Banks

Delivered March 27th, 2018. Contributors: Jessica B., Michelle R., Jacob T., Jarrett S. and

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Number of Online-Only Bank Accounts in the U.S.

Using the Millennials survey sample calculated against United States census data as a baseline, there are, at least, 831,000 individual online-only banking accounts.  Unfortunately, more precise or current figures have been found, thus far, to be publicly unavailable.

While we were unable to find exact data for the number of online-only bank accounts in the United States, we were able to locate useful statistical trends, particularly for Millennials, the demographic shown most likely to use online-only banks.  Considering this was the only demographic for which current statistics of online-only banking data were publicly available, we feel that Millennial data may be the most reliable as a baseline low figure. Other estimates for this data were behind a paywall.

Below you'll find an outline of our research methodology to better understand why information you've requested is publicly unavailable, as well as a deep dive into our findings.
MethodologyWhen a pre-compiled list of publicly available data was unable to be located, we then switched tactics to piecing consumer numbers together through industry investor reports, white papers, FDIC records, and press releases within the past two years, as well as industry-specific trend forecasts and Millennial-specific trend publications. 

The only current figures publicly available for total online-only banking consumers was found within survey data of Millennial focus groups.  Considering that Millennials are the demographic most likely to utilize online-only banking, we have provided their estimated numbers for our very conservative figure.  

Although precise numbers of current online-only banking consumers are publicly unavailable, we used several statistics to triangulate some useful data points: surveyed Millennial digital-only banking consumers, data regarding online-banking consumers, United States Census population data, and the publicly available consumer numbers reported by top online-only banks within the past three years.
Online bankingWith a population over the age of 18 at approximately 245,157,000 (318,748,000 total population in 2014 - 73,591,000 under the age of 18 = 245,157,000), and 46% of whom use online banking, we were able to arrive at an estimate of 112,772,220 (245,157,000*0.46) individual online banking-usage accounts.  Please note, however, that this data does not distinguish between users with online-only banks vs. banks with online interactive options.
MillennialsA 2017 Cornerstone Advisors survey of 2,015 U.S. Millennials consumers reported that 1% of those surveyed had a primary checking account with an online-only bank. In 2015, the U.S. Census Bureau reported the population of Millennials to be 83.1 million, with 1% of that figure coming out to 831,000 individuals between the ages of 18-34.
Switching to online-only bankingA 2016 Accenture survey of over 4,000 United States consumers reported that 11% had switched over to an online-virtual bank in the past 12 months.  If we play this percentage off of the 2014 population of 18 and over (245,157,000; triangulated above), then we can assume that the estimated number of consumers who switched over to online-only banking to be 26,967,270 (245,157,000*0.11).
PROJECTIONSWe discovered that major online retailer, Amazon, is considering initiating steps toward developing online-only banking options primarily targeted toward Prime users. As of 2017, there were roughly 90 million Amazon Prime US-based users. Of the 1,000 surveyed, 57.95% said they would consider opening an online-only savings account through the retailers, and 52.33% stated they would consider opening a primary bank account through Amazon.  Given the number of Amazon Prime users at 90 million, the number of users projected to open an online-only bank account through Amazon comes out to between 52-47 million users (90 million*0.5233 and 90 million*0.5795).
Top online-only banks in the u.s.We discovered that the major players in what is also called "Direct Banking" in the United States are as follows, presented alphabetically.  The original list was compiled with criteria that included each listed worldwide bank be independently-operated from a physical branch. We pulled only the companies based in the United States for our list, with available customer data. Although the data are presented here to provide a backdrop of the customer levels of the major players in this market, their data are too broad to effectively triangulate an estimate based on their combined numbers. 

-Ally: A 2015 press release announced over 1 million customers.

-Bank Mobile: A 2015 press release announced its first 100,000 customers, with a projection to reach 2 million by 2016.

-Finn: Launched in late 2017, with no publicly available consumer size data as of this date.  However, "Chase already has the most popular branch-based mobile app, with over 29 million users."  Considering the company's already proven mobile-app-success with its parent company, the 2018 Finn promotions should lead to high numbers once reports are released.

-GoBank: No certain consumer base available.  However, the Wal-Mart-based company plans to target the "un-banked" demographic, which means a potential customer base of over 30 million.

-Moven: No certain consumer base data available. Their Facebook page lists 6,850 "likes" and Google Play lists a broad figure of 100,000-500,000 installs. However, neither of these figures could be used as a reliable data point for triangulation since there are other avenues of download access available.

-Simple: Over 100,000 customers.

