                                                                                  • Banks are already meeting many needs
                                                                                    • Most people are satisfied with what their bank provides
                                                                                    • Innovations and Innovators

                                                                                      • Key points
                                                                                        • Mobile bill pay
                                                                                          • Figure 10: US Bank mobile bill pay online ad, 2013
                                                                                          • Figure 11: US Bank electronic bill pay direct mail ad, 2013
                                                                                          • Figure 12: US Bank mobile bill pay email ad, 2013
                                                                                        • Umpqua Bank’s branch design
                                                                                          • Checkless checking accounts
                                                                                            • Innovative partnership with Apple
                                                                                              • Apple Pay marketing
                                                                                                • Figure 13: Bank of America Apple Pay email, 2014
                                                                                                • Figure 14: Wells Fargo Apple Pay email, 2014
                                                                                                • Figure 15: Citibank Apple Pay email, 2014
                                                                                              • Innovations in financial literacy education
                                                                                                • Union Bank Yuby
                                                                                                  • BBVA Compass
                                                                                                    • Bank of America
                                                                                                      • Figure 16: Bank of America/Khan Academy television commercial
                                                                                                    • TD Bank WOW!Zone
                                                                                                      • Capital One
                                                                                                      • Marketing Strategies

                                                                                                        • Overview
                                                                                                          • Ally Bank
                                                                                                            • Figure 17: Brand analysis: Ally Bank
                                                                                                          • Online initiatives
                                                                                                              • Figure 18: Ally Bank Discovering Retirement video
                                                                                                              • Figure 19: Ally Bank “Behind the Scenes with Kiplinger: Building Wealth the Old-Fashioned Way” video
                                                                                                            • Online ads
                                                                                                              • Figure 20: Ally Bank savings account online ad, 2014
                                                                                                              • Figure 21: Ally Bank online customer service ad, 2014
                                                                                                            • Mobile
                                                                                                              • Figure 22: Ally Bank No Branch Mobile ad, 2014
                                                                                                            • Direct mail
                                                                                                              • Figure 23: Ally Bank Raise Your Rate CD direct mail ad, 2013
                                                                                                            • Email
                                                                                                              • Figure 24: Ally Bank savings account email, 2014
                                                                                                            • Print
                                                                                                              • Figure 25: Ally Bank branding print ad, 2014
                                                                                                            • Television
                                                                                                              • Figure 26: Ally Bank New Things television ad, 2014
                                                                                                              • Figure 27: Ally Bank Raise Your Rate CD television ad, 2014
                                                                                                            • Capital One 360
                                                                                                              • Figure 28: Brand Analysis: Capital One 360
                                                                                                            • Online initiatives
                                                                                                                • Figure 29: Capital One 360 checking account video
                                                                                                                • Figure 30: Capital One 360 “How to do Person2Person transfers” video
                                                                                                              • Online ads
                                                                                                                • Figure 31: Capital One 360 Fee-Free Party Online ad, 2013
                                                                                                              • Mobile
                                                                                                                • Figure 32: Capital One mobile deposit mobile ad, 2013
                                                                                                                • Figure 33: Capital One 360 savings account mobile ad, 2013
                                                                                                              • Direct mail
                                                                                                                • Figure 34: Capital One 360 checking account direct mail ad, 2013
                                                                                                            • Account Ownership

                                                                                                              • Key points
                                                                                                                • Any account owned
                                                                                                                  • Figure 35: Account ownership, any type, September 2014
                                                                                                                • Checking account ownership
                                                                                                                  • Traditional banks still control the checking account market
                                                                                                                    • Figure 36: Checking account ownership, by gender, September 2014
                                                                                                                  • Online-only banks are most popular nontraditional option
                                                                                                                    • Figure 37: Checking account ownership, by age, September 2014
                                                                                                                  • Almost all with highest income use traditional banks
                                                                                                                    • Figure 38: Checking account ownership, by household income, September 2014
                                                                                                                  • Asians are less likely than others to use a credit union
                                                                                                                    • Figure 39: Checking account ownership, by race/Hispanic origin, September 2014
                                                                                                                  • Savings account ownership
                                                                                                                    • More people use alternatives for savings accounts
                                                                                                                      • Figure 40: Savings account ownership, by gender, September 2014
                                                                                                                    • One quarter of 55+ use credit unions for their savings
                                                                                                                      • Figure 41: Savings account ownership, by age, September 2014
                                                                                                                    • Credit unions and online-only banks are equally attractive to those with higher household incomes
                                                                                                                      • Figure 42: Savings account ownership, by household income, September 2014
                                                                                                                    • Hispanics are more likely than non-Hispanics to use less traditional options for savings accounts
                                                                                                                      • Figure 43: Savings account ownership, by race/Hispanic origin, September 2014
                                                                                                                  • Type of Product Owned

                                                                                                                    • Key points
                                                                                                                      • Men are more likely to own a variety of financial products
                                                                                                                        • Figure 44: Type of product owned, by gender, September 2014
                                                                                                                      • Owning financial products competes with other priorities
                                                                                                                        • Figure 45: Type of product owned, by age, September 2014
                                                                                                                    • Mobile App Downloaded

                                                                                                                      • Key points
                                                                                                                        • Men use mobile banking apps far more than do women
                                                                                                                          • Figure 46: Downloaded mobile app, by gender, September 2014
                                                                                                                        • Millennials are much more likely to have mobile banking apps on phones than on tablets
                                                                                                                          • Figure 47: Downloaded mobile app, by generation, September 2014
                                                                                                                        • Use of mobile phone apps decreases after household income reaches $100K
                                                                                                                          • Figure 48: Downloaded mobile app, by household income, September 2014
                                                                                                                      • Interest in Banking Products and Services

