Consumer Banking and Borrowing: U.S. Market Trends

Jul 12, 2016
104 Pages - Pub ID: LA5916746
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Consumer Banking and Borrowing: U.S. Market Trends

Consumer banking and borrowing trends represent a host of riddles in need of solving. While checking account usage will likely continue to decline, the primary checking account remains the foundation of consumers’ banking relationships. Multi-channel banking is reshaping the consumer relationships with financial institutions, and yet branch banking obituaries are entirely premature: Millennial and Silent Generation alike see great value in them. Generational differences aside, the primary banking relationship brings great rewards, but it can be further strengthened. High savings rates, low financial security, low delinquency rates, and sworn aversion to adding to debt loads spell consumer loan stagnation, and yet consumer loans outstanding have long been hitting new highs. Emerging and alternative products and services are making an impact in the marketplace, and yet major banking institutions will continue to dominate the consumer banking landscape for years to come.

To help market participants navigate these riddles and succeed years down the road, Consumer Banking and Borrowing: U.S. Market Trends provides trend-forward analysis of the consumer banking and borrowing market, focusing on commercial banks, credit unions, and savings institutions, with supplemental analysis of finance companies, as well as emerging banking alternatives. In doing so, the report emphasizes 2007-2016 trend patterns that highlight consumer behavior, attitudes and usage of banking and borrowing products and services; and related deposit, asset and loan trends.

The report does the following:
  • Assesses the consumer’s future prospects, blending economic forecasting, employment trend analysis and HH income shifts in affluence; consumer attitudes toward debt, money management trends and savings trends; and consumer debt ratio, delinquency rate and charge-off trends.
  • Provides direction on the importance of checking accounts and primary checking accounts to consumers, with analysis of factors important to opening a bank account; assesses banking institution consolidation trends; and banking institution asset, deposit and loan growth trends; and discusses how technology impacts consumer decisions that curtail banking revenue.
  • Analyzes consumer banking revenue streams and amounts for three major banking institutions with varying product emphasis, and discusses consumer security and trust concerns.
  • Discusses the primary banking relationship, including identifying primary banking choices among major banking institutions, assessing factors relevant to choosing a primary bank, primary bank relationship length, and number of banking institutions used.
  • Studies factors that can strengthen the primary banking relationship; the degree to which major banking institutions cross-sell credit cards to bank users and the degree to which they cross-sell banking services to credit card users.
  • Studies the impact of mobile banking, including the importance of banking apps to the account opening decision and shifts in bank channel usage.
  • Details checking and savings account usage trends, emphasizing age, generation, and HH income shifts in usage; banking account and card usage, by type of account and card; and checking account usage, by bank channel and emerging account types.
  • Assesses consumer deposits and deposit service charges, providing a consumer checking and savings deposit market size; a breakdown of consumer service charges by type; and analysis of banking institutions by total consumer deposits, by consumer deposit fees, by highest share of consumer deposit fees, and by the ratio of overdraft fees to deposits.
