Banks & Credit Unions Industry Profile

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Excerpt from Banks & Credit Unions Industry Profile

Companies in this industry accept deposits and make commercial, industrial, and consumer loans. Major companies include Bank of America, Citibank, JPMorgan Chase, Navy Federal Credit Union, and Wells Fargo (all based in the US), as well as Banco Santander (Spain), China Construction Bank and Industrial and Commercial Bank of China (both based in China), and HSBC Holdings (UK).

The global banking revenue is expected to fall by about 14% from their pre-crisis trajectory by 2024, according to consulting firm McKinsey & Company. The firm estimates the COVID-19 crisis may cost the industry about $4 trillion.

The US banking industry includes about 5,000 commercial banks and about 5,300 credit unions with combined annual revenue of $530 billion. Commercial banks have about $13.5 trillion in assets, savings institutions $1.5 trillion, and credit unions $812 billion, according to Lumen.

COMPETITIVE LANDSCAPE

Demand for banking services is closely tied to economic activity and the level of interest rates. The profitability of individual banks depends on marketing skills, efficient operations, and good risk management. Large economies of scale exist in some segments of the industry, which has encouraged industry consolidation. While smaller banks and credit unions can compete successfully in segments where customer service or knowledge of the local market is more important, big banks are becoming increasingly dominant.

The US commercial banking segment is concentrated: the 50 largest firms generate about 70% of revenue. The credit union ...

 
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