Retail Banking US - Trends in Deposits
Trends shown in deposits with respect to retail banking in the United States are that customers are more likely to make deposits through ATMs and mobile banking, while over-the-counter deposits will continue to decline. Banks continue to reduce their branches, cutting real estate costs, while gaining increased deposits by way of non-cash payments. While the frequency of deposits made using debit cards is higher, the value of deposits made by credit cards is greater. Below, you will find a deep-dive of our findings and the methodology used to arrive at them.
While we have found accurate data and information to analyze trends in deposits with respect to retail banking in the US from 2007 to 2017, there were no reliable sources available for the year 2018. The Federal Reserve Payments Study- a triennial study by the Federal Reserve System, last released a report in 2016 with statistics and estimates to show the growth rate of trends we have observed in the last 10 years with respect to deposits, indicating that the trends are set to continue and hold true for the current year as well.
RETAIL BANKING AND CHANNELS FOR DEPOSITS
Retail banking- also known as personal banking is the division of a bank that deals directly with their retail customers. Branches of banks facilitate retail banking.
Deposits are made in any of the 3 ways:
-Over-the-counter(through a Teller)
-Through an ATM
-Mobile Banking (for online transactions)
Over-the-counter transactions involving Tellers has been declining steadily, as the number of bank branches has been decreasing, with 97,000 branches in 2007 having reduced to 90,000 in 2017 mainly due to banking companies in the United States making efforts to tighten operating costs after the recession. An estimated $8.3 billion can be saved by banks annually in direct real estate costs alone by facilitating online transactions.
The decline in over-the-counter deposits can also be attributed to costs involved in making deposits, with mobile deposits currently being cheapest at $0.08, ATM deposits costing $0.8 and over-the-counter deposits being most expensive at $8 per deposit.
Corresponding to the trend of more customers embracing mobile banking owing to reduced cost for deposits, total deposits in retail banking have also been increasing steadily from about 6-7 trillion USD in 2007, to an estimated 9 trillion USD in 2012 to 11.3 trillion USD in 2016, which marked a 70% increase in deposits.
THE SIZE OF DEPOSITS
The exact amounts corresponding to domestic deposits in retail banking for those years were found to be $11,150,570,345,000 in 2017, $8,641,916,965,000 in 2012 and $5,811,799,951,000 in 2007.
This marked increase in deposits over the years is also attributed to Americans holding about $2 trillion in checking accounts currently, with their "love (for) liquidity". The average checking account deposit in the United States as of 2017 is about $3,600, climbing up from $1,000 in 2007.
THE SHIFT TO ATMs AND MOBILE BANKING
In 2007, in a retail banking and deposits statistics report, half of the bank offices at the time the sample was drawn issued 70 million debit cards and 57.7 million credit cards. Doubling those numbers to estimