Table of Contents
Introduction and Abbreviations
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- Introduction
- Other relevant reports
- Scope of the report
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- The banking customer
- The evolving banking industry
- Future trends
Market Drivers
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- Consumers’ appetite for borrowing is strong
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- Figure 1: Graph: US household debt service ratio: estimated required payments on outstanding mortgage and consumer debt vs. disposable income, 1995-2005
- Banks hold most consumer debt, although credit unions are gaining ground
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- Figure 2: Percentage of debt of U.S. families by lending institution, 1992-2001
- The changing demographics of the bank customer
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- Figure 3: U.S. populations projections by race and ethnicity, 2000-10
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- Figure 4: U.S. age group population projections, 2000-10
- Is saving out of style?
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- Figure 5: Personal savings as a percentage of disposable income, annualized rates, 2000-05
- Figure 6: Percentage of U.S. consumers naming most important reason for saving in the past year, 1992-2001
- Making money work for the consumer
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- Figure 7: Percentage of financial assets in banking products, by type, 1992-2001
- No matter how consumers pay for things, the bank has a role
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- Figure 8: Number and value of non-cash payments from U.S. depository institutions, 2000 and 2003
- Branches and ATMs – where the cash is
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- Figure 9: Number of branches and atms of major U.S. banks, and number of states covered, December 2005
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- Figure 10: Branches and population by state, 2004
- Rising ATM fees make one’s own bank’s ATM locations more important
- Integrating channels for the optimum customer experience
- Consumers gravitate toward the efficiency of online banking for routine tasks
- Technology complements, but does not stop investment in new branches
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- Figure 11: Number of branches by type, 2003 and 2004
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- Figure 12: Deposits, expense and non-interest income, 2004
- Lessons from retail
- Other factors impacting the banking industry
- Security and fraud
- A flattening yield curve puts pressure on profits
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- Figure 13: Yield curve spread, 1982-2005
- Figure 14: Graph: index of US prime interest rates, 2000-05
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- Figure 15: Graph: Consumer lending by category, June through December 2005
- Fee income eases the pain of low interest margins
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- Figure 16: Interest income vs. non-interest income, 1998-2005
- Figure 17: Interest income vs. non-interest income, 1998-2005
- The changing product mix of real estate lending
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- Figure 18: Loans receivable by U.S. banks, 2002-05
- New mortgages driven by very localized supply and demand
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- Figure 19: changes in conventional mortgage home price index, 3rd quarter, 2005
- Figure 20: Top ten U.S. MSA’s by median home price, 2004
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- Figure 21: Mortgage originations, conventional purchases vs. refinancing, and mortgage rates, 2000-05
- Home equity financing is more popular than ever
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- Figure 22: Percentage of U.S. households that are owner-occupied by region, 2004-05
- Figure 23: Volume of home equity lending by type of financial institution, 1990-2004
- Basel II
Market Size and Segmentation
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- Mergers shrink the number of banks, but not branches or banking activity
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- Figure 24: Top ten states by institutions and their branches, 2003-04
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- Figure 25: Number of FDIC-insured institutions, assets, loans and deposits, 1999-2005
- Real estate has kept loans growing
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- Figure 26: Bank loans and leases, 1999-2005
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- Figure 27: Institutions and deposits by asset size, all institutions, June 2005
- Figure 28: Institutions and deposits by asset size, commercial banks, June 2005
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- Figure 29: Institutions and deposits by asset size, Savings Institutions, June 2005
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- Figure 30: Top ten MSA’s by deposits, June 2005
Competitive Landscape
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- National Banking Leaders
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- Figure 31: Assets and deposits of the top twenty banks, ranked by assets, 2004 and 2005
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- Figure 32: Total deposits of top eight U.S. banks and key merger activities, 2000-04
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- Figure 33: Key statistics of top U.S. banks, 2004 and Q2 2005
- Regional/Community Bank Leaders
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- Figure 34: Return on assets of community banks, 2004 and 2005
- SunTrust Bank
- NexTier Bank
- Community State Bank
- Bank of St. Edward
- Competitors on the horizon
- Online banks
- ING Direct
- E*Trade Financial
- Bricks and mortar retail stores
- Wal-Mart
Advertising and Promotion
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- Overall marketing spending
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- Figure 35: Marketing expenses of selected banks, 2003-04
- Spending on advertising in traditional media has been on the rise
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- Figure 36: Top financial institutions, by estimated advertising spending, by type of ad spend, 2003-04
- Online
- Increasing direct mail volume to promote specific products and services
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- Figure 37: Graph: estimated direct mail volumes, U.S. banks, 2004-05
- Figure 38: Estimated direct mail volumes related to checking accounts, U.S. banks, millions of mail pieces, 2001-05
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- Figure 39: Direct mail product segments, U.S. banks, 2004-05
- Making a statement
- Email gets the word out to existing customers
- Event sponsorship associates banks with winners
- Company websites
- Incentives
- SPOTLIGHT: NexTier Bank
The Consumer
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- Type of account
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- Figure 40: Type of account held, by gender, May 2004-May 2005
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- Figure 41: Type of accounts held, by age, May 2004-May 2005
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- Figure 42: Type of accounts held, by household income, May 2004-May 2005
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- Figure 43: Type of checking account held, by race/ethnicity, May 2004-May 2005
- Where consumers bank
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- Figure 44: Type of primary financial services provider, U.S. consumers by age of respondent, December 2005
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- Figure 45: Type of primary financial services provider, U.S. consumers by household income of respondent, December 2005
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- Figure 46: Type of primary financial services provider, U.S. consumers by region or type of area, December 2005
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- Figure 47: Type of primary financial services provider, U.S. consumers by race of respondent, December 2005
- Even though many bank with mega-banks, they believe they will get the best service at smaller banks
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- Figure 48: Which bank size would give better service, by age of respondent, December 2005
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- Figure 49: Which bank size would give better service, by household income of respondent, December 2005
- Where the money is safest
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- Figure 50: At which bank size would give money be safer, by age of respondent, December 2005
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- Figure 51: At which type of bank size would money be safer, by education, December 2005
- Where fees would be lower
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- Figure 52: Perception of smaller banks’ fees, by age of respondent, December 2005
- Switching behavior
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- Figure 53: Respondents who have switched banks in the past 12 months, by age, December 2005
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- Figure 54: Respondents who have switched banks in the past 12 months, by marital status and by living area of respondent, December 2005
- Summary
Future and Forecast
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- Future trends
- Less paper, more plastic
- Technology will aid personal service
- Banks will focus more attention on non-interest income and innovation
- Health savings accounts will bring in more deposit dollars
- Even more consumers will adapt to online banking
- Retail chains: the next competition
- Concerns about Basel II and shrinking margins could spark more mergers
- Banking products and services are more commoditized
- Market forecast
- Overall bank assets
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- Figure 55: Number of FDIC-insured institutions, assets, loans and deposits, 1999-2005
- Figure 56: Forecast of total assets at FDIC-insured institutions, at current and constant prices, 2005-10
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- Figure 57: Graph: Forecast of total assets at FDIC-insured institutions, at current and constant prices, 2005-10
Appendix: Trade Associations
Appendix: Advertising and Promotion
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- Chase/BankOne post-merger direct mail piece
- Washington Mutual Platinum Savings Account
- Signature Bank services
- e*Trade debit card offering no ATM fees and 5% cash back
- Commerce Bank offering extended hours
- BancorpSouth offering Health Savings Account
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