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Retail Banking - US - October 2012

“Retail banks are facing a lot of pressure right now. The economy, government regulators, and non-bank alternatives are all challenging their growth. However, there is a lot of opportunity out there for them, and they are gearing up to take advantage of it.”

– Robyn Kaiserman, Financial Services Analyst

Some questions answered in this report include:

  • How are banks seeking to make up revenue losses attributed to the costs of the Durbin Amendment?
  • What are the trends in mobile banking?
  • How are banks redefining their branch operations?
  • What is the most popular marketing strategy banks are currently employing?
  • How did Bank Transfer Day affect banks and credit unions?

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Table of contents

  1. Scope and Themes

      • What you need to know
        • Data sources
          • Consumer study data
            • Comperemedia
              • Abbreviations
                • Terms
                  • Companies mentioned in this report
                  • Executive Summary

                      • The market
                        • The number of banks continues to fall
                          • Figure 1: Number of FDIC-insured commercial banks and savings institutions, year- end, 2002-11
                        • Total assets and deposits show strong growth in the past decade
                          • Figure 2: Total assets of all banks, Q2 2007-Q2 2012
                        • The top four banks dominate the industry
                          • Figure 3: Assets of four largest banks, Q2 2012
                        • The industry is strengthening
                          • Where people bank
                            • Figure 4: Type of financial institution for primary banking relationship, all respondents, May 2012
                            • Figure 5: Type of financial institution for banking relationship, by race/Hispanic origin, May 2012
                          • Switching behavior is consistent across income groups
                            • Figure 6: Switching behavior and incidence of multiple accounts, by household income, May 2012
                          • Fees are now the main reason people switch
                            • Figure 7: Top reasons for switching banks, respondents who have switched in last three years, all respondents, any agree, May 2012
                          • Customers leave because of fees, but branch location is important
                            • Figure 8: Attitudes about banks and banking products and services, all respondents, any agree, May 2012
                          • Blacks and Hispanics most want comprehensive services
                            • Figure 9: Attitudes about banks and banking products and services, by race/Hispanic origin, any agree, May 2012
                          • The desirability of bank advisory services
                            • Figure 10: Attitudes about bank advisory services, all respondents, any agree, May 2012
                          • Online financial tools
                            • Figure 11: Usage of web-based financial management tools, by household income, May 2012
                          • Cluster analysis: Dissatisfied Bankers
                            • Opportunity
                              • Banks rethinking branch model
                                • Incentives are key to marketing strategies
                                  • The bank of the future
                                    • What we think
                                    • Issues in the Market

                                        • Pressures on the retail banking industry
                                          • Opportunities exist
                                            • Technology—and its management—are key
                                              • Customer-centrism is increasingly important
                                              • Insights and Opportunities

                                                  • Key points
                                                    • Conquering Big Data will increase profitability
                                                      • Mobile banking has room for growth
                                                        • Figure 12: Banking activities conducted on mobile phone in last year, mobile phone owners, November 2011
                                                      • More banks getting into prepaid card market
                                                        • Branch self-service will help differentiate banks
                                                          • Rethinking branch design
                                                            • Online tools and financial advice
                                                              • Figure 13: Usage of web-based financial management tools, by age, May 2012
                                                          • Trend Applications

                                                              • Trend: Extend My Brand
                                                                • Industry application
                                                                  • Trend: Boomerang Generation
                                                                    • Industry application
                                                                      • 2015 Trend—Access Anything
                                                                        • Industry implications
                                                                        • Market Size

                                                                          • Key points
                                                                            • The number of banks continues to fall
                                                                              • Figure 14: Number of FDIC-insured commercial banks and savings institutions, year- end, 2002-11
                                                                              • Figure 15: Assets of FDIC-insured commercial banks and savings institutions, year- end, 2002-11
                                                                              • Figure 16: Deposits held by FDIC-insured commercial banks and savings institutions, year-end, 2002-11
                                                                            • Credit unions are becoming more popular
                                                                              • Figure 17: Growth in number, membership, and assets of credit unions, 2002-11
                                                                          • Competitive Context

