Understand the current market and opportunities within the US banking industry with the Banking Experience Market Report. Featuring analysis, statistics, and expert recommendations, our report provides valuable insight into the US digital banking market, US commercial banking market size, and consumer trends and behaviors. Read on to discover more about our insights.
US Banking Industry – Market Outlook
The Federal Reserve’s aggressive tightening cycle has been a double-edged sword for the financial providers market. High-yield savings offerings have been a hit with customers seeking a safe haven for their money, but also one that guarantees satisfactory returns.
On the other hand, the US banking industry’s lending arms, especially their mortgage businesses, have not performed as well given that consumers are finding the prospects of borrowing increasingly costlier. As such, the battle for deposits will remain heated for the year ahead. In an increasingly competitive landscape, customer attrition remains a risk. However, Mintel’s market analysis has found that financial institutions have the tools at their disposal to ensure healthy consumer retention levels while continuing to seek growth.
- US commercial banking market size: The total number of US banks has fallen every year since 2008, down to an estimated 4,746 as of 2022.
Current Market Challenges and Consumer Behavior
Inflation and high interest rates have had a significant impact on the behavior of banking customers. In times of economic uncertainty, consumers are more likely to weigh their options and seek maximum value from their financial products, even if it comes from multiple providers.
- US banking consumer behavior: Bank customers remain incentive-driven, with 70% willing to sign up for a new bank account if the incentive is appealing enough.
- Banking industry consumer attitudes: Nearly half of consumers cited strong customer service as the most important factor when choosing a new financial services provider.
- US banking market challenges: 68% of consumers want support and financial advice from their banks, yet just 45% have received it.
- US banking market segmentation: While commercial banks lead in usage for most consumers, online-only banks and neobanks are most popular among financially struggling consumers, given digital FIs’ focus on fee-free banking.
US Banking Market Opportunities
Banks still have gaps to fill when it comes to engaging their customers with the financial advice and support they need, but they should make financial advice a priority to ensure that those that need support the most get it. Just 7% of financially struggling consumers report using their bank’s financial advisor, compared to 18% of financially healthy consumers.
While much has been made of the death of the physical branch, banks still have the opportunity to transform the in-branch experience to be more consultative and financial wellness driven, make visits more inclusive and welcoming in messaging, and support financially struggling customers yearning to improve their situations.
Read on to discover more about the Banking Experience Market Report, read our Digital Banking Market Report, or take a look at our other Financial Services Market Research.
Quickly Understand
- Usage of financial institutions in the past year.
- Reasons for visiting a bank branch.
- Most important factors when consumers consider a new provider.
- What would drive consumers to switch to a new provider.
- Attitudes toward banking.
US Banking Brands Covered in this Report
Citibank, Bank of America, JP Morgan Chase Bank, Wells Fargo Bank, US Bank, Capital One, Chime, SoFi, Discover, Ally, PNC Bank, Truist Bank, TD Bank, Goldman Sachs Bank USA.
Expert Analysis from a Specialist in the US Financial Services Sector
This report, written by Amr Hamdi, a leading analyst in the finance industry, delivers in-depth commentary and analysis to highlight current trends in the US commercial banking market and add expert context to the numbers.
With economic uncertainty still looming, FIs must remain engaged and in-tune with their customers’ needs and wants. If it is support that customers desire, FIs must position themselves as subject matter experts in their customers’ corner ready to support their financial aspirations as well as enhance their knowledge and literacy. Banking, for the most part, remains a price and rate-driven game when it comes to acquisition, but providers that go the extra mile and show customers that they care about them being the best version of their financial-selves have the opportunity to build deeper and more meaningful relationships with these customers.
