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US COMMERCIAL BANKING MARKET- Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 120 Pages
  • March 2022
  • Region: United States
  • Mordor Intelligence
  • ID: 5572840
The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking. Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.

Commercial banking provides customized banking products and services to middle market companies with annual sales ranging between $10 million and $500 million. Middle market companies often have more complex financial needs than small businesses, and they can benefit from the specialty of a commercial banking partner to help them work toward their financial and operational goals.

A commercial bank is where most individuals do their banking. They make money by providing and earning interest from the loans they’ve provided to others, like mortgages, auto loans, business loans, and personal loans. When a customer deposits money, it is used to provide the bank with the capital to make the loans.

In October 2020, the value of loans of U.S. commercial banks amounted to over 14.9 trillion dollars, up from about 13.7 trillion in the previous year. banks, globally, need to counter the strong headwinds to achieve profitability, given compressed NIM from lower rates and lower demand for loans. In the United States, both revenues and net income for US commercial banks won’t bounce back to reach prepandemic levels until 2022.

Key Market Trends

US is ahead in adopting Blockchain Technology in Financial and Banking sector.

With an initial purpose of a mechanism behind cryptocurrencies, today the blockchain technology has stepped far beyond just powering the bitcoin or ether transactions. Blockchain is a powerful and secure technology that is getting into almost every industry, from banking and medicine to the government sector.

The shared infrastructure of blockchain ensures the veracity of information, making it easier for banks to detect fraud and eliminate risks. With the potential to reduce operational costs while improving efficiencies, blockchain will be a potential gamechanger in the near future.

Blockchain is being suggested as way to streamline and de-risk the factoring business, where banks advance funds to the seller of goods or services before the buyer has paid for them. This is another cumbersome process that involves manual checking and opportunities for fraud, and could be made more efficient by a single, distributed ledger including smart contracts. For commercial banks looking for more efficient - and therefore cheaper - ways to support high-friction operations such as these, blockchain looks to have great potential.

Blockchain brings the benefits such as it records and validates each and every transaction, it does not require third-party authorization. Blockchain is decentralized has revealed that it is also looking for an acquisition in the USD 20 to USD 30 billion range. Interestingly, such a deal may push BB&T over the new, USD 250 billion thresholds.

Use of Open Banking is gradually increasing in United States.

The Open Banking movement starts with the banking industry, but it will soon expand to Open Everything: open finance, open government, open healthcare, as well as other industries. Global phenomenon driven by consumers who want to control where, when, and how their personal data is shared and manage it from one place.

In the USA, unlike in Europe, where it has been driven by the PSD2 regulation, Open Banking took a late start, but it is becoming a central topic of discussion for the largest banks. Many are now seriously committing resources to their Open Banking efforts by putting an organization in charge of formulating a strategy. In Open Banking, regulators see an impetus for greater competition and an opportunity to foster innovation and address consumers’ rights to own their own data. Some banks have sought to get ahead of the Open Banking curve, typically by seeking to develop application programming interfaces (APIs), which essentially allow different organizations’ computers to exchange information and provide the technical underpinning for Open Banking.

In global media coverage of Open Banking, much of the emphasis has been on retail solutions in areas such as payment initiation, multi-bank account aggregation and the streamlining of the credit application process. However, Open Banking may have an even bigger impact on corporate and small-to-medium enterprise (SME) customers. This reflects not only banks’ response to regulators’ concerns, but the power of new capabilities supported by digital technologies such as cloud, blockchain and artificial intelligence.

For consumers, being able to manage their full financial assets in one place and freely compare financial institutions’ fees and interest is an exciting proposition; however, one that might not be so attractive for banks, at least on the surface. On top of that, cybersecurity’s concern is high on both sides and might even be an inhibitor for wary consumers in fear of seeing their accounts being hacked.

Open Banking is poised to redraw the competitive landscape of the future. Those banks that invest in their capabilities will position themselves well to remain as strong consumer-facing brands.

Competitive Landscape

The US Commercial Banking Market is highly competitive, with the presence of major international players. JP Morgan Chase & Co., Bank of America Corp, Citigroup Inc., and Wells Fargo & Co. has the highest market share since a decade. The US Commercial Banking Market presents opportunities for growth during the forecast period especially for the FinTech Startups which are collaborating with these large players, which is expected to further drive market competition. With a few players holding a significant share, the US Commercial Banking Market has an observable level of consolidation


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Table of Contents

1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
4.1 US Current Economic and Banking Industry Scenario
4.2 Impact of Government Regulations and Initiatives on the Banking Industry
4.3 Review and Commentary on the Global Banking Industry on US Commercial Banking
4.4 Key Trends in US Banking and Finance Industry
4.5 Review and Commentary on the extent of RegTech on the Banking Industry
4.6 Digital Disruptions and Technological Trends in the US Banking Industry
4.7 Review and Commentary on US Banking Sector and FinTech Collaborations
4.8 The shifting landscape of US commercial middle market banking
4.9 Market Drivers
4.9.1 Deepening share of wallet through fee-based products
4.9.2 Embedding data and analytics in decision making
4.10 Market Restraints
4.11 Porters 5 Force Analysis
4.11.1 Threat of New Entrants
4.11.2 Bargaining Power of Buyers/Consumers
4.11.3 Bargaining Power of Suppliers
4.11.4 Threat of Substitute Products
4.11.5 Intensity of Competitive Rivalry
4.12 Impact of Covid 19 on the Market
5.1 Depository services and other noninterest-income generating products
5.2 Lending Services
5.2.1 Commercial and industrial loans
5.2.2 Residential, Agricultural and Real Estate loans
5.2.3 Loans to individuals excluding credit cards
5.2.4 Credit card loans
5.3 Other Services
6.1 Market Concentration Overview (Includes Market Shares and Recent M&A Deals)
6.2 Company Profiles
6.2.1 JP Morgan
6.2.2 Bank of America
6.2.3 Wells Fargo
6.2.4 Citibank
6.2.5 Goldman Sachs Group Inc
6.2.6 Morgan Stanley
6.2.7 US Bancorp
6.2.8 PNC Financial Services Group Inc
6.2.9 Capital One Financial Corp*

Companies Mentioned

A selection of companies mentioned in this report includes:

  • JP Morgan
  • Bank of America
  • Wells Fargo
  • Citibank
  • Goldman Sachs Group Inc
  • Morgan Stanley
  • US Bancorp
  • PNC Financial Services Group Inc
  • Capital One Financial Corp*