                                                                            • Key points
                                                                              • Big banks are dominating the industry more than ever
                                                                                • Figure 18: Asset market share of financial institutions, 1992, 2011
                                                                                • Figure 19: Assets of four largest banks, as of end of Q2 2012
                                                                              • Credit unions are getting big, but banks are still bigger
                                                                                • Figure 20: Credit union membership growth, 2002-11
                                                                                • Figure 21: Credit union deposit growth, June 2008-June 2012
                                                                                • Figure 22: Credit union asset growth trend, June 2008-June 2012
                                                                              • Branchless banks: wave of the future?
                                                                                • Big banks extending less credit and regional banks are stepping in
                                                                                • Segment Performance

                                                                                  • Key points
                                                                                    • Industry continues to show strength
                                                                                        • Figure 23: Net income and assets of all FDIC institutions, Q2 2007-Q2 2012
                                                                                        • Figure 24: Net income of top U.S. banks by deposits, Q2 2012 VS. Q2 2011
                                                                                        • Figure 25: Net income of top 10 U.S. banks by deposits, 2007-11
                                                                                      • Mortgages are helping lift the industry
                                                                                        • Figure 26: Mortgage origination estimates, Q1 2011-Q2 2012
                                                                                      • Bank failures continue, but fewer banks on Problem List
                                                                                        • Figure 27: Number of bank failures, 2004-12 (all as of June 30)
                                                                                        • Figure 28: Number of banks on FDIC Problem List, 2004-12
                                                                                      • Durbin regulations hampering revenue at the biggest banks
                                                                                        • Figure 29: change in interchange revenues for top public U.S. bank holding companies, Q4 2010-Q4 2011
                                                                                    • Marketing Channels

                                                                                      • Key points
                                                                                        • Banks doing more with email, less with direct mail
                                                                                          • Mobile banking is mentioned more often than ever
                                                                                            • Other channels
                                                                                              • Figure 30: Attitudes about banks and bank communications, by age, any agree, May 2012
                                                                                              • Figure 31: Attitudes about banks and bank communications, by household income, May 2012
                                                                                              • Figure 32: Attitudes about banks and bank communications, by race/Hispanic origin, May 2012
                                                                                            • Retail banks becoming more active in social media
                                                                                              • Figure 33: Percentage of users in each demographic group who use social networking sites, Jan.-Feb., 2012
                                                                                              • Figure 34: Attitudes about banks and social media, by age, May 2012
                                                                                            • The marketing mix continues to change
                                                                                              • Figure 35: Importance of channel in 2012, bank executive survey, January 2012
                                                                                            • Customers using branches less, self-service more
                                                                                              • Figure 36: Percentage of respondents who prefer to use a branch teller for transactions, 2006, 2011, 2012
                                                                                            • Branches are still important
                                                                                            • Market Drivers

                                                                                              • Key points
                                                                                                • Economic growth slower than expected
                                                                                                  • Figure 37: Quarter-to-quarter change in gross domestic product, Q1 2010-Q2 2012
                                                                                                  • Figure 38: U.S. Unemployment rate, June 2009-December 2012
                                                                                                  • Figure 39: Quarter-to-quarter change in total consumer spending, Q1 2010-Q2 2012
                                                                                                • New regulations continue to change the way banks do business
                                                                                                  • Growth in smartphone ownership
                                                                                                    • Figure 40: U.S. mobile phone unit sales, by segment, 2006-12
                                                                                                    • Figure 41: Smartphone ownership among American adults, May 2011- February 2012
                                                                                                  • Home sales are rising and more people need mortgages
                                                                                                      • Figure 42: Sales of new and existing homes, July 2011-July 2012
                                                                                                    • Refinance application volumes are at historic highs
                                                                                                      • Figure 43: Refinance application volume as a percentage of total mortgage application volume, December 2003–December 2011
                                                                                                      • Figure 44: Conventional conforming 30-year fixed-rate mortgage rates, annual average, 1978–2011
                                                                                                    • Increased fees are impacting customer loyalty
                                                                                                      • Figure 45: Reasons for switching banks for respondents who switched in last three years, May 2012
                                                                                                      • Figure 46: Average fees for banking services, Year-end 2011-Midyear 2012
                                                                                                  • Leading Companies

