Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- The issues
- Consumers slow to adopt mobile payment apps from banks
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- Figure 1: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
- Interest in diversifying accounts could hurt FSI loyalty
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- 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
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- 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
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- Figure 4: Important features of primary financial institution, November 2016
- Bridge gap between satisfaction and value
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- Figure 5: Satisfaction and appreciation of current financial institution, by generation, November 2016
- What it means
The Market – What You Need to Know
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- 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
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- Bank selection continues to dwindle…
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- Figure 6: Number of FDIC-insured commercial institutions in US and other areas, 2005-15
- … while bank branches continue to multiply
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- Figure 7: Number of FDIC-insured commercial branches in US and other areas, 2005-15
- Number of credit unions decrease, while membership increases
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- 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
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- Figure 9: Deposits in domestically chartered commercial banks (not seasonally adjusted), 2005-14
- Savings deposits
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- Figure 10: Total savings deposits at depository institutions (not seasonally adjusted), 2005-14
Market Factors
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- Most consumers think their financial situation is “healthy” or “OK”
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- Figure 11: Consumer opinion about current financial situation, November 2016
- Consumer economic confidence continues to rise
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- Figure 12: Consumer Sentiment Index, January 2007-September 2016
- Disposable personal income continues slight upward trajectory
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- Figure 13: Disposable personal income change from previous period, January 2010-August 2016
- Consumers plan to save and pay off debts
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- Figure 14: Anticipated changes in consumer spending, November 2016
- Personal saving rate remained relatively flat in 2016
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- Figure 15: Personal saving rate, January 2010-November 2016
Key Players – What You Need to Know
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- 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?
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- JPMorgan Chase stands to increase profits with brick-and-mortar branches
- Retail banks begin switching to contactless ATMs
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- 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
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- Figure 17: Trust in banking industry vs primary bank, October 2016
What’s Struggling?
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- Security remains a challenge as hackers target ATMs
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- Figure 18: Chase account email alert, December 2016
- Consumers slow to adopt mobile payment apps from banks
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- Figure 19: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
- Interest in diversifying accounts could hurt FSI loyalty
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- Figure 20: Reason for bank switching, keeping accounts all in one FSI, by age, November 2016
What’s Next?
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- 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
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- Figure 21: TD Bank email, “Bank easy with Touch ID,” January 2017
The Consumer – What You Need to Know
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- 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
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- Overwhelming majority of consumers have some sort of financial account
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- Figure 22: Account ownership across any financial location, November 2016
- Black consumers less likely to have financial accounts
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- Figure 23: Account ownership at any location, by race and Hispanic origin, November 2016
- Hispanic account ownership delineated along generational lines
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- Figure 24: Account ownership at any location, by Hispanic origin and generation, November 2016
Location of Accounts
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- Consumers maintain most accounts at large national banks
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- Figure 25: Account ownership across any bank locations, November 2016
- Fewer than 20% have accounts at credit unions
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- Figure 26: Account ownership at credit unions, November 2016
- Younger consumers less likely to hold checking accounts at small or regional banks
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- 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
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- Figure 28: Incidence of maintaining account at same financial institution, by generation, November 2016
Banking Behaviors
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- Most do not use a credit card issued by their bank/credit union
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- Figure 29: Use of a credit card from bank or credit union, by gender and age, November 2016
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- Figure 30: Ally cashback credit card mailer, November 2016
- Investments may be entwined with bank accounts
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- Figure 31: Investments kept separate from banking accounts, by age, November 2016
- Lack of understanding about how personal information is used
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- Figure 32: Understanding of use of personal financial information, November 2016
- Most bank correspondence remains unread
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- Figure 33: Likelihood to read correspondence from bank/credit union, November 2016
- Slow adoption of mobile wallets and P2P payment apps
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- Figure 34: Banking behaviors, use of mobile wallet or P2P payment app, November 2016
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- 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
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- Security is the top priority for consumers
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- Figure 37: Top five attributes of primary financial institution, November 2016
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- Figure 38: Consumers Credit Union email, reasons to download mobile app, January 2017
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- Figure 39: Fifth Third welcome email, January 2017
- Most consumers don’t choose digital or mobile when considering appeal…
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- Figure 40: Least important attributes of primary financial institution, November 2016
- … except for iGen and Millennial consumers
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- Figure 41: Technological attributes of primary financial institution, by generation, November 2016
- Free checking is the “most essential” banking feature
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- 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
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- Figure 43: Free checking as essential banking feature, by age, November 2016
- Convenient branch features a preferred part of the banking process
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- Figure 44: Important features of primary financial institution – location and convenience, November 2016
Understanding Bank Switching Behavior
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- Rates continue to be main choice driver
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- Figure 45: Top motivators to switch from primary financial institution, November 2016
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- Figure 46: Ally Bank email, “Great rates, no branch required,” November 2016
- Parents are more motivated by rewards and personal service
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- 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
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- Figure 48: Bank switching due to life event, by age and gender, November 2016
Attitudes toward the Financial Services Industry
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- FSIs may need to bridge the gap between satisfaction and appreciation
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- Figure 49: Satisfaction and appreciation of current financial institution, by generation, November 2016
- Credit unions slightly more trusted than banks
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- Figure 50: Comparison of banks and credit unions, November 2016
- Lack of interest in personal financial management tools
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- Figure 51: Interest in use of personal financial management tools, by age, November 2016
- Few agree that bank advisers are as knowledgeable as brokers
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- Figure 52: Trust in knowledge of bank advisers, by Hispanic origin and generation, November 2016
- Online-only banks still struggle with security concerns
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- Figure 53: Interest in use of personal financial management tools, by gender and age, November 2016
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
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