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Retail Banking - US - December 2009

This report examines the trends, opportunities and challenges faced by the US retail banking industry. Under continued pressure from unemployment, decreased housing prices, and tighter lending standards, the retail banking industry is still facing a world of change. Though President Obama and his team have made some progress towards working through the financial crisis and the recession is deemed by many to have ended, the financial industry still has a tough road ahead. The challenges that remain – as well as the opportunities that have begun to open up – are examined in this report.

Here are some of the main themes of the report:

  • The number of banks is decreasing in this country at the same time that assets are increasing. Banks are failing in record numbers; 123 have failed during 2009 as of November 14, as compared to 25 in all of 2008
  • Success in the banking industry will require the adoption and implementation of cutting-edge technology; between the online banking functionality that consumers are coming to expect and the expected explosion of interest in banking by mobile phone, banks that can position themselves as being technologically savvy and secure stand to do well in the future
  • Banks need to overcome the loss of customer trust experienced by all financial institutions over the past year. They can do this by changing their messages and becoming more attuned to their customers’ needs

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Advertising and promotions
            • Abbreviations and terms
              • Abbreviations
                • Terms
                  • Companies mentioned in this report
                  • Executive Summary

                    • Industry overview
                      • The economy is still a challenge
                        • Trust is still an issue
                          • Regulatory environment is going to change the revenue mix
                            • Technology is key
                              • Opportunities exist in segmented markets
                                • What consumers look for
                                • Insights and Opportunities

                                  • Key points
                                    • Building financial literacy
                                      • Mobile Banking
                                          • Figure 1: Growth of online banking customers, 2007-08
                                        • Integrated online money management tools
                                          • Mass affluents
                                            • Retirement planning
                                              • Figure 2: Sources of retirement planning assistance, by age, September 2009
                                              • Figure 3: Institutions people use to set up IRAs, September 2009
                                            • Dissatisfaction with banks is less than with other institutions
                                              • Figure 4: Percentage of customers who were “highly satisfied” with financial institutions, 2007-09
                                          • Inspire Insights

                                              • Trend: Transparency and Trust
                                                • Implications
                                                  • Trend: Location, location, location
                                                    • Implications
                                                      • Trend: Experience is All
                                                        • Implications
                                                        • Market Size and Forecast

                                                          • Key points
                                                            • The number of banks is shrinking
                                                              • Figure 5: Number of bank failures 1998-2008
                                                            • Assets of top organizations
                                                              • Figure 6: Top 25 U.S. banking institutions, by assets, as of December 2008
                                                          • Competitive Context

                                                            • Key points
                                                              • The economy is still fragile
                                                                • Credit crunch still limiting growth
                                                                  • New fee structures to begin
                                                                    • Brand image and customer service are most important to consumers
                                                                      • Customer loyalty and commitment continue their decline
                                                                      • Marketing Channels

                                                                        • Key points
                                                                          • Non-traditional marketing is increasing
                                                                            • Cross-selling with direct mail and email
                                                                            • Market Drivers

                                                                              • Key points
                                                                                • What will happen to TARP?
                                                                                  • FDIC Fund is underfunded
                                                                                    • New banking regulations on the way
                                                                                    • Leading Companies