                                                                                                    • Key points
                                                                                                      • JPMorgan Chase largest bank by assets
                                                                                                        • Figure 47: Top 10 largest banks, by assets (Dec. 31, 2010; Dec. 31, 2011; June 30, 2012)
                                                                                                      • JPMorgan Chase overtakes Bank of America in deposits
                                                                                                        • Figure 48: Top 10 U.S. commercial banks by deposits as of March 31, 2012
                                                                                                      • Navy Federal Credit Union is the largest in deposits
                                                                                                        • Figure 49: Top 10 credit unions by deposits as of June 30, 2012
                                                                                                      • JPMorgan Chase
                                                                                                        • Bank of America
                                                                                                          • Wells Fargo
                                                                                                            • Citigroup
                                                                                                              • U.S. Bank
                                                                                                                • PNC Bank
                                                                                                                  • TD Bank
                                                                                                                    • SunTrust Bank
                                                                                                                      • Capital One
                                                                                                                        • Navy Federal Credit Union
                                                                                                                        • Brand Qualities

                                                                                                                          • Key points
                                                                                                                            • Banks still trying to rebuild reputations
                                                                                                                              • Convenience is a factor
                                                                                                                                • Figure 50: Chase direct mail advertisement, August 2012
                                                                                                                              • Banks increasingly want to be seen as environmentally friendly
                                                                                                                                • Figure 51: Capital One email advertisement, 2012
                                                                                                                            • Innovation and Innovators

                                                                                                                              • Key points
                                                                                                                                • C1 Bank
                                                                                                                                  • State Farm Bank
                                                                                                                                    • Citibank
                                                                                                                                      • Kasasa
                                                                                                                                        • Simple
                                                                                                                                          • Innovations in branch design
                                                                                                                                            • Acru
                                                                                                                                              • Figure 52: Interior of Acru Bank branch, July 2012
                                                                                                                                            • State Farm Bank
                                                                                                                                            • Marketing Strategies

                                                                                                                                              • Key points
                                                                                                                                                • Banks are increasing marketing focus on less traditional products
                                                                                                                                                  • Mobile banking is front and center
                                                                                                                                                    • Figure 53: ING email advertisement, April 2012
                                                                                                                                                  • Incentives are increasingly rich
                                                                                                                                                    • Figure 54: Chase direct mail advertisement, March 2012
                                                                                                                                                    • Figure 55: ING email advertisement, May 2012
                                                                                                                                                    • Figure 56: Capital One direct mail advertisement, June 2012
                                                                                                                                                  • Print advertising
                                                                                                                                                    • Figure 57: PNC print advertisement, August 2012
                                                                                                                                                    • Figure 58: TD Bank print advertisement, 2012
                                                                                                                                                    • Figure 59: Popular Community Bank print advertisement, August 2012
                                                                                                                                                  • Direct mail advertising
                                                                                                                                                    • Figure 60: Harris Bank direct mail advertisement, September 2012
                                                                                                                                                    • Figure 61: Capital One direct mail advertisement, September 2012
                                                                                                                                                    • Figure 62: KeyBank direct mail advertisement, May 2012
                                                                                                                                                    • Figure 63: Community Choice Credit Union direct mail advertisement, 2012
                                                                                                                                                  • Online and email advertising
                                                                                                                                                    • Figure 64: Bank of America Email advertisement, May 2012
                                                                                                                                                    • Figure 65: AARP MasterCard Email advertisement, August 2012
                                                                                                                                                    • Figure 66: Bank of America online advertisement, August 2012
                                                                                                                                                    • Figure 67: Wells Fargo email advertisement, August 2012
                                                                                                                                                  • Television and other advertising
                                                                                                                                                    • Chase Bank
                                                                                                                                                      • Ally Bank
                                                                                                                                                        • Capital One
                                                                                                                                                          • Wells Fargo
                                                                                                                                                            • Bank of America
                                                                                                                                                            • The Consumer—Type of Institution Preferred