-USAA: 11.9 million members, with data figures for online-only banking members unavailable.
ConclusionConsidering that major online player Amazon.com appears to have plans to enter the world of online-only banking, one can safely assume that online-only banking will experience exponential growth in the near future.  If the demographic most likely to use an online-only banking model is used as a base figure, we can also safely assume that the current (and very conservative) number of online-only bank accounts in the U.S. is estimated at 831,000.

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Number of In-Person Bank Accounts in the U.S.

OVERVIEWBanks do not release any financial information they believe could be a privacy breach, so finding the exact number of how many in-person bank accounts there are in the US isn't possible. Only an estimation of how many in-person bank accounts could be reached. In order to make this estimation, our research team investigated the number of US citizens, how many US citizens have bank accounts, and how many bank accounts each citizen has, and then we used the available numbers to calculate the approximate number of in-person bank accounts.  In short, our calculations indicate that there are approximately 578.54 million in-person bank accounts in the United States.
THE NUMBER OF BANKERS IN THE USThe population of the United States is approximately 327.41 million. According to the Federal Deposit Insurance Corporation, the number of households without bank accounts has declined, and only 7% of US citizens don't have any kind of bank account. By using these numbers, we can determine that roughly 93% of US citizens have one or more bank account. Therefore, the approximate number of US citizens with bank accounts is 304.49 million. 

A survey done by GOBankingRates found that more than 50% of US citizens have more than one bank account. In addition, the survey found that 28% of US citizens have two bank accounts, 11% have three bank accounts, 4% have four bank accounts, and 7% of US citizens have five bank accounts. 
AN APPROXIMATE NUMBER OF IN-PERSON BANK ACCOUNTS   By using the numbers from the FDIC along with the numbers taken from the GOBankingRates survey, we can reach an approximate number of how many in-person bank accounts there are in the US. We begin by multiplying the percentage numbers we found on GOBankingRates with 304.49, the approximate number of how many US citizens have bank accounts. 

If 50% of 304.49 million people have one bank account, then we can multiply 0.5 with 304.49 to reach a total of 152.34. We can therefore conclude that approximately 152.34 million people in the US have one bank account.

By multiplying 0.28 (28%) with 304.49, we reach a total of 85.25. We can therefore conclude that approximately 85.25 million people in the US have two bank accounts.

Multiplying 0.11 (11%) with 304.49 gives us an answer of 33.49. Approximately 33.49 million people in the US have three bank accounts.

When we multiply 0.04 (4%) with 304.49 we get an answer of 12.17. Approximately 12.17 million people in the US have four bank accounts

When we multiply 0.07 (7%) with 304.49 we get 21.31, and therefore we can conclude 21.31 million people in the US have five bank accounts.

With the numbers we have calculated, we can reach an approximate value of how many in-person bank accounts there are in the US. 

The formula our research team used to calculate the approximate number of in-person bank accounts is: 

(152.34 + (85.25 * 2) + (33.49 * 3) + (12.17 * 4) + (21.31 * 5))
= 152.34 + 170.5 + 100.47 + 48.68 + 106.55
= 578.54 

The formula above calculated that there are approximately 578.54 million in-person bank accounts in the US. 
CONCLUSIONThere are no official numbers of in-person bank accounts released by US banks, and therefore finding the exact number of in-person bank accounts isn't possible. To calculate an approximate number, our team investigated the data made available by sources such as the FDIC and surveys done by GOBankingRates. After extensive research and calculations, the number of in-person bank accounts in the US was found to be approximately 578.54 million.

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Demographics of Online Bank Users

OVERVIEW
The leading target demographic for online banking is comprised mainly of millennials.  Analyzing statistics from Pew, Statista and Forbes indicated the top user trends, expectations and behaviors.  These users are also tech suave with heavy reliance on using mobile devices for banking services.  Target demographics also include white adults aged 18-29 who represent groups seeing the greatest increase in online banking.  Income is also a determining factor, with 45.6% of those earning $40,000 and up and 62.1% of those earning less than $25,000 both using the service.  
Pew Research
 51% of U.S. adults are banking online and 32% use their mobile phones to transact bank business.  61% of all internet users in the U.S. bank online and 35% of cell phone owners bank using their mobile phones.  This online mobile banking trend is expected to increase according to the Pew Internet and American Life Project.  
Associate Director for the Pew Internet Project and author of the research Susannah Fox says that young, white adults aged 18 through 29 represent the groups seeing the most significant increase in uptake of desktop-based online banking.  A chart published by Pew breaks down internet users by race, age, education, income and urbanity.  A separate chart for mobile phone users is also available.    