Chapter 1: Executive Summary
Report Scope
Report Summary
Trends shaping consumer banking
The state of the consumer
Consumer debt ratio, delinquency rate and charge-off trends
The state of financial institutions
The technology
Security
The consumer banking relationship
Bank, credit union and savings & loan usage trends
A loyalty proxy: banking institution use vs. use as primary banking institution
Reasons for choosing primary bank
Length of banking history suggests long-term primary banking relationship
Consumers can count number of institutions used on one hand
Strengthening the primary banking relationship
The credit card connection
The mobile connection
Consumer account ownership and service charge trends
Checking and savings accounts
Banking account and card usage, by type of account and card
Checking account, by bank channel
Consumer deposits and deposit service charges
Consumer loan trends
Loan usage trends, by loan type and banking institution
Automobile loan trends
Credit card loan trends
Attitudes toward credit card debt
Personal loan trends
Student loans: the straw that will break the camel’s back
Mortgage loan trends
Chapter 2: Trends Shaping Consumer Banking
The consumer
Economic forecast: slow going ahead
Figure 2-1: Unemployment, Inflation and GDP Forecast, 2016-2018
HH income trends shape a growing affluent class and a shrinking middle class
Table 2-1: Change in Household Number and Share, by Income Segment, 2007-2015
Employment challenges persist
Figure 2-2: Population Trends: Civilian, Part-Time Employed Civilian and Full-Time Employed Civilian,Indexed Comparison, 2007-2016
Consumer savings, debt and money management trends
Attitudes toward debt
Table 2-2: Attitudes Toward Debt, 2007-2016
Table 2-3: Effect of Recession on Taking on Debt, 2016
Money management trends
Table 2-4: Attitudes Toward Money Management, 2007-2016
Consumer debt ratios
Figure 2-3: Household Debt Ratios: Financial Obligation Ratio; Consumer and Mortgage Debt Service Ratio, 2007-2016
Savings trends
Table 2-5: Personal Disposable Income, Personal Saving and Personal Saving Rate, 2007-2015
Consumer credit trends: Ominous growth
Figure 2-4: Consumer Credit as Percentage of Disposable Personal Income and GDP, 2007-2016
Non-revolving credit is the culprit
Figure 2-5: Consumer Credit: Revolving and Non-Revolving, 2007-2016
The bank account
Losing ground over time
But primary checking account remains foundation of consumer banking
Table 2-6: Checking Account Holders Who Have a Primary Checking Account, 2016
Table 2-7: Primary Checking Account Holders Who Get Most Banking Needs Met by Primary Checking
Account Provider, 2016
Factors important to opening a bank account
Figure 2-6: Important Factors to Opening a Bank Account, 2016
The financial institution
Number of institutions
Branch and ATM reach
Table 2-8: Commercial Banks, Savings Institutions and Credit Unions: Number of Institutions, Number,Annual Change and Share, 2007-2015
Assets and deposits
Table 2-9: Commercial Banks, Savings Institutions and Credit Unions: Total Assets, Amount, Annual Change and Share, 2007-2015
Table 2-10: Commercial Banks, Savings Institutions and Credit Unions: Domestic Deposits, Amount,Annual Change and Share, 2007-2015
Loans to individuals
Table 2-11: Loans to Individuals: Commercial Banks, Savings Institutions and Credit Unions, by Amount, Annual Change and Share, 2007-2015
Consumer delinquency and charge-off rates
Table 2-12: Consumer Loan Delinquency Rates, By Loan Type, 2007-2016
Table 2-13: Consumer Loan Charge-Off Rates, By Loan Type, 2007-2016
The technology
Table 2-14: Effect of Technology on Financial Management and Financial Services Fees, by Demographic, 2016
The revenue
Tale of the tape: JPMorgan Chase
Tale of the tape: Capital One
Tale of the tape: American Express
Table 2-17: Consumer Banking Loan and Revenue Analysis, by Product Type: American Express,
Capital One and JPMorgan Chase, 2015
Profitability
Figure 2-7: Credit Card Profitability: Rate of Return on Assets, 2001-2015
Security
Table 2-18: Concern about Bank Trust and Credit Card Identity Theft, 2007-2016
Adding mobile wrinkles
Figure 2-8: Mobile Banking Safety
Chapter 3: The Consumer Banking Relationship
Banking institution usage trends
