This report builds on the analysis presented in Mintel's report Retail Banking—U.S., September 2008 and Retail Banking—U.S., December 2009, as well as previous Mintel reports on this subject. Insights include:
- The U.S. deposit business is large and growing. The fragile economy of the past several years has instilled in consumers a “New Frugal” attitude of saving more and spending less, boosting bank deposits.
- Banks have also been working hard to attract new deposits since the economic events of 2008 and 2009, as they have been rebuilding their balance sheets and have needed to gather assets to meet regulatory capital requirements. The competition for deposits has been fierce between the nearly 16,000 banks, thrifts and credit unions.
- At the same time, weakened demand and more critical underwriting requirements have reduced lending at banks, further swelling deposits. With interest rates at historically low levels, banks are paying relatively negligible amounts in interest to depositors, boosting net interest income to record levels.
- While the deposit business is growing in size, it may not be growing in profitability. New federal regulatory rules likely to take effect in the summer of 2010 will force many banks to reduce their penalty fees on account overdrafts, previously a significant contributor to revenues. And the proposed federal financial reform legislation will likely place further constraints on fee income overall.
- Banks are looking for new ways to increase revenues to make up for lost fees and attract new customers and hang onto old ones. But consumers are averse to paying annual fees for rewards programs as well as for things that have been offered for free in the past, such as online banking and bill payment.
- Many consumers currently have a negative attitude about banks and the banking system, which creates an opportunity for small, local banks and credit unions to attract new customers.