                                                                                                                        • Key points
                                                                                                                          • Security is of most concern
                                                                                                                            • Figure 49: Interest in banking products/services, September 2014
                                                                                                                          • Already use
                                                                                                                            • Men use more services than women
                                                                                                                              • Figure 50: Interest in banking products/services – Already use, by gender, September 2014
                                                                                                                            • Millennials are the target market
                                                                                                                              • Figure 51: Interest in banking products/services – Already use, by age, September 2014
                                                                                                                            • Higher-income households use more features
                                                                                                                              • Figure 52: Interest in banking products/services – Already use, by household income, September 2014
                                                                                                                            • Don’t use but would be interested in using
                                                                                                                              • Men want it to be easier to connect with their bank
                                                                                                                                • Figure 53: Interest in banking products/services – Don’t use but would be interested in using, by gender, September 2014
                                                                                                                              • There is more opportunity among younger consumers
                                                                                                                                • Figure 54: Interest in banking products/services – Don’t use but would be interested in using, by age, September 2014
                                                                                                                              • Interest in new features
                                                                                                                                • Interest is highest among those with checking accounts at alternative banks
                                                                                                                                  • Figure 55: Interest in banking products/services – Any interested, by checking account ownership, September 2014
                                                                                                                                  • Figure 56: Interest in banking products/services – Any interested, by checking account ownership, September 2014
                                                                                                                                • The pattern is similar for savings accounts
                                                                                                                                  • Figure 57: Interest in banking products/services – Any interested, by savings account ownership, September 2014
                                                                                                                                  • Figure 58: Interest in banking products/services – Any interested, by savings account ownership, September 2014
                                                                                                                                • Qualitative interest
                                                                                                                                  • Responses about security-based innovations (A and C):
                                                                                                                                    • Responses about advanced banking activities (B):
                                                                                                                                      • Responses about using branch-based technology (D):
                                                                                                                                      • Attitudes toward Banking Innovations

                                                                                                                                        • Key points
                                                                                                                                          • Half do most banking online
                                                                                                                                            • Figure 59: Attitudes toward banking innovations, by gender, September 2014
                                                                                                                                          • Innovation may win young customers
                                                                                                                                            • Figure 60: Attitudes toward banking innovations, by age, September 2014
                                                                                                                                        • Comfort Using New Products and Services

                                                                                                                                          • Key points
                                                                                                                                            • Women may need to try new features before they are comfortable
                                                                                                                                              • Figure 61: How comfortable using new products/services – Any comfortable, by gender, September 2014
                                                                                                                                            • Millennials are most comfortable with advanced ATMs
                                                                                                                                              • Figure 62: How comfortable using new products/services – Any comfortable, by age, September 2014
                                                                                                                                          • Appendix – Other Useful Consumer Tables

                                                                                                                                            • Checking account ownership
                                                                                                                                              • Figure 63: Checking account ownership, by generations, September 2014
                                                                                                                                            • Savings account ownership
                                                                                                                                              • Figure 64: Savings account ownership, by generations, September 2014
                                                                                                                                            • Type of product owned
                                                                                                                                              • Figure 65: Type of product owned, by household income, September 2014
                                                                                                                                              • Figure 66: Type of product owned, by race/Hispanic origin, September 2014
                                                                                                                                            • Mobile app downloaded
                                                                                                                                              • Figure 67: Downloaded mobile app, by age, September 2014
                                                                                                                                              • Figure 68: Downloaded mobile app, by gender and age, September 2014
                                                                                                                                              • Figure 69: Downloaded mobile app, by race/Hispanic origin, September 2014
                                                                                                                                              • Figure 70: Downloaded mobile app, by household size, September 2014
                                                                                                                                            • Interest in banking products and services
                                                                                                                                              • Any interest
                                                                                                                                                • Figure 71: Interest in banking products/services – Any interested, by gender, September 2014
                                                                                                                                                • Figure 72: Interest in banking products/services – Any interested, by age, September 2014
                                                                                                                                                • Figure 73: Interest in banking products/services – Any interested, by gender and age, September 2014
                                                                                                                                                • Figure 74: Interest in banking products/services – Any interested, by household income, September 2014
                                                                                                                                                • Figure 75: Interest in banking products/services – Any interested, by race/Hispanic origin, September 2014
                                                                                                                                              • Already use
                                                                                                                                                • Figure 76: Interest in banking products/services – Already use, by race/Hispanic origin, September 2014
                                                                                                                                                • Figure 77: Interest in banking products/services – Already use, by generations, September 2014
                                                                                                                                              • Don’t use but would be interested in using
                                                                                                                                                • Figure 78: Interest in banking products/services – Don’t use but would be interested in using, by household income, September 2014
                                                                                                                                                • Figure 79: Interest in banking products/services – Don’t use but would be interested in using, by generations, September 2014
                                                                                                                                              • Attitude toward banking innovation
                                                                                                                                                • Figure 80: Attitudes toward banking innovations, by household income, September 2014
                                                                                                                                              • How comfortable using new products and services
                                                                                                                                                • Figure 81: How comfortable using new products/services – Any comfortable, by household income, September 2014
                                                                                                                                                • Figure 82: How comfortable using new products/services – Any comfortable, by race/Hispanic origin, September 2014
                                                                                                                                                • Figure 83: How comfortable using new products/services – Any comfortable, by household size, September 2014
                                                                                                                                            • Appendix – Trade Associations

                                                                                                                                              Companies Covered

                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                              Innovations in Banking - US - November 2014

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