                                                                                      • Key points
                                                                                        • Leading companies
                                                                                          • JPMorgan Chase
                                                                                            • Figure 7: JPMorgan Chase snapshot, as of 12/31/08
                                                                                            • Figure 8: JPMorgan Chase Historical Assets, YE 2005-YE 2008
                                                                                          • Bank of America
                                                                                            • Figure 9: Bank of America snapshot, as of 12/31/08
                                                                                            • Figure 10: Bank of America historical assets, YE 2005-YE 2008
                                                                                          • Citigroup
                                                                                            • Figure 11: Citigroup snapshot, as of 12/31/08
                                                                                            • Figure 12: Citicorp Historical Assets, YE 2005-YE 2008
                                                                                          • Wells Fargo/Wachovia
                                                                                            • Figure 13: Wells Fargo/Wachovia snapshot, as of 12/31/08
                                                                                            • Figure 14: Wells Fargo Historical Assets, YE 2005-YE 2008
                                                                                          • U.S. Bank
                                                                                            • Figure 15: U.S. Bank snapshot, as of 12/31/08
                                                                                            • Figure 16: U.S. Bank Historical Assets, YE 2005-YE 2008
                                                                                          • Bank of New York Mellon
                                                                                            • Figure 17: Bank of New York Mellon snapshot, as of 12/31/08 (except as noted)
                                                                                            • Figure 18: Bank of New York Mellon Historical assets, YE 2005-YE 2008
                                                                                          • SunTrust
                                                                                            • Figure 19: SunTrust snapshot, as of 12/31/08
                                                                                            • Figure 20: SunTrust Historical Assets, YE 2005-YE2008
                                                                                          • HSBC
                                                                                            • Figure 21: HSBC as of 12/31/08
                                                                                            • Figure 22: HSBC Historical assets, YE 2005-YE 2008
                                                                                          • State Street Bank and Trust
                                                                                            • Figure 23: State Street as of 12.31.08
                                                                                            • Figure 24: State Street Historical Assets, YE 2005-YE 2008
                                                                                          • Goldman Sachs
                                                                                            • Figure 25: Goldman Sachs as of 12/31/08
                                                                                            • Figure 26: Goldman Sachs Historical Assets, YE 2005-YE2008
                                                                                        • Innovation and Innovators

                                                                                          • Key points
                                                                                            • Technology is making banking even easier
                                                                                              • Contactless banking
                                                                                                • Biometric ATMs
                                                                                                  • iPhones as bank branches
                                                                                                    • PNC’s Virtual Wallet
                                                                                                    • Competitive Strategy – Heat Map

                                                                                                        • Age
                                                                                                          • Region
                                                                                                            • Income
                                                                                                              • Figure 27: Heat map of targeting strategies for banking competitors, by age, region and income, October 2009
                                                                                                          • Advertising and Promotion

                                                                                                            • Key points
                                                                                                              • Incentives for opening new accounts are quite popular
                                                                                                                • Focusing less on product, more on image
                                                                                                                  • Overview
                                                                                                                    • Print Ads
                                                                                                                      • HSBC
                                                                                                                        • Figure 28: HSBC print ad, 2009
                                                                                                                      • American Express
                                                                                                                        • Figure 29: American Express print ad, 2009
                                                                                                                      • Direct mail
                                                                                                                        • Citibank
                                                                                                                          • Figure 30: Citibank direct mail ad, 2009
                                                                                                                        • Key Bank
                                                                                                                          • Figure 31: Key Bank direct mail ad, 2009
                                                                                                                        • Independence Bank
                                                                                                                          • Figure 32: Independence Bank direct mail ad, 2009
                                                                                                                        • American Express
                                                                                                                          • Figure 33: American Express direct mail ad, 2009
                                                                                                                        • Chase
                                                                                                                          • Figure 34: JP Morgan Chase direct mail ad, 2009
                                                                                                                        • Email
                                                                                                                          • Chase
                                                                                                                            • Figure 35: Chase email ad, 2009
                                                                                                                          • Wells Fargo
                                                                                                                            • Figure 36: Wells Fargo email ad, 2009
                                                                                                                          • Broadcast ads
                                                                                                                            • PNC Bank
                                                                                                                              • Figure 37: PNC broadcast ad, 2009
                                                                                                                            • Ally Bank
                                                                                                                              • Figure 38: Ally Bank broadcast ad, 2009
                                                                                                                            • Bank of America
                                                                                                                              • Figure 39: Bank of America broadcast ad, 2009
                                                                                                                            • Citizens Bank
                                                                                                                              • Figure 40: Citizens Bank broadcast ad, 2009
                                                                                                                            • US Bank
                                                                                                                              • Figure 41: US Bank broadcast ad, 2009
                                                                                                                            • Chase
                                                                                                                              • Figure 42: JP Morgan Chase broadcast ad, 2009
                                                                                                                          • The Consumer