Banks, credit unions and savings & loans
Banks, credit unions and savings & loans as primary banking institution
Table 3-1: Banking Institution Use in Last 12 Months: Any, Primary and Also, by Type of Institution,2007-2016
Age and HH income trends diverge
Table 3-2: Banks vs. Credit Unions: Usage as Primary Banking Institution, by Generation/Age,2007 vs. 2016
Table 3-3: Banks vs. Credit Unions: Usage as Primary Banking Institution, by HH Income, 2007 vs. 2016
A loyalty proxy: banking institution use vs. use as primary banking institution
Table 3-4: Banking Institution User: Primary Usage Share, by Institution Type, 2007-2016
Wide disparities across major banking institutions as primary choice
Table 3-5: Banking Institution Use vs. Primary Use in Last 12 Months, by Institution, 2016
Credit unions lead, followed by Bank of America
Figure 3-1: Credit Unions, Savings & Loans and Top Banks: Usage as Primary Bank, by Institution, 2016
Millennials surpass Generation X in usage share
USAA among Millennial usage share leaders
Table 3-6: Credit Unions, Savings & Loans and Top Banks: Usage as Primary Bank, by Institution and Generation, 2016
Money matters
Table 3-7: Credit Unions, Savings & Loans and Top Banks: Usage as Primary Bank, by Institution and Household Income, 2016
Reasons for choosing primary bank
Location, location, location
Figure 3-2: Reasons for Choosing Primary Bank, 2016
The Millennial factor
Figure 3-3: Reasons for Choosing Primary Bank, by Age, 2016
The income factor
Figure 3-4: Reasons for Choosing Primary Bank, by Household Income, 2016
Length of banking history suggests long-term relationships
Figure 3-5: Length of Relationship with Primary Bank, by Age, 2016
Consumers can count number of institutions used on one hand
Figure 3-6: Number of Financial Institutions Used for Products and Services, 2016
Hitting the Millennial sweet spot
Table 3-8: Number of Financial Institutions Used for Products and Services, 2016
Strengthening the primary banking relationship
Choosing a primary financial services provider
Figure 3-7: Rationales for Strengthening Relationship with One Financial Services Provider, 2016
The credit card connection
Bank users, credit card users, and relationship between the two
Top banks and credit card issuers, by usage
Table 3-9: Credit Unions, Savings & Loans and 10 Largest Banks: Usage as Bank in Last 12 Months and Credit Cards Issued, 2016
Share of credit card holders using the issuing bank for banking services
Table 3-10: Credit Unions, Savings & Loans and 10 Largest Banks: Credit Cards Issued and Share of
Credit Card Users Who Use as Bank, 2016
Share of banking services users using the bank’s credit card
Table 3-11: Credit Unions, Savings & Loans and 10 Largest Banks: Usage as Bank in Last 12 Months and Share Users Who Have Bank’s Credit Card, 2016
The mobile connection
Use of mobile banking continues to rise
Mobile at-home access gaining on PC access
Table 3-12: U.S. Adult Home Internet Use: Desktop via Mobile Phone, 2008-2015
Smartphone ubiquity around the corner?
Table 3-13: U.S. Adult Call Phone and Smartphone Ownership Trends, 2012-2015
Shift to mobile commerce
And mobile financial service engagement
Table 3-14: U.S. Adult App Use and Banking/Finance App Use, 2015
Mobile apps a factor influencing where to open bank account
Table 3-15: Important Factors to Opening a Bank Account: Mobile Banking App Attributes, by Demographic, 2016
Shifts in banking channel usage
Figure 3-8: Channel Usage, 2016
Bank of America and JPMorgan Chase: a comparative multi-channel banking analysis
Table 3-16: Bank of America: Branches, ATMs, Online Banking Accounts and Mobile Bankers, 2011-2015
Table 3-17: JPMorgan Chase: Branches, ATMs, Online Banking Accounts and Mobile Bankers, 2011-2015
PayPal account provides strong checking alternative
By the numbers: A mobile payments powerhouse
Mobile usage is pronounced—at point of sale and online
Usage reach and demographics
Recipe for success: the PayPal digital wallet
Using the mobile app is simplicity itself
P2P leadership
Chapter 4: Consumer Account Ownership and Service Charge Trends
Account trends
Checking and savings accounts
Table 4-1: Checking Account and Savings Account Usage, 2007-2016
