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Retail Banking and Credit Unions - US - February 2017

Published By :

Mintel

Published Date : Mar 2017

Category :

Banking

No. of Pages : N/A

There are few industries that reach as many consumers across the US like financial services do. Nearly 100% of American consumers currently own some sort of financial account at a retail bank or credit union and are affected by the proliferation of financial technology, products, and trends. The total number of banks and credit unions has been declining but the number of accounts, credit union memberships, and overall deposits continues to rise. While the industry may change with technological developments, financial accounts remain an almost universal need.

Table of Content

Overview

What you need to know
Definition

Executive Summary
The issues
Consumers slow to adopt mobile payment apps from banks
Figure 1: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
Interest in diversifying accounts could hurt FSI loyalty
Figure 2: Reason for bank switching, keeping accounts all in one FSI, November 2016
Most do not use a credit card issued by their bank/credit union
Figure 3: Use of bank-issued credit card, by age and gender, November 2016
The opportunities
Show benefit of enhanced technology with in-person interaction
Figure 4: Important features of primary financial institution, November 2016
Bridge gap between satisfaction and value
Figure 5: Satisfaction and appreciation of current financial institution, by generation, November 2016
What it means

The Market – What You Need to Know
Number of banks decline, but more branches are opening
Credit union memberships increase
Deposit numbers continue to rise
Most consumers think their financial situation is “healthy” or “OK”

Market Size
Bank selection continues to dwindle…
Figure 6: Number of FDIC-insured commercial institutions in US and other areas, 2005-15
while bank branches continue to multiply
Figure 7: Number of FDIC-insured commercial branches in US and other areas, 2005-15
Number of credit unions decrease, while membership increases
Figure 8: Number of US credit unions, credit union members, and average savings deposits, 2005-15
Deposits continue to increase across the banking market
Deposits in US-chartered banks
Figure 9: Deposits in domestically chartered commercial banks (not seasonally adjusted), 2005-14
Savings deposits
Figure 10: Total savings deposits at depository institutions (not seasonally adjusted), 2005-14

Market Factors
Most consumers think their financial situation is “healthy” or “OK”
Figure 11: Consumer opinion about current financial situation, November 2016
Consumer economic confidence continues to rise
Figure 12: Consumer Sentiment Index, January 2007-September 2016
Disposable personal income continues slight upward trajectory
Figure 13: Disposable personal income change from previous period, January 2010-August 2016
Consumers plan to save and pay off debts
Figure 14: Anticipated changes in consumer spending, November 2016
Personal saving rate remained relatively flat in 2016
Figure 15: Personal saving rate, January 2010-November 2016

Key Players – What You Need to Know
Trust in financial services has increased, but there’s work to be done
Interest in diversifying accounts could hurt FSI loyalty
JPMorgan Chase sees success with investment in brick-and-mortar branches
Artificial intelligence

What’s Working?
JPMorgan Chase stands to increase profits with brick-and-mortar branches
Retail banks begin switching to contactless ATMs
Figure 16: Wells Fargo Mobile ATM access email, January 2017
Consumers and developers begin to welcome “open banking”
Trust in financial services has increased, but there’s work to be done
Figure 17: Trust in banking industry vs primary bank, October 2016

What’s Struggling?
Security remains a challenge as hackers target ATMs
Figure 18: Chase account email alert, December 2016
Consumers slow to adopt mobile payment apps from banks
Figure 19: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
Interest in diversifying accounts could hurt FSI loyalty
Figure 20: Reason for bank switching, keeping accounts all in one FSI, by age, November 2016

What’s Next?
Trump administration issues “regulatory freeze”
Innovators look to blockchain technology for interbank payments
Fifth Third to accept mobile payments from all five providers
Artificial intelligence
Banking and biometrics
Figure 21: TD Bank email, “Bank easy with Touch ID,” January 2017

The Consumer – What You Need to Know
Overwhelming majority of consumers have some sort of financial account
Security is the top priority for consumers
Rates continue to be main choice driver
FSIs may need to bridge the gap between satisfaction and appreciation

Account Ownership
Overwhelming majority of consumers have some sort of financial account
Figure 22: Account ownership across any financial location, November 2016
Black consumers less likely to have financial accounts
Figure 23: Account ownership at any location, by race and Hispanic origin, November 2016
Hispanic account ownership delineated along generational lines
Figure 24: Account ownership at any location, by Hispanic origin and generation, November 2016

Location of Accounts
Consumers maintain most accounts at large national banks
Figure 25: Account ownership across any bank locations, November 2016
Fewer than 20% have accounts at credit unions
Figure 26: Account ownership at credit unions, November 2016
Younger consumers less likely to hold checking accounts at small or regional banks
Figure 27: Checking account ownership at bank locations, by age, November 2016
Less than one third have stayed with the same FSI for their entire financial history
Figure 28: Incidence of maintaining account at same financial institution, by generation, November 2016

Banking Behaviors
Most do not use a credit card issued by their bank/credit union
Figure 29: Use of a credit card from bank or credit union, by gender and age, November 2016
Figure 30: Ally cashback credit card mailer, November 2016
Investments may be entwined with bank accounts
Figure 31: Investments kept separate from banking accounts, by age, November 2016
Lack of understanding about how personal information is used
Figure 32: Understanding of use of personal financial information, November 2016
Most bank correspondence remains unread
Figure 33: Likelihood to read correspondence from bank/credit union, November 2016
Slow adoption of mobile wallets and P2P payment apps
Figure 34: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
Figure 35: Chase mobile app holiday promotion, December 2016
Figure 36: USAA direct mail, ease of mobile banking, January 2017

What Consumers are Looking for in an FSI
Security is the top priority for consumers
Figure 37: Top five attributes of primary financial institution, November 2016
Figure 38: Consumers Credit Union email, reasons to download mobile app, January 2017
Figure 39: Fifth Third welcome email, January 2017
Most consumers don’t choose digital or mobile when considering appeal…
Figure 40: Least important attributes of primary financial institution, November 2016
except for iGen and Millennial consumers
Figure 41: Technological attributes of primary financial institution, by generation, November 2016
Free checking is the “most essential” banking feature
Figure 42: Important features of primary financial institution – free checking, debit card, and online bill pay, November 2016
Free checking more important to older account holders
Figure 43: Free checking as essential banking feature, by age, November 2016
Convenient branch features a preferred part of the banking process
Figure 44: Important features of primary financial institution – location and convenience, November 2016

Understanding Bank Switching Behavior
Rates continue to be main choice driver
Figure 45: Top motivators to switch from primary financial institution, November 2016
Figure 46: Ally Bank email, “Great rates, no branch required,” November 2016
Parents are more motivated by rewards and personal service
Figure 47: Switching for incentive or personal service, by presence of children in household, November 2016
Women more likely to be affected by life events
Figure 48: Bank switching due to life event, by age and gender, November 2016

Attitudes toward the Financial Services Industry
FSIs may need to bridge the gap between satisfaction and appreciation
Figure 49: Satisfaction and appreciation of current financial institution, by generation, November 2016
Credit unions slightly more trusted than banks
Figure 50: Comparison of banks and credit unions, November 2016
Lack of interest in personal financial management tools
Figure 51: Interest in use of personal financial management tools, by age, November 2016
Few agree that bank advisers are as knowledgeable as brokers
Figure 52: Trust in knowledge of bank advisers, by Hispanic origin and generation, November 2016
Online-only banks still struggle with security concerns
Figure 53: Interest in use of personal financial management tools, by gender and age, November 2016

Appendix – Data Sources and Abbreviations
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms

List of Table

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