                                                                                                                            • Key points
                                                                                                                              • Bank penetration
                                                                                                                                • Figure 43: Bank penetration, by gender and age, September 2009
                                                                                                                                • Figure 44: Bank penetration, by household income, September 2009
                                                                                                                                • Figure 45: Bank penetration, by race/Hispanic origin, September 2009
                                                                                                                              • Where are they banking?
                                                                                                                                  • Figure 46: Where respondents are banking, by gender, September 2009
                                                                                                                                  • Figure 47: Where respondents are banking, by age, September 2009
                                                                                                                                  • Figure 48: Where respondents are banking, by race/Hispanic origin, September 2009
                                                                                                                                  • Figure 49: Where respondents are banking, by household income, September 2009
                                                                                                                                  • Figure 50: Where respondents are banking, by region, September 2009
                                                                                                                                • How they pay their bills
                                                                                                                                    • Figure 51: How bills are paid, August 2007, September 2009
                                                                                                                                    • Figure 52: How bills are paid by gender, August 2007, September 2009
                                                                                                                                    • Figure 53: How bills are paid, by age, August 2007, September 2009
                                                                                                                                    • Figure 54: How bills are paid, by race/Hispanic origin, August 2007, September 2009
                                                                                                                                    • Figure 55: How bills are paid, by age, September 2009
                                                                                                                                    • Figure 56: How bills are paid, by household income, September 2009
                                                                                                                                    • Figure 57: How bills are paid, by region, September 2009
                                                                                                                                  • How they communicate with their banks
                                                                                                                                      • Figure 58: How customers prefer to communicate with their banks, August 2007, June 2008, September 2009
                                                                                                                                      • Figure 59: How customers prefer to communicate with their banks, by gender, August 2007, September 2009
                                                                                                                                      • Figure 60: How customers prefer to communicate with their banks, by age, September 2009
                                                                                                                                      • Figure 61: How customers communicate with their banks, by race/Hispanic origin, September 2009
                                                                                                                                      • Figure 62: How customers communicate with their banks, by household income, September 2009
                                                                                                                                      • Figure 63: How customers communicate with their banks by region, September 2009
                                                                                                                                    • What features are important?
                                                                                                                                      • Figure 64: Important features in a bank, August 2007, September 2009
                                                                                                                                      • Figure 65: Important features in a bank by gender, August 2007, June 2008, September 2009
                                                                                                                                      • Figure 66: Important features in a bank, by race/Hispanic origin, August 2007, June 2008, September 2009
                                                                                                                                      • Figure 67: Important features in a bank, by gender, September 2009
                                                                                                                                      • Figure 68: Important features in a bank, by age, September 2009
                                                                                                                                      • Figure 69: Important features in a bank, by race/Hispanic origin, September 2009
                                                                                                                                      • Figure 70: Important features in a bank, by household income, September 2009
                                                                                                                                      • Figure 71: Important features in a bank, by region, September 2009
                                                                                                                                    • Switching to other banks or bank alternatives
                                                                                                                                      • Figure 72: Switching banks or using bank alternatives, August 2007, September 2009
                                                                                                                                      • Figure 73: Have conducted banking services at Walmart in past 12 months, by age, August 2007, September 2009
                                                                                                                                      • Figure 74: Have conducted banking services at Walmart in past 12 months, by household income, August 2007, September 2009
                                                                                                                                      • Figure 75: Would consider leaving their bank for Walmart if offered same services, by age, August 2007, September 2009
                                                                                                                                      • Figure 76: Would consider leaving their bank for Walmart if offered same services, by household income, August 2007, September 2009
                                                                                                                                      • Figure 77: Switching banks or using bank alternatives, by gender, September 2009
                                                                                                                                      • Figure 78: Switching banks or using bank alternatives, by age, September 2009
                                                                                                                                      • Figure 79: Switching banks or using bank alternatives by race/Hispanic origin, September 2009
                                                                                                                                      • Figure 80: Switching banks or using bank alternatives, by household income, September 2009
                                                                                                                                      • Figure 81: Switching banks or using bank alternatives, by region, September 2009
                                                                                                                                    • Attitudes towards consumers’ banking relationships
                                                                                                                                        • Figure 82: Attitudes towards consumer banking, June 2008, September 2009
                                                                                                                                        • Figure 83: Attitudes towards consumer banking, by gender, September 2009
                                                                                                                                        • Figure 84: Attitudes towards consumer banking, by age, September 2009
                                                                                                                                        • Figure 85: Attitudes towards consumer banking, by race/Hispanic origin, September 2009
                                                                                                                                        • Figure 86: Attitudes towards consumer banking, by household income, June 2008
                                                                                                                                        • Figure 87: Attitudes towards consumer banking, by household income, September 2009
                                                                                                                                        • Figure 88: attitudes towards consumer banking, by region, September 2009
                                                                                                                                      • Reasons why they consider switching
                                                                                                                                          • Figure 89: Reasons to consider switching, August 2007, June 2008, September 2009
                                                                                                                                          • Figure 90: Reasons to consider switching, by gender, September 2009
                                                                                                                                          • Figure 91: Reasons to consider switching, by age, September 2009
                                                                                                                                          • Figure 92: Reasons to consider switching, by race/Hispanic origin, September 2009
                                                                                                                                          • Figure 93: Reasons to consider switching, by household income, September 2009
                                                                                                                                          • Figure 94: Reasons to consider switching, by region, September 2009
                                                                                                                                        • Who banking consumers trust to be their advisors
                                                                                                                                          • Figure 95: Preference as to where financial activities are conducted, by type of vendor, September 2009
                                                                                                                                          • Figure 96: Preferred vendor for financial planning, by age, September 2009
                                                                                                                                          • Figure 97: Preferred vendor for financial planning, by household income, September 2009
                                                                                                                                          • Figure 98: Preferred vendor for retirement planning, by age, September 2009
                                                                                                                                          • Figure 99: Preferred vendor for retirement planning, by household income, September 2009
                                                                                                                                      • Cluster Analysis

