Table of Contents
Executive Summary
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- Overview
- The issues
- Consumers are evenly split on necessity of in-branch banking
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- Figure 1: Necessity of in-branch banking, by generation, November 2018
- Increasing fees and poor customer service are primary reasons to switch banks
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- Figure 2: Motivation to switch banks, November 2018
- Young people more likely to use online customer service, less likely to visit branch
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- Figure 3: Banking activities in past three months, November 2018
- The opportunities
- Consumers don’t think many features are easy to use
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- Figure 4: Perception of finance mobile apps, November 2018
- Hispanic and Black consumers less likely to visit branch
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- Figure 5: Banking activities in past three months, November 2018
- Banks still have a lot of work to do in developing mobile apps
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- Figure 6: Perception of finance mobile apps, November 2018
- What it means
The Market – What You Need to Know
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- 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
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- Number of banks and branch locations continues to dwindle…
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- Figure 7: Number of FDIC-Insured commercial institutions and branches, 2006-2018
- …While banks continue to amass assets
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- Figure 8: deposits in domestically chartered commercial banks (seasonally adjusted), Jan. 2008- Jan. 2018
- Credit union memberships still on the rise
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- Figure 9: Number of US credit unions, credit union members, and savings deposits, June 2007-November 2018
Market Factors
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- Federal interest rate
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- Figure 10: Effective federal funds rate, 2000-2018
- Figure 11: Marcus by Goldman Sachs, Acquisition Email, January 2019
- Unemployment at a record low
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- Figure 12: Unemployment and underemployment, January 2007- November 2018
- Personal saving rate leaves room for improvement
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- Figure 13: Personal saving rate, January 2007- January 2019
- Consumer debt reaches new heights
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- Figure 14: Outstanding consumer credit, revolving and nonrevolving, 1985-2018
Key Players – What You Need to Know
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- 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?
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- Banks step into new roles in 2019 government shutdown
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- 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?
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- Financial topics are inherently complex
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- 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?
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- AI to provide more real, actionable insights via PFM tools
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- 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
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- 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
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- Nearly 90% of consumers hold a checking account
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- Figure 18: Financial account ownership, by generation, November 2018
- Most use a national bank, as minority consumers shy away from regional institutions
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- 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
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- Figure 20: Financial institutions used in past year, by age and income, November 2018
Banking Behaviors
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- Most consumers use bank debit and credit; mobile app usage rivals ATMs
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- 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
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- Figure 22: Banking activities in past three months, November 2018
- Young people more likely to use online customer service, less likely to visit branch
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- Figure 23: Banking activities in past three months, November 2018
- Hispanic and Black consumers less likely to visit branch
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- Figure 24: Banking activities in past three months, November 2018
Types of Bank Interactions
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- Consumers prefer to deal with their bank via computer or in-branch
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- Figure 25: Preferred bank transaction channel, November 2018
- Minority customers favor more tech-based experience
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- Figure 26: Preferred bank transaction channel, by race and ethnicity, November 2018
- Phone and mail channels have low utilization across all age groups
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- Figure 27: Preferred bank transaction channel, by age, November 2018
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- Figure 28: Chase direct mail campaign, November 2016
Perceptions of Banking Features
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- Banks still have a lot of work to do in developing mobile apps
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- Figure 29: Perception of finance mobile apps, November 2018
- Consumers don’t think many features are easy to use
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- Figure 30: Perception of finance mobile apps, November 2018
- Consumers find online banking more convenient than using mobile app
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- Figure 31: Convenience of online versus mobile banking, by age, November 2018
Motivation to Switch Banks
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- Increasing fees and poor customer service are primary reasons to switch banks
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- Figure 32: Motivation to switch banks, November 2018
- Fees are more motivating than rewards
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- Figure 33: Motivation to switch banks, November 2018
- Over 60% of consumers say it’s a hassle to switch banks
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- Figure 34: Attitude toward switching banks, by age, November 2018
- Brand reputation is also important
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- Figure 35: Motivation to switch banks, by generation, November 2018
Attitudes toward Banks
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- Most consumers are satisfied with their bank, and feel they have their best interests in mind
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- Figure 36: Consumer satisfaction with banks, November 2018
- Consumers are evenly split on necessity of in-branch banking
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- Figure 37: Necessity of in-branch banking, by generation, November 2018
- All consumers value a common language
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- Figure 38: Importance of having same-language bank employee, by race and ethnicity, November 2018
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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