Other leading demographics include those who have graduated from college and high school.  Urban areas with household incomes of $50,000 and above also comprise the largest demographic.  
STATISTA
According to Statista, surveys conducted in 2015 show that 62.1% of people earning less than $25,000 USD used mobile banking.  Only 45.6% of those who earned $40,000 to $74,999 dollars used the service.  Convenience also plays a large factor in the demand for mobile banking from younger demographics.  A separate 2015 survey noted that 45% of respondents originally implemented mobile banking for convenience reasons.  
MILLENNIAL BANKERS
Banks are interested primarily in millennials (who make up the most prominent members of the above criteria) when targeting audiences today.  This audience is interested in more features and services which implement virtual components.  According to Accenture,  67% of millennials are interested in financial management tools compared to 33% of those over 55. 

Millennial interest in mobile devices also constitutes their large target by big online banks.  Mitek suggests that 85% of millennials wish they could do banking and shopping on their phones.  These millennials also spend 35 hours a week on digital devices.  52% of millennials have also used mobile devices for making some type of payment, according to Money 20/20.
FORBES
 Forbes suggests that mobile internet banking will only increase to even more demographics as community banks and credit unions begin to implement the services.  Most financial services consider mobile banking apps the standard of service.  Forbes claims that the number of mobile banking users has doubled over the past 5 years reaching 43% in 2015, nearly all whom are millennials.  

These users value the ability to check an account balance and recent transactions anytime.  They also are more likely than older demographics to transfer money between bank accounts and look forward to receiving notifications without having to visit a banking office.  These millennial users constantly demand new banking innovations, with the current top demanded service being mobile check deposit.  
CONCLUSION
We analyzed reports from Pew, Statista and Forbes as well as various annual reports, press releases and articles to explain how the millennial demographic is currently the largest market for online banking.  The 85% of millennials who reported an interest in mobile banking are the largest users of both the internet and mobile devices, both which constitute the popular trend of the current banking system.  This report details the buying behaviors and expectations of this demographic in relation to the efforts of banks who support online and mobile services.   

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Overview of Online Banks - Consumer Standpoint

Four well-known online banks are Ally Bank, Discover Bank, iGobanking, and Bank of Internet USA. Each of these banks have received good reviews from customers, but there are also reported downsides. An overview of each bank is located below. 

To decide which banks to choose, a list of top online banks was used. The top four banks were considered first, but not all had the desired information. Therefore, the banks described below are the top online banks that also had the most available information. 
Discover BankCustomers have found it fairly easy to open an account at Discover. Opening an account is a four-step process. In Step 1, the consumer is informed of the requirements to open an account. There are few requirements, such as providing a United States address, date of birth, and Social Security number. To finish Step 1, an account type must be selected and a joint owner can be added if necessary. To complete Step 2, the customer must decide how to fund the account. The account can be funded via another account, a wire transfer, or a check. A positive aspect of a Discover account is that there is no minimum for the initial deposit. Step 2 is complete once an electronic signature is given. Step 3 involves verifying the information previously provided and giving another electronic signature, this time for tax certification. In Step 4, the customer will fill out security questions based on credit report information. This is done to confirm the account. After the security and identity checks go through, an email from the bank is sent. 

According to a review from a consumer who opened an account at Discover Bank, a response from the bank comes quickly after the account is created. They received a second email just over 24 hours after the confirmation email, which was faster than expected since the account was opened on a weekend. This second email details how to access the new account. Required information to access the account includes account number, Social Security number, date of birth, mother's maiden name, user ID, password, and security questions. 

A second consumer review offers more insight on the pros and cons of opening an account with Discover. One positive aspect is that the account compounds interest daily and pays out monthly. There is also cashback checking, which gives customers 10 cents back for the first 100 transactions made with their debit card, check, or online bill pay. The customer was also satisfied with the iOS widget for the bank, even though the Discover card was not Apple Pay compatible. 

There were multiple drawbacks that came with the account as well. One main drawback is that there is a limit of six transactions per month. When trying to register the account, the button to register takes the user away from the account numbers, and there is no way to get back to them. The emails that inform the user of completed transactions only contain part of the account number, so the consumer has to wait until the paperwork gets mailed out to receive their account number again, if they did not note it in the first place. 
Ally Bank This bank has a great reputation and has been named the best online bank each year from 2015-2018 in the GoBanksRates Best Banks rankings. It has achieved this success because of its high-quality checking accounts, savings accounts, and CD accounts. Its online tools make life easy for customers as well. There is an app available for iOS and Android users. The app is easy to access and contains most of the functions available with online banking. With Popmoney, Ally makes transferring money easy as well. Users praised the ability to pay third parties through the Popmoney function, since it lets users transfer money to anyone with a U.S. bank account by using their email address or mobile phone number.  