                                                                                                                                          • Bank loyalists
                                                                                                                                            • Other transactors
                                                                                                                                              • Personal switchables
                                                                                                                                                • Credit unionists
                                                                                                                                                  • Characteristic tables
                                                                                                                                                    • Figure 100: Banking clusters, September 2009
                                                                                                                                                    • Figure 101: Preferred bill payment method, by banking clusters, September 2009
                                                                                                                                                    • Figure 102: Preferred communication with bank/credit union, by banking clusters, September 2009
                                                                                                                                                    • Figure 103: Attitudes and perceptions of banks, by banking clusters, September 2009
                                                                                                                                                    • Figure 104: reasons to potentially switch banks, by banking clusters, September 2009
                                                                                                                                                    • Figure 105: Preferred place to do business, by banking clusters, September 2009
                                                                                                                                                  • Demographic tables
                                                                                                                                                    • Figure 106: Banking clusters, by gender, September 2009
                                                                                                                                                    • Figure 107: Banking clusters, by age group, September 2009
                                                                                                                                                    • Figure 108: Banking clusters, by household income group, September 2009
                                                                                                                                                    • Figure 109: Banking clusters, by race, September 2009
                                                                                                                                                    • Figure 110: Banking clusters, by Hispanic origin, September 2009
                                                                                                                                                  • Cluster methodology
                                                                                                                                                  • Custom Consumer Groups