Amr Hamdi
Finance Analyst
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Overview
- What you need to know
- This Report looks at the following areas
- Market context
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Executive Summary
- Top takeaways
- Younger consumers more likely to seek rewards and financial advice when choosing new providers
- Figure 1: Importance of rewards and financial advice when choosing provider, by generation, 2022
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- Figure 2: Vitality Money, 2023
- 68% of consumers want support and financial advice from their banks, yet just 45% have received it
- Figure 3: Importance of financial advice from bank, by household income, 2022
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- Figure 4: Fidelity paid Facebook ad, 2023
- Figure 5: SoFi financial tips email, 2022
- Just 7% of financially struggling consumers use their bank’s advisory services
- Figure 6: Use of bank’s financial advisor, by financial situation, 2022
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- Figure 7: Bank of America CDFI directory, 2023
- Market overview
- Figure 8: The Banking Experience outlook, 2023-27
- Opportunities and challenges
- The struggling fintech sector presents a prime growth opportunity for incumbents
- Standing out in a rate-focused world through relatable messaging
- Figure 9: Most important factors in choosing a financial provider, 2022
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- Figure 10: Marcus online savings account paid Facebook ad, 2023
- Key consumer insights
- Overdraft and non-sufficient funds fees remain a severe financial burden on financially struggling minority consumers
- Figure 11: Consumers charged an overdraft or NSF fee in the past year, by financial situation and race/ethnicity, 2022
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- Figure 12: Earnings disparities, by race and ethnicity, 2020
- Figure 13: Citibank desktop display ad, 2022
- Figure 14: Bank of America SafeBalance checking account email, 2022
- Gen Z and Millennials are most swayed by sign-up bonuses and rewards when considering a banking switch
- Figure 15: Reasons to switch financial providers, by generation, 2022
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- Figure 16: Chase Southwest Rapid Rewards card email, 2023
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Market Size
- Total number of US banks remains in freefall
- Figure 17: Total number of US insured commercial banks, 2008-2022
- Chase and Bank of America top the list of largest US banks by assets
- Figure 18: US chartered commercial banks with consolidated assets of $300 million or more, 2022
- Total number of US banks remains in freefall
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Market Factors
- Banks cut mortgage lending staff amid struggling housing market
- Personal savings rate rebounds to 3.4%
- Figure 19: Personal saving rate, seasonally adjusted, 2015-22
- Figure 20: Net percentage of domestic banks tightening standards for credit card loans, quarterly, Q1 2019-Q4 2022
- Branch closures on pace to slow down after pandemic-era record closures
- Figure 21: Total number of US insured commercial bank branches, 2008-21
- Figure 22: Importance of in-branch banking, by residence in urban, suburban, and rural locations, 2022
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Competitive Strategies and Market Opportunities
- TD stresses overdraft protection along with an appealing sign-up bonus
- Figure 23: TD Bank checking account paid Facebook ad, 2023
- Schwab makes financial planning more human by putting advisors at the forefront of its messaging
- Figure 24: Charles Schwab financial consultancy ad, 2023
- Fifth Third announces new Early Pay feature aimed at expediting the tax refund process
- Figure 25: Fifth Third Early Pay for tax refunds, 2023
- Figure 26: US Bank and TurboTax partnership, 2023
- Dollar Bank encourages digital banking via a community-driven approach
- Figure 27: Dollar Bank Facebook ad, 2023
- TD stresses overdraft protection along with an appealing sign-up bonus
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The Banking Experience – Fast Facts
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Use of Financial Institutions in the Past Year
- Commercial banks remain the most popular type of financial institution
- Figure 28: Usage of financial institution in the past year, 2022
- Digital bank usage ranks among the highest for financial struggling consumers
- Figure 29: Usage of financial institutions in the past year, by financial situation, 2022
- Commercial banks remain the most popular type of financial institution
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Total Number of Bank Accounts
- Most consumers have at least two bank accounts
- Figure 30: Total number of bank accounts, 2022
- Older consumers are more likely to diversify their funds and accounts
- Figure 31: Total number of bank accounts, by age, 2022
- Figure 32: Total number of bank accounts, by household income, 2022
- Most consumers have at least two bank accounts
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Length of Primary Account Ownership
- A third of consumers have held their primary bank account for over 16 years
- Figure 33: Length of primary account ownership, 2022
- 18-24 year olds are a prime segment for FIs to establish early banking relationships with
- Figure 34: Length of primary account ownership, by age, 2022
- A third of consumers have held their primary bank account for over 16 years
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Reasons for Visiting a Physical Branch
- Over half of consumers visit physical bank branches to use an ATM
- Figure 35: Reasons for visiting a physical branch, 2022
- Younger Millennials most likely to visit their FI’s financial advisor
- Figure 36: Use of bank’s financial advisor, by generation, 2022
- Over half of consumers visit physical bank branches to use an ATM
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Most Important Factors in Choosing Financial Providers
- Customer service is top of mind for prospects seeking a new provider
- Figure 37: Most important factors in choosing a financial provider, 2022
- 40% of Gen Z considers savings rates when choosing a new provider
- Figure 38: Importance of savings rates when choosing provider, by generation, 2022
- Financially struggling consumers least likely to consider financial advice when seeking a new provider
- Figure 39: Importance of financial advice when choosing provider, by financial situation, 2022
- Customer service is top of mind for prospects seeking a new provider
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Reasons to Switch Financial Providers
- Fees, customer service, and rates remain the trifecta most likely to prompt switching banks
- Figure 40: Reasons to switch financial providers, 2022
- Figure 41: Capital One 360 Checking account, 2023
- Fees, customer service, and rates remain the trifecta most likely to prompt switching banks
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Attitudes toward Banks
- Nine in 10 consumers are satisfied with their current bank(s)
- Figure 42: Bank satisfaction and likelihood of making recommendations, 2020 and 2022
- Over 90% of consumers prefer to bank at FIs with well-established reputations
- Figure 43: Importance of reputation in banking, by generation, 2022
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- Figure 44: Use of traditional banks and neobanks, by generation, 2022
- 70% of consumers would consider opening a new account if the incentive was appealing enough
- Figure 45: Likelihood of signing up for a new bank account if incentives are offered, by generation, 2022
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- Figure 46: Discover checking account email, 2023
- Nine in 10 consumers are satisfied with their current bank(s)
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Appendix – Data Sources and Abbreviations
- Data sources
- Consumer survey data
- Marketing creative
- Abbreviations and terms
- Abbreviations
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