Since Ally Bank has no physical locations, they offer phone support 24/7 and a live chat is available in the app. Another advantage provided by Ally is the WalletWise banking courses. Through these courses, the consumer is taught budgeting, banking and investing, credit, and auto-financing. Users of the bank are impressed by these courses due to their easy-to-use formats and the opportunity to learn how to improve finances. In March 2016, Apply Pay became available in the Ally Bank app on the iPhone 6 or 6s Plus, Apple Watch, iPad Air 2 and iPad mini 3. Another feature that users might find valuable is the Ally Assist program. This is a virtual bank assistant that helps users transfer money, make deposits, pay bills, and even see saving and spending patterns. The downside is that this feature is currently only available to iPhone users. Card Controls is another feature, and it allows users to build protections into their debit card. This helps the user establish spending limits, manage notifications, and view transactions.

Even though Ally has been named the best online bank, it has received some complaints from customers as well. Like Discover Bank, there is a limit of six transactions per month. Also, some users feel that it takes too long to deposit checks by phone, or that it takes a few attempts to use some functions of the app, such as finding ATM locations. Although the app has earned decent ratings from users, these ratings are almost all for past versions. Complaints include inconveniences like slow reaction time and blurred and misaligned photos for check deposit. Some more recent reviews claimed these issues were fixed, but a few reviewers were still experiencing issues as recently as May 2016. A final drawback is that the bank does not accept cash. 
iGobanking 
This bank is a division of Flushing Bank. iGObanking.com offers customers easy access to their accounts via Flushing Financial’s online and mobile banking platform, along with over 50,000 ATMs nationwide. Users can access their savings account anytime, find an ATM, check account balance and history, and transfer funds through mobile banking. iGObanking offers checking, savings and money market accounts with competitive interest rates, no hidden fees or minimum balance requirements, and makes it simple to open an online account. Joining is an easy process, and only requires Social Security number, ID, home address, and bank account and routing number to fund the account. iGObanking has a mobile banking account that is comparable to similar online accounts. Many standard mobile banking features are available, including mobile deposit, balance inquiries and free bill pay. 

Based on a review of iGObanking, several problems with the bank were found, along with the positive aspects described above. One problem was that while opening a CD was easily located, a specific rate could not be found. Also, the website seemed hard to navigate. After opening tab after tab, the user finally found the information they wanted, but they almost lost interest in what they were doing. All in all, it is likely for users to experience quality mobile banking but poor user interface with this bank.
Bank of internet USABank of Internet USA is known to cover the main banking services, but it usually falls short of banks with physical locations. It extends home equity loans and credit lines, mortgages and a variety of deposit accounts. Its money market account shares gives users free, online, external account transfers and the ability to write checks against it. To help protect accounts, the bank uses two-factor authentication, and the user can set up notifications to alert them of account activity in order to help them better monitor their accounts.  
For online savings accounts, the interest rates are lower than average, but their rewards checking account offers unlimited ATM fee reimbursements, which is not offered by Ally and Discover Bank. Mobile banking is available, and has apps available on iTunes and Google Play. With this app, users can check available balances, view transaction history, transfer funds between accounts, pay bills and view and activate cash back offers. The app has been rated 4 out of 5 stars, and was last updated on September 12, 2017. 

Bank of Internet USA provides online statements and accepts direct deposit. It also gives users free money management software called FinanceWorks and has online calculators to help users determine mortgage costs and interest earnings. Another advantage is that deposited funds are available within one to two days, which is slightly better than average for internet-only banks.

In 2016, the bank launched its redesigned website with enhanced mobile banking capabilities. The new site features a fresh look, easier access to social media tools and enriched content to help customers find the information they need to make informed financial decisions.  
According to a review of the bank, the website makes it easy to see what distinguishes the different checking accounts, including rates and features. It has useful digital tools as well. For example, users can link and see all their bank accounts, regardless of the bank, from Bank of Internet’s FinanceWorks tool on its website or mobile app. The bank has a customer support team at headquarters available by phone on weekdays, along with a third-party call center to provide around-the-clock phone support. The bank has live chat support on its site as well.

Some downsides of the bank are described as well. One problem is that users need to scroll through a long account disclosure to find two sets of fees, which can be confusing.  Bank of Internet uses a service called Reload @ the Register, which lets customers add cash to their accounts at retailers such as 7-Eleven and CVS Pharmacy, but it can cost up to $4.95 per deposit. Overall, the bank is currently being rated 4 out of 5 stars. 
conclusionIn conclusion, these four banks have covered the majority of consumer needs, but no bank is without its problems. Ally Bank has been ranked as the best online bank, but the others are not far behind. 