                                                                                                                                                              • Key points
                                                                                                                                                                • Almost half bank at large banks
                                                                                                                                                                    • Figure 68: Type of financial institution for banking relationship, by gender, May 2012
                                                                                                                                                                    • Figure 69: Type of financial institution for banking relationship, by age, May 2012
                                                                                                                                                                    • Figure 70: Type of financial institution for banking relationship, by gender and age, May 2012
                                                                                                                                                                    • Figure 71: Type of financial institution for banking relationship, by household income, May 2012
                                                                                                                                                                    • Figure 72: Type of financial institution for banking relationship, by race/Hispanic origin, May 2012
                                                                                                                                                                • Banking-related Behaviors

                                                                                                                                                                  • Key point
                                                                                                                                                                    • Switching behavior and multiple accounts
                                                                                                                                                                      • Figure 73: Switching behavior and incidence of multiple accounts, by age, May 2012
                                                                                                                                                                      • Figure 74: Switching behavior and incidence of multiple accounts, by household income, May 2012
                                                                                                                                                                      • Figure 75: Switching behavior, incidence of multiple accounts, and usage of advisory services, by race/Hispanic origin, May 2012
                                                                                                                                                                  • Reasons for Switching Banks

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Fee sensitivity has increased
                                                                                                                                                                        • Figure 76: Reasons for switching banks, by gender, May 2012
                                                                                                                                                                        • Figure 77: Reasons for switching banks, by age, May 2012
                                                                                                                                                                    • Online Financial Tools

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Use of web-based financial management tools
                                                                                                                                                                          • Figure 78: Usage of web-based financial management tools, by gender, May 2012
                                                                                                                                                                          • Figure 79: Usage of web-based financial management tools, by age, May 2012
                                                                                                                                                                          • Figure 80: Usage of web-based financial management tools, by household income, May 2012
                                                                                                                                                                          • Figure 81: Usage of web-based financial management tools, by race/Hispanic origin, May 2012
                                                                                                                                                                        • Reasons for using web-based financial management tools
                                                                                                                                                                          • Figure 82: Reasons for using web-based financial management tools, by age, May 2012
                                                                                                                                                                          • Figure 83: Reasons for using web-based financial management tools, by household income, May 2012
                                                                                                                                                                          • Figure 84: Reasons for using web-based financial management tools, by race/Hispanic origin, May 2012
                                                                                                                                                                      • Attitudes toward Banking Products and Services

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Customers still think a convenient branch is important
                                                                                                                                                                            • Figure 85: Attitudes about banks and banking products and services, by gender, any agree, May 2012
                                                                                                                                                                            • Figure 86: Attitudes about banks and banking products and services, by age, any agree, May 2012
                                                                                                                                                                            • Figure 87: Attitudes about banks and banking products and services, by household income, any agree, May 2012
                                                                                                                                                                            • Figure 88: Attitudes about banks and banking products and services, by race/Hispanic origin, any agree, May 2012
                                                                                                                                                                        • Attitudes about Advisory Services

