Table of Contents
Executive Summary
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- Overview
- The issues
- Young consumers are not checking their deposit accounts regularly
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- Figure 1: Deposit account usage, by generation, November 2017
- Inertia and trust drive loyalty
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- Figure 2: Reasons to stay at financial institution, November 2017
- Black consumers use debit, not credit
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- Figure 3: Banking behaviors, use of bank debit and credit cards, by race/ethnicity, November 2017
- The opportunities
- Mobile app usage is growing, while mobile payments lag behind
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- Figure 4: Banking behaviors, use of mobile and online banking, by generation, November 2017
- Consumers still desire a human touch
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- Figure 5: Attitudes towards banks and banking, prefer to talk to bank employee, by generation, November 2017
- Consumers want flexible banking hours and more branches
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- Figure 6: Attitudes towards banks and banking, November 2017
- What it means
The Market – What You Need to Know
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- Number of banks and credit unions continue to drop, deposits increase
- Number of bank branches still in decline
- Consumer sentiment hit record highs in late 2017
- Personal savings rate drops to near pre-Recession low
Market Size
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- Commercial bank deposits march upward
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- Figure 7: deposits in domestically chartered commercial banks (seasonally adjusted), Jan 2008-Jan 2018
- Branch locations finally plateau, as number of banks continues to fall
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- Figure 8: Number of FDIC-Insured commercial institutions and branches, 2006-16
- Figure 9: Number of FDIC-Insured commercial branches and institutions, 2006-16
- Number of credit unions and memberships continues to diverge
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- Figure 10: Number of us credit unions, credit union members, and savings deposits, June 2007-June 2017
Market Factors
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- Most consumers think their financial situation is “healthy” or “OK”…
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- Figure 11: Opinion of current financial situation, October 2017
- …though consumers continue to accrue debt
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- Figure 12: Total consumer debt, by debt type, Q2 2017
- Consumer sentiment index hits record high
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- Figure 13: Consumer Sentiment Index, January 2003-December 2017
- Consumer price index and personal disposable income continue to rise
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- Figure 14: Consumer Price Index, change from previous period, November 2010-November 2017
- Figure 15: Disposable personal income, change from previous period, November 2010-November 2017
- Majority of consumers are making more than they spend
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- Figure 16: Average annual income and average expenditures, by age, August 2017
- Consumers plan to save, but saving rate nears pre-recession low
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- Figure 17: Anticipated changes in consumer spending, November 2017
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- Figure 18: Ally bank, email, November 2017
- Figure 19: Personal saving rate, January 2007-November 2017
Key Players – What You Need to Know
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- Only a third of consumers think start-up banks could offer more innovation
- Nearly 20% of young consumers have not used bank or credit union account in the past three months
- Wells Fargo plans to close 800 branches by 2020
What’s Working?
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- Only a third of consumers think start-ups could offer more innovation
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- Figure 20: Attitudes towards banking, start-up innovation, by age, November 2017
- Fifth Third Bank offers way to pay down student debt
- RBC uses AI to help consumers manage finances and watch spending
What’s Struggling?
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- Nearly 20% of young consumers have not used bank or credit union account in the past three months
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- Figure 21: Savings or checking account usage in past three months, by age, November 2017
- Consumers not motivated to stay with bank for “sophisticated technology”
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- Figure 22: Reasons to stay with current financial institution, November 2017
- Bank of America to end free checking for low-balance accounts
What’s New and Next?
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- Open banking comes to the UK
- Umpqua offers BFF – “Best Financial Friend”
- Wells Fargo plans to close 800 branches in the next 2 years
- Trump administration may change the Community Reinvestment Act
- Amazon and PayPal allow underbanked consumers to use cash online
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- Figure 23: PayPal, email, January 2018
- Pop-up branches the next trend in retail banking?
The Consumer – What You Need to Know
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- Most consumers utilize a deposit account on a regular basis
- Mobile banking apps gain traction as mobile payments lag behind
- The human element within financial institutions remains vital
- Inertia and trust the most important factors in consumer loyalty
Account Ownership
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- Over 90% of consumers utilize a deposit account
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- Figure 24: Deposit account usage, by generation, November 2017
- Nearly half of consumers hold accounts with more than one institution
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- Figure 25: Number of deposit accounts, by household income, November 2017
Banking Behaviors
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- Most consumers use a credit and debit card from their bank or credit union
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- Figure 26: Banking behaviors, use of bank debit and credit cards, by age, November 2017
- Blacks and Hispanics more likely to use bank-issued debit cards
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- Figure 27: Banking behaviors, use of bank debit and credit cards, by race/ethnicity, November 2017
- Mobile banking apps have found traction, but payments lag
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- Figure 28: Banking behaviors, use of mobile and online banking, by generation, November 2017
- The human element remains vital within financial institutions
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- Figure 29: Banking behaviors, financial services used, November 2017
- Consumers prefer to talk to a person
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- Figure 30: Attitudes towards banks and banking, preference for talking to bank employee, by generation, November 2017
- The branch remains important, though not heavily trafficked
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- Figure 31: Banking behaviors, financial services used, by race/ethnicity, November 2017
- Hispanic, Black, and Millennial consumers use ATMs more frequently
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- Figure 32: Banking behaviors, use of bank-affiliated atm, by race/ethnicity, November 2017
Attitudes toward the Financial Services Industry
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- Customer satisfaction with banks and credit unions remains high
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- Figure 33: Attitudes toward finance and financial services, by gender, march 2017
- Majority of consumers prefer to have their accounts with one institution
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- Figure 34: Attitudes towards banks and banking, preference for single insitutuion, by race/ethnicity, November 2017
- Millennials and Hispanics want help reaching their financial goals
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- Figure 35: Attitudes towards banks and banking, help reaching financial goals, by age and race/ethnicity, November 2017
- The bottom line still matters in financial services
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- Figure 36: Bank switching behavior, November 2017
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- Figure 37: Discover, Direct Mail Piece, January 2018
Understanding Bank Loyalty
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- Inertia and trust drive consumer loyalty
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- Figure 38: Reasons to stay at financial institution, November 2017
- Non-Millennials place greater value on trust
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- Figure 39: Reasons to stay at financial institution, by generation, November 2017
Building a Better Branch Experience
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- Consumers want flexible hours and more branches
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- Figure 40: TURF analysis, future of the branch, November 2017
- BMO Harris invites customers to Smart Branch opening
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- Figure 41: BMO Harris bank, direct mail piece, June 2017
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
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