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The Banking Experience - US - February 2019

"While the total number of banks and credit unions has been declining, the number of accounts, credit union memberships, and overall deposits continues to steadily rise. The majority of consumers are satisfied with their banking institutions, and while the future of banking will be a primarily digital experience, most individuals continue to interact with their banks in-person as well."
- Chris Shadle, Financial Services Analyst

This report looks at the following areas:

  • Consumers are evenly split on necessity of in-branch banking
  • Increasing fees and poor customer service are primary reasons to switch banks
  • Young people more likely to use online customer service, less likely to visit branch

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • The issues
            • Consumers are evenly split on necessity of in-branch banking
              • Figure 1: Necessity of in-branch banking, by generation, November 2018
            • Increasing fees and poor customer service are primary reasons to switch banks
              • Figure 2: Motivation to switch banks, November 2018
            • Young people more likely to use online customer service, less likely to visit branch
              • Figure 3: Banking activities in past three months, November 2018
            • The opportunities
              • Consumers don’t think many features are easy to use
                • Figure 4: Perception of finance mobile apps, November 2018
              • Hispanic and Black consumers less likely to visit branch
                • Figure 5: Banking activities in past three months, November 2018
              • Banks still have a lot of work to do in developing mobile apps
                • Figure 6: Perception of finance mobile apps, November 2018
              • What it means
              • The Market – What You Need to Know

                • Number of bank institutions and branches further declines
                  • Federal interest rate continues to rise
                    • Unemployment descends to record lows
                      • Personal saving rate well below suggested levels
                      • Market Size

                        • Number of banks and branch locations continues to dwindle…
                          • Figure 7: Number of FDIC-Insured commercial institutions and branches, 2006-2018
                        • …While banks continue to amass assets
                          • Figure 8: deposits in domestically chartered commercial banks (seasonally adjusted), Jan. 2008- Jan. 2018
                        • Credit union memberships still on the rise
                          • Figure 9: Number of US credit unions, credit union members, and savings deposits, June 2007-November 2018
                      • Market Factors

                        • Federal interest rate
                          • Figure 10: Effective federal funds rate, 2000-2018
                          • Figure 11: Marcus by Goldman Sachs, Acquisition Email, January 2019
                        • Unemployment at a record low
                          • Figure 12: Unemployment and underemployment, January 2007- November 2018
                        • Personal saving rate leaves room for improvement
                          • Figure 13: Personal saving rate, January 2007- January 2019
                        • Consumer debt reaches new heights
                          • Figure 14: Outstanding consumer credit, revolving and nonrevolving, 1985-2018
                      • Key Players – What You Need to Know

                        • Banks come to rescue during 2019 government shutdown
                          • AT&T helps Citizens Bank with digital branch transformation
                            • Financial topics are inherently complex
                              • AI to provide more real, actionable insights via PFM tools
                              • What’s Happening?

                                • Banks step into new roles in 2019 government shutdown
                                  • Figure 15: Ally Bank Facebook post regarding federal shutdown, January 4, 2019
                                • AT&T helps Citizens Bank with digital branch transformation
                                  • Plaid investment underscores importance of banking APIs
                                  • What’s Struggling?

                                    • Financial topics are inherently complex
                                      • Figure 16: Perception of finance mobile apps, November 2018
                                    • Unbanked and underbanked population poses a challenge and opportunity
                                      • Robinhood executes false start on checking program
                                      • What’s New and What’s Next?

                                        • AI to provide more real, actionable insights via PFM tools
                                          • Figure 17: Bank of America, informational email, January 2019
                                        • Google lands new status in Ireland
                                          • PenFed merger grants open charter to credit union
                                          • The Consumer – What You Need to Know

                                            • Nearly 90% of consumers hold a checking account, and most use a national bank
                                              • Banks still have a lot of work to do in developing mobile apps
                                                • Consumers don’t think many features are easy to use
                                                  • Most consumers are satisfied with their bank, and feel they have their best interests in mind
                                                    • Increasing fees and poor customer service are primary reasons to switch banks
                                                      • Consumers are evenly split on necessity of in-branch banking
                                                      • Account Ownership

                                                        • Nearly 90% of consumers hold a checking account
                                                          • Figure 18: Financial account ownership, by generation, November 2018
                                                        • Most use a national bank, as minority consumers shy away from regional institutions
                                                          • Figure 19: Financial institutions used in past year, by race and ethnicity, November 2018
                                                        • Online-only banking is most popular among young and wealthy consumers
                                                          • Figure 20: Financial institutions used in past year, by age and income, November 2018
                                                      • Banking Behaviors

                                                        • Most consumers use bank debit and credit; mobile app usage rivals ATMs
                                                          • Figure 21: Banking activities in past three months, November 2018
                                                        • One third of consumers have used a digital payment service in the last three months
                                                          • Figure 22: Banking activities in past three months, November 2018
                                                        • Young people more likely to use online customer service, less likely to visit branch
                                                          • Figure 23: Banking activities in past three months, November 2018
                                                        • Hispanic and Black consumers less likely to visit branch
                                                          • Figure 24: Banking activities in past three months, November 2018
                                                      • Types of Bank Interactions

                                                        • Consumers prefer to deal with their bank via computer or in-branch
                                                          • Figure 25: Preferred bank transaction channel, November 2018
                                                        • Minority customers favor more tech-based experience
                                                          • Figure 26: Preferred bank transaction channel, by race and ethnicity, November 2018
                                                        • Phone and mail channels have low utilization across all age groups
                                                          • Figure 27: Preferred bank transaction channel, by age, November 2018
                                                          • Figure 28: Chase direct mail campaign, November 2016
                                                      • Perceptions of Banking Features

                                                        • Banks still have a lot of work to do in developing mobile apps
                                                          • Figure 29: Perception of finance mobile apps, November 2018
                                                        • Consumers don’t think many features are easy to use
                                                          • Figure 30: Perception of finance mobile apps, November 2018
                                                        • Consumers find online banking more convenient than using mobile app
                                                          • Figure 31: Convenience of online versus mobile banking, by age, November 2018
                                                      • Motivation to Switch Banks

                                                        • Increasing fees and poor customer service are primary reasons to switch banks
                                                          • Figure 32: Motivation to switch banks, November 2018
                                                        • Fees are more motivating than rewards
                                                          • Figure 33: Motivation to switch banks, November 2018
                                                        • Over 60% of consumers say it’s a hassle to switch banks
                                                          • Figure 34: Attitude toward switching banks, by age, November 2018
                                                        • Brand reputation is also important
                                                          • Figure 35: Motivation to switch banks, by generation, November 2018
                                                      • Attitudes toward Banks

                                                        • Most consumers are satisfied with their bank, and feel they have their best interests in mind
                                                          • Figure 36: Consumer satisfaction with banks, November 2018
                                                        • Consumers are evenly split on necessity of in-branch banking
                                                          • Figure 37: Necessity of in-branch banking, by generation, November 2018
                                                        • All consumers value a common language
                                                          • Figure 38: Importance of having same-language bank employee, by race and ethnicity, November 2018
                                                      • Appendix – Data Sources and Abbreviations

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

                                                                The Banking Experience - US - February 2019

                                                                US $4,395.00 (Excl.Tax)