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Biggest Three Banks Gobble Up $2.4 Trillion in New Deposits Since Crisis

Now that many transactions are done online or through smartphones, customers are increasingly choosing national banks.

Americans are parking more money with the biggest banks than ever before, cementing the firms’ dominance of the financial industry less than a decade after the crisis.

The three largest U.S. banks have added more than $2.4 trillion in domestic deposits over the past 10 years—a 180% increase—according to a Wall Street Journal analysis of regulatory data. That amount exceeds what the top eight banks had in such deposits combined in 2007.

The outsize gain began when the trio of lenders— JPMorgan Chase JPM -2.31% & Co., Bank of America Corp. BAC -2.84% and Wells Fargo WFC -2.30% & Co.—did huge deals during the crisis. Their heft has continued to increase in recent years as consumers opt to put their money at the behemoths over smaller U.S. banks.

While the crisis led many to question whether banks had grown too large, the lead of the biggest lenders has only widened. At the end of 2007, the three banks held 20% of the country’s deposits. By the end of 2017, they held 32%, or $3.8 trillion.

It marks a new phase of consolidation in the banking industry—one driven first by the deals and then by customers’ attraction to the digital tools and ubiquitous locations of the biggest banks.

Last year, about 45% of new checking accounts were opened at the three national banks, even though those lenders only had 24% of U.S. branches, according to research by consulting firm Novantas. Regional and community banks, by contrast, had 76% of branches but only got 48% of new accounts, the firm said.

These customers, who tend to be younger, are valuable to banks because they often provide more business later on by, for instance, taking out a mortgage or opening a brokerage account.

Before online and mobile banking became popular following the financial crisis, these consumers generally opened a new account at the bank with the nearest branch, no matter the size of the institution, said Andrew Frisbie, executive vice president at Novantas.

But now that many banking transactions are done online or through smartphones, these customers are increasingly picking national banks because of their well-known brands and the perception that their technology is better, Mr. Frisbie said.

Read the full article on The Wall Street Journal.

For more information, contact Novantas Marketing

+1 (212) 901-2772


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