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Banks and bank communications
                                                                                                                                                                              • Figure 89: Attitudes about bank advisory services, by gender, any agree, May 2012
                                                                                                                                                                              • Figure 90: Attitudes about bank advisory services, by age, any agree, May 2012
                                                                                                                                                                              • Figure 91: Attitudes about bank advisory services, by household income, any agree, May 2012
                                                                                                                                                                              • Figure 92: Attitudes about bank advisory services, by race/Hispanic origin, any agree, May 2012
                                                                                                                                                                            • Usage of advisory services
                                                                                                                                                                              • Figure 93: Actual usage of advisory services, by age, May 2012
                                                                                                                                                                              • Figure 94: Actual usage of advisory services, by household income, May 2012
                                                                                                                                                                              • Figure 95: Actual usage of advisory services, by race/Hispanic origin, May 2012
                                                                                                                                                                          • Cluster Analysis

                                                                                                                                                                              • Young Switchers
                                                                                                                                                                                • Demographics
                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                      • Dissatisfied Bankers
                                                                                                                                                                                        • Demographics
                                                                                                                                                                                          • Characteristics
                                                                                                                                                                                            • Opportunity
                                                                                                                                                                                              • Bank Loyalists
                                                                                                                                                                                                • Demographics
                                                                                                                                                                                                  • Characteristics
                                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                                      • Cluster characteristic tables
                                                                                                                                                                                                        • Figure 96: Retail Bank clusters, May 2012
                                                                                                                                                                                                        • Figure 97: Type of financial institution for banking relationship, by target clusters, May 2012
                                                                                                                                                                                                        • Figure 98: Behaviors relating to bank products and services, by target clusters, May 2012
                                                                                                                                                                                                        • Figure 99: Reasons for switching banks, by target clusters, May 2012
                                                                                                                                                                                                        • Figure 100: Usage of web-based financial management tools, by target clusters, May 2012
                                                                                                                                                                                                        • Figure 101: Reasons for using web-based financial management tools, by target clusters, May 2012
                                                                                                                                                                                                        • Figure 102: Attitudes about banks and banking products and services, by target clusters, any agree, May 2012
                                                                                                                                                                                                        • Figure 103: Attitudes about bank advisory services, by target clusters, any agree, May 2012
                                                                                                                                                                                                      • Cluster demographic tables
                                                                                                                                                                                                        • Figure 104: Target clusters, by demographics, May 2012
                                                                                                                                                                                                      • Cluster methodology
                                                                                                                                                                                                      • Appendix—Trade Associations

                                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                                        • Bank of America Corporation
                                                                                                                                                                                                        • Bank of New York Mellon Corporation, The
                                                                                                                                                                                                        • BB&T Corporation
                                                                                                                                                                                                        • Capital One Financial Corporation
                                                                                                                                                                                                        • Citigroup Inc.
                                                                                                                                                                                                        • Countrywide Financial Corporation
                                                                                                                                                                                                        • Fifth Third Bancorp
                                                                                                                                                                                                        • General Motors Corporation
                                                                                                                                                                                                        • Goldman Sachs Group, Inc., The
                                                                                                                                                                                                        • Harris Bankcorp, Inc.
                                                                                                                                                                                                        • HSBC North America Holdings Inc.
                                                                                                                                                                                                        • ING Bank, fsb
                                                                                                                                                                                                        • JPMorgan Chase & Co
                                                                                                                                                                                                        • KeyCorp
                                                                                                                                                                                                        • Morgan Stanley
                                                                                                                                                                                                        • Navy Federal Credit Union
                                                                                                                                                                                                        • Regions Financial Corporation
                                                                                                                                                                                                        • Royal Bank of Canada
                                                                                                                                                                                                        • Royal Bank of Scotland Group plc
                                                                                                                                                                                                        • ShareBuilder Corp.
                                                                                                                                                                                                        • SunTrust Banks Inc.
                                                                                                                                                                                                        • The PNC Financial Services Group
                                                                                                                                                                                                        • Wachovia Corporation
                                                                                                                                                                                                        • Wells Fargo & Company

                                                                                                                                                                                                        Retail Banking - US - October 2012

                                                                                                                                                                                                        £3,199.84 (Excl.Tax)