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Consolidation of
the US Banking
Industry
The Role of Innovation
and Scale

Consolidation of the US Banking Industry
Retail banking
is undergoing
a strategic
transformation,
with innovation
and scale creating
a competitive
advantage.
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Other
Direct banks
Credit unions
Midsize or local banks
Regional banks
Super regional banks
National banks
Consolidation of the US Banking Industry
In 2017, national banks were the winners in
primary bank switching, at the expense of
smaller banks and credit unions
Market share of each primary bank type
+0.6%
–3.2%
-2.3%
-4.7%
-2.1%
+0.4%
+11.2%
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Notes: National banks are the top three banks by deposits; super-regional banks are the top four to top 10 banks by deposits; regional banks are the banks with deposits of more than $50 billion that are not in the top 10; midsize or
local banks are those with less than $50 billion in deposits; and direct banks are those with no or limited physical presence. Numbers may not resolve due to rounding.
Source: A.T. Kearney Q4 2017 Banking and Payments Study, A.T. Kearney estimates
9%
% contribution of bank switchers
(share of prior bank)
27%
10%
30%
% capture of bank switchers
(share of new bank)
10%
10%
28%
41%
8%
11%
1%5%
6%
5%

If the current switching dynamics are sustained,
the US will experience a ~30% industry
consolidation over the next 10 years
Notes: National banks are the top three banks by deposits; super-regional banks are the top four to top 10 banks by deposits; regional banks are the banks with deposits of more than $50 billion that are not in the top 10; midsize or
local banks are those with less than $50 billion in deposits; and direct banks are those with no or limited physical presence.
Source: A.T. Kearney Q4 2017 Banking and Payments Study, A.T. Kearney estimates
Estimated number of US financial institutions (in thousands) Illustrative
Consolidation of the US Banking Industry
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2017
11.5
2027e
8.3
Assumptions:
• 10% annual primary bank
switching rate
• Stable net switchers gains and
losses by bank type (adjusted
as required for “extinction” of
bank types)
• Average number of customers
per bank type remains the same
over time, assuming no benefits
of scale
–28%

Consolidation of the US Banking Industry
Large banks owe their
success to low costs,
high productivity,
and—most
importantly—their
ability to invest in
and launch digital
capabilities.
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Consolidation of the US Banking Industry
Mobile and digital
capabilities are
now a prerequisite
when consumers are
choosing a bank,
especially for
Millennials.
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Consolidation of the US Banking Industry
To fund innovation
and compete, scale,
cost management,
and efficiency
programs will
become more
important,
highlighting a
clear advantage
for large banks.
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Consolidation of the US Banking Industry
With more limited
strategic investment
funds, small banks
can gain ground by
partnering with
digital solutions
providers and by
investing in
marketing.
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Consolidation of the US Banking Industry
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Since 1926, we have been trusted advisors to the world’s foremost organizations. A.T. Kearney
is a partner-owned firm, committed to helping clients achieve immediate impact and growing
advantage on their most mission-critical issues. For more information, visit www.atkearney.com.
A.T. Kearney can help prepare
your company for the US banking
industry’s consolidation.
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