Competitive rivalry: The Retail Banking and Credit Unions have seen a drop in the number of FDIC-insured commercial banks since 2013. This market has maintained a downward trend falling 4% year after year till 2006 and fell 31% from 2006 to 2016. The number of branch closures is expected to continue to drop as companies, like Wells Fargo, have made it public that they are planning on closing 800 branches by the year 2020. Two of the larger banks, Wells Fargo and Bank of America, are moving towards less physical banks and more online or mobile services. The retail banking market also has problems when it comes to differentiation. 44% think all banks are pretty much the same but 44% also would switch banks if they were offered a good enough …show more content…
Also, only a third of consumers think startups could offer more innovation. Financial startups and Fintech companies do offer some progress and invention, but the majority of consumers, over 80%, are satisfied with their current bank or credit union. Many consumers like the idea of the latest technology being used for banking but aren’t willing to get up and make the switch. Even though we are seeing a decline in the overall number of commercial banks there are a few who have a major competitive advantage over their others. Fifth Third Bank offers a service marketed towards Millennials and their growing college debt. Just over 20% of Millennials said that their biggest financial challenge is paying their student loans. Fifth Third Bank saw this as an opportunity to come up with a mobile app called “Momentum” to help tackle student debt. The app works by …show more content…
This strategy is called “open banking” and it starting to really appeal to consumers. This is because many businesses have their own financial services with usually lower fees and discounts than you would find in a bank. This new concept of banking hasn’t made it to the US yet but the retail banking industry should keep a close eye on this trend. It could potentially change how Americans choose to do their banking. Wealthier consumers are especially more willing to be tracked by merchants if they somehow