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, and HSBC Holdings (UK).

North America accounts for about 30% of global banking revenue, followed by Western Europe and China (20% each), according to consulting firm McKinsey & Company. China -- home to four of the world's 10 largest banks -- represents a huge growth opportunity for banks, as does the massive unbanked population in India.

The US banking industry includes about 4,430 commercial banks, 640 savings institutions, and 5,160 credit unions with combined annual revenue of $617 billion. Commercial banks have about $19.8 trillion in assets, savings institutions $1.2 trillion, and credit unions $1.75 trillion.

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 and savings segments are concentrated: ...