Checking accounts losing ground over time
Generations: then and now
Table 4-2: Checking Account Usage, by Generation and Type of Banking Institution, 2007 vs. 2016
Not enough Millennial growth
Table 4-3: Percent of Adults with Checking Account, by Generation/Age, 2007, 2010, 2013, 2016
Table 4-4: Percent of Adults with Checking Account, by HH Income, 2007, 2010, 2013, 2016
Banking account and card usage, by type of account and card
Figure 4-1: Banking Account and Card Usage, by Type of Account and Card, 2016
Checking account, by bank channel
Figure 4-2: Checking Account and Checking Account Alternatives: Usage by Brand/Institution, 2016
Consumer deposits and deposit service charges
Assets and deposits
Table 4-5: Commercial Bank Domestic Assets and Deposits: Business-Only Banks vs. Consumer Banks,by All Banks and $1 Billion Asset Banks, 2015
Table 4-6: Commercial Bank Deposits: All Deposits vs. Consumer Checking/Savings Deposits, 2015
Consumer deposit accounts
Consumer share higher than business share
Consumer savings deposits dwarf checking deposits
Table 4-7: Bank Deposits at Consumer Banks: Consumer Deposits vs. Business Deposits, Checking vs. Savings Accounts, 2015
Consumer deposit account service charges
Over time, taking a regulation-related hit
Figure 4-3: Bank Deposit Account Service Charges, 2007-2015
Table 4-8: Bank Deposit Account Service Charges: Business-Only Banks vs. Consumer Banks, by All Banks and $1 Billion Asset Banks, 2015
Table 4-9: Consumer Deposit Account Service Charges, by Type, 2015
Overdraft: a 4% return on deposits
Table 4-10: Consumer Overdraft Service Charges as Share of Consumer Transaction Account Deposits:$1+ Billion Asset Banks, 2015
Top banks serving consumers: a comparative analysis
Table 4-11: Top 40 Commercial Banks, by Consumer Deposits: Savings and Checking Accounts, 2015
Table 4-12: Top 40 Commercial Banks, by Consumer Deposit Account Service Charges, 2015
Top ten service charge earners rely more heavily on maintenance charges
Table 4-13: Top 10 Commercial Banks: Share of Consumer Deposit Account Service Charges, by Type,2015
Overdraft leaders
Table 4-14: Top 10 Commercial Banks, by Ratio of Consumer Deposit Account Overdraft Charges to
Consumer Checking Deposits, 2015
Chapter 5: Consumer Loan Trends
Loan usage trends, by loan type
Table 5-1: Loans Have/Use, By Type of Loan, 2007-2016
Loan usage trends, by type of banking institution
Table 5-2: Any Loan Have/Use, By Type of Banking Institution, 2007-2016
Automobile loan trends
Figure 5-1: Motor Vehicle Loans Outstanding, 2007-2015
Table 5-3: Financing Company Automobile Loans: Interest Rate, Amount Financed and Maturity, Used and New Cars, 2011-2015
Credit unions putting the pedal to the metal
Table 5-4: Automobile Loans Outstanding: Commercial Banks/Savings Institutions, Credit Unions and
Financing Companies, 2011-2015
Table 5-5: Loans for New Automobile: Share, by HH Income and Generation, 2010-2016
Credit card loan trends
Table 5-6: Credit Card Loans Outstanding: Commercial Banks, Savings, Institutions and Credit Unions,2010-2015
Card usage trends, by age and HH income
Table 5-7: Credit Card Usage Penetration and Usage Share, by Generation/Age, 2007-2016
Table 5-8: Credit Card Usage Penetration and Usage Share, by HH Income, 2007-2016
Credit card bill payment trends generally consistent
Table 5-9: MasterCard and Visa Credit Card Usage Penetration and Portion of Monthly Bill Paid, 2010-2016
Attitudes toward credit card debt
Table 5-10: Attitudes Toward Credit Card Debt and Paying Credit Card Balance, by Demographic, 2016
Personal loan trends
Figure 5-2: Personal Loan Sources, by Type, 2016
Student loans: the straw that will break the camel’s back
An unsettling state of affairs
Figure 5-3: Student Loans Outstanding, 2007-2015
Just the facts
Skew to Millennials
Table 5-11: Adults with Student Loans, by Demographic, 2016
The consequences
Figure 5-4: Attitudes Toward Student Loan Debt, 2016
Mortgage loan trends
Table 5-12: Real Estate Loans Outstanding, Commercial Banks, Credit Unions and Financing Companies, 2010-2015
Appendix
Methodology
Consumer survey methodology
Report table interpretation
Generations
Terms and definitions

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