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Retail Banking and Credit Unions - US - February 2017

There are few industries that reach as many consumers across the US like financial services do. Nearly 100% of American consumers currently own some sort of financial account at a retail bank or credit union and are affected by the proliferation of financial technology, products, and trends. The total number of banks and credit unions has been declining but the number of accounts, credit union memberships, and overall deposits continues to rise. While the industry may change with technological developments, financial accounts remain an almost universal need.

This report examines the following issues:

  • Consumers slow to adopt mobile payment apps from banks
  • Interest in diversifying accounts could hurt FSI loyalty
  • Most do not use a credit card issued by their bank/credit union

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • The issues
            • Consumers slow to adopt mobile payment apps from banks
              • Figure 1: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
            • Interest in diversifying accounts could hurt FSI loyalty
              • Figure 2: Reason for bank switching, keeping accounts all in one FSI, November 2016
            • Most do not use a credit card issued by their bank/credit union
              • Figure 3: Use of bank-issued credit card, by age and gender, November 2016
            • The opportunities
              • Show benefit of enhanced technology with in-person interaction
                • Figure 4: Important features of primary financial institution, November 2016
              • Bridge gap between satisfaction and value
                • Figure 5: Satisfaction and appreciation of current financial institution, by generation, November 2016
              • What it means
              • The Market – What You Need to Know

                • Number of banks decline, but more branches are opening
                  • Credit union memberships increase
                    • Deposit numbers continue to rise
                      • Most consumers think their financial situation is “healthy” or “OK”
                      • Market Size

                        • Bank selection continues to dwindle…
                          • Figure 6: Number of FDIC-insured commercial institutions in US and other areas, 2005-15
                        • … while bank branches continue to multiply
                          • Figure 7: Number of FDIC-insured commercial branches in US and other areas, 2005-15
                        • Number of credit unions decrease, while membership increases
                          • Figure 8: Number of US credit unions, credit union members, and average savings deposits, 2005-15
                        • Deposits continue to increase across the banking market
                          • Deposits in US-chartered banks
                            • Figure 9: Deposits in domestically chartered commercial banks (not seasonally adjusted), 2005-14
                          • Savings deposits
                            • Figure 10: Total savings deposits at depository institutions (not seasonally adjusted), 2005-14
                        • Market Factors

                          • Most consumers think their financial situation is “healthy” or “OK”
                            • Figure 11: Consumer opinion about current financial situation, November 2016
                          • Consumer economic confidence continues to rise
                            • Figure 12: Consumer Sentiment Index, January 2007-September 2016
                          • Disposable personal income continues slight upward trajectory
                            • Figure 13: Disposable personal income change from previous period, January 2010-August 2016
                          • Consumers plan to save and pay off debts
                            • Figure 14: Anticipated changes in consumer spending, November 2016
                          • Personal saving rate remained relatively flat in 2016
                            • Figure 15: Personal saving rate, January 2010-November 2016
                        • Key Players – What You Need to Know

                          • Trust in financial services has increased, but there’s work to be done
                            • Interest in diversifying accounts could hurt FSI loyalty
                              • JPMorgan Chase sees success with investment in brick-and-mortar branches
                                • Artificial intelligence
                                • What’s Working?

                                  • JPMorgan Chase stands to increase profits with brick-and-mortar branches
                                    • Retail banks begin switching to contactless ATMs
                                      • Figure 16: Wells Fargo Mobile ATM access email, January 2017
                                    • Consumers and developers begin to welcome “open banking”
                                      • Trust in financial services has increased, but there’s work to be done
                                        • Figure 17: Trust in banking industry vs primary bank, October 2016
                                    • What’s Struggling?

                                      • Security remains a challenge as hackers target ATMs
                                        • Figure 18: Chase account email alert, December 2016
                                      • Consumers slow to adopt mobile payment apps from banks
                                        • Figure 19: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
                                      • Interest in diversifying accounts could hurt FSI loyalty
                                        • Figure 20: Reason for bank switching, keeping accounts all in one FSI, by age, November 2016
                                    • What’s Next?

