Banks & Credit Unions Industry Overview

Excerpt from Banks & Credit Unions Report

Companies in this industry primarily accept deposits and make commercial, industrial, and consumer loans. Major companies include Bank of America, Citibank, JPMorgan Chase, Wells Fargo, and Navy Federal Credit Union (all based in the US), as well as BNP Paribas (France), Deutsche Bank (Germany), and HSBC Bank (UK).

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. Smaller banks can compete successfully in segments where customer service or knowledge of the local market is more important.

Products, Operations & Technology

Major products are bank loans, account services, brokerage services, credit card and leasing services, trust management, and investment services. Bank loans provide about 55 percent of commercial banking revenue, securities financing provide 16 percent, the other major services each provide less than 5 percent. After adoption of the Gramm-Leach-Bliley Act of 1999, some banks have used the financial services company structure to acquire large insurance or retail securities brokerage operations. Commercial banks, savings institutions, and credit unions provide many of the same products. However, commercial banks get a large percent of their revenue from services, while savings banks and credit unions get a majority of their revenue from loans.