                                                                                                                                                    • Key points
                                                                                                                                                      • Bank account penetration
                                                                                                                                                        • Figure 111: Bank account penetration, by gender and age, September 2009
                                                                                                                                                        • Figure 112: Bank account penetration, by race/Hispanic origin and age, September 2009
                                                                                                                                                      • Online banking
                                                                                                                                                        • Figure 113: Method used for paying bills, by marital status and presence of children, September 2009
                                                                                                                                                        • Figure 114: Method used for paying bills, by gender and age, September 2009
                                                                                                                                                      • Communicating with their bank
                                                                                                                                                        • Figure 115: How they communicate with their bank, by gender and presence of children, September 2009
                                                                                                                                                        • Figure 116: How they communicate with their bank, by gender and age, September 2009
                                                                                                                                                      • Where people prefer to conduct business
                                                                                                                                                        • Figure 117: Where prefer to conduct financial planning business, by gender and age, September 2009
                                                                                                                                                        • Figure 118: Where prefer to conduct retirement planning business, by gender and age, September 2009
                                                                                                                                                        • Figure 119: Where prefer to set up iras, by gender and age, September 2009
                                                                                                                                                      • Who switches banks – and why
                                                                                                                                                        • Figure 120: Propensity to switch banks, by gender and household income, September 2009
                                                                                                                                                        • Figure 121: Reasons to consider switching banks, by gender and household income, September 2009
                                                                                                                                                        • Figure 122: Reasons to consider switching banks, by race/Hispanic origin and household income, September 2009
                                                                                                                                                    • Appendix: Trade Associations

                                                                                                                                                      Companies Covered

                                                                                                                                                      • American Express Company (The)
                                                                                                                                                      • Bank of America Corporation
                                                                                                                                                      • Bank of New York Mellon Corporation, The
                                                                                                                                                      • Barclays Bank Delaware
                                                                                                                                                      • BB&T Corporation
                                                                                                                                                      • Bear Stearns
                                                                                                                                                      • Capital One Financial Corporation
                                                                                                                                                      • Citibank
                                                                                                                                                      • Citigroup Inc.
                                                                                                                                                      • Citizens Financial Group, Inc.
                                                                                                                                                      • Consumer Bankers Association
                                                                                                                                                      • Countrywide Financial Corporation
                                                                                                                                                      • Facebook, Inc.
                                                                                                                                                      • Federal Deposit Insurance Corporation
                                                                                                                                                      • Federal Reserve System
                                                                                                                                                      • Fifth Third Bancorp
                                                                                                                                                      • First Direct
                                                                                                                                                      • Fiserv, Inc.
                                                                                                                                                      • Garmin International Inc.
                                                                                                                                                      • Goldman Sachs Group, Inc., The
                                                                                                                                                      • Greenfield Online
                                                                                                                                                      • HSBC North America Holdings Inc.
                                                                                                                                                      • ICMA Retirement Corporation
                                                                                                                                                      • Independent Community Bankers of America
                                                                                                                                                      • ING Group
                                                                                                                                                      • Intuit Inc.
                                                                                                                                                      • J.D. Power and Associates
                                                                                                                                                      • JPMorgan Chase & Co
                                                                                                                                                      • MasterCard Incorporated
                                                                                                                                                      • Mellon Financial Corporation
                                                                                                                                                      • Merrill Lynch & Co. Inc
                                                                                                                                                      • Mortgage Bankers Association (MBA)
                                                                                                                                                      • Northern Trust Corporation
                                                                                                                                                      • Royal Bank of Canada
                                                                                                                                                      • Starbucks Corporation
                                                                                                                                                      • State Street Corporation
                                                                                                                                                      • SunTrust Banks Inc.
                                                                                                                                                      • The American Bankers Association
                                                                                                                                                      • The Conference Board
                                                                                                                                                      • The New York Times Company
                                                                                                                                                      • The PNC Financial Services Group
                                                                                                                                                      • Toronto-Dominion Bank
                                                                                                                                                      • U.S. Bureau of Labor Statistics
                                                                                                                                                      • U.S. Securities and Exchange Commission
                                                                                                                                                      • USAA
                                                                                                                                                      • Wachovia Corporation
                                                                                                                                                      • Walmart Stores (USA)
                                                                                                                                                      • Washington Mutual Inc
                                                                                                                                                      • Wells Fargo & Company
                                                                                                                                                      • Zions Bank

                                                                                                                                                      Retail Banking - US - December 2009

                                                                                                                                                      £3,277.28 (Excl.Tax)