                                      • Trump administration issues “regulatory freeze”
                                        • Innovators look to blockchain technology for interbank payments
                                          • Fifth Third to accept mobile payments from all five providers
                                            • Artificial intelligence
                                              • Banking and biometrics
                                                • Figure 21: TD Bank email, “Bank easy with Touch ID,” January 2017
                                            • The Consumer – What You Need to Know

                                              • Overwhelming majority of consumers have some sort of financial account
                                                • Security is the top priority for consumers
                                                  • Rates continue to be main choice driver
                                                    • FSIs may need to bridge the gap between satisfaction and appreciation
                                                    • Account Ownership

                                                      • Overwhelming majority of consumers have some sort of financial account
                                                        • Figure 22: Account ownership across any financial location, November 2016
                                                      • Black consumers less likely to have financial accounts
                                                        • Figure 23: Account ownership at any location, by race and Hispanic origin, November 2016
                                                      • Hispanic account ownership delineated along generational lines
                                                        • Figure 24: Account ownership at any location, by Hispanic origin and generation, November 2016
                                                    • Location of Accounts

                                                      • Consumers maintain most accounts at large national banks
                                                        • Figure 25: Account ownership across any bank locations, November 2016
                                                      • Fewer than 20% have accounts at credit unions
                                                        • Figure 26: Account ownership at credit unions, November 2016
                                                      • Younger consumers less likely to hold checking accounts at small or regional banks
                                                        • Figure 27: Checking account ownership at bank locations, by age, November 2016
                                                      • Less than one third have stayed with the same FSI for their entire financial history
                                                        • Figure 28: Incidence of maintaining account at same financial institution, by generation, November 2016
                                                    • Banking Behaviors

                                                      • Most do not use a credit card issued by their bank/credit union
                                                        • Figure 29: Use of a credit card from bank or credit union, by gender and age, November 2016
                                                        • Figure 30: Ally cashback credit card mailer, November 2016
                                                      • Investments may be entwined with bank accounts
                                                        • Figure 31: Investments kept separate from banking accounts, by age, November 2016
                                                      • Lack of understanding about how personal information is used
                                                        • Figure 32: Understanding of use of personal financial information, November 2016
                                                      • Most bank correspondence remains unread
                                                        • Figure 33: Likelihood to read correspondence from bank/credit union, November 2016
                                                      • Slow adoption of mobile wallets and P2P payment apps
                                                        • Figure 34: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
                                                        • Figure 35: Chase mobile app holiday promotion, December 2016
                                                        • Figure 36: USAA direct mail, ease of mobile banking, January 2017
                                                    • What Consumers are Looking for in an FSI

                                                      • Security is the top priority for consumers
                                                          • Figure 37: Top five attributes of primary financial institution, November 2016
                                                          • Figure 38: Consumers Credit Union email, reasons to download mobile app, January 2017
                                                          • Figure 39: Fifth Third welcome email, January 2017
                                                        • Most consumers don’t choose digital or mobile when considering appeal…
                                                          • Figure 40: Least important attributes of primary financial institution, November 2016
                                                        • … except for iGen and Millennial consumers
                                                          • Figure 41: Technological attributes of primary financial institution, by generation, November 2016
                                                        • Free checking is the “most essential” banking feature
                                                            • Figure 42: Important features of primary financial institution – free checking, debit card, and online bill pay, November 2016
                                                          • Free checking more important to older account holders
                                                            • Figure 43: Free checking as essential banking feature, by age, November 2016
                                                          • Convenient branch features a preferred part of the banking process
                                                              • Figure 44: Important features of primary financial institution – location and convenience, November 2016
                                                          • Understanding Bank Switching Behavior

                                                            • Rates continue to be main choice driver
                                                              • Figure 45: Top motivators to switch from primary financial institution, November 2016
                                                              • Figure 46: Ally Bank email, “Great rates, no branch required,” November 2016
                                                            • Parents are more motivated by rewards and personal service
                                                              • Figure 47: Switching for incentive or personal service, by presence of children in household, November 2016
                                                            • Women more likely to be affected by life events
                                                              • Figure 48: Bank switching due to life event, by age and gender, November 2016
                                                          • Attitudes toward the Financial Services Industry

                                                            • FSIs may need to bridge the gap between satisfaction and appreciation
                                                              • Figure 49: Satisfaction and appreciation of current financial institution, by generation, November 2016
                                                            • Credit unions slightly more trusted than banks
                                                              • Figure 50: Comparison of banks and credit unions, November 2016
                                                            • Lack of interest in personal financial management tools
                                                              • Figure 51: Interest in use of personal financial management tools, by age, November 2016
                                                            • Few agree that bank advisers are as knowledgeable as brokers
                                                              • Figure 52: Trust in knowledge of bank advisers, by Hispanic origin and generation, November 2016
                                                            • Online-only banks still struggle with security concerns
                                                              • Figure 53: Interest in use of personal financial management tools, by gender and age, November 2016
                                                          • Appendix – Data Sources and Abbreviations

                                                            • Data sources
                                                              • Consumer survey data
                                                                • Direct marketing creative
                                                                  • Abbreviations and terms
                                                                    • Abbreviations
                                                                      • Terms

                                                                      Companies Covered

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

                                                                      Retail Banking and Credit Unions - US - February 2017

                                                                      US $3,995.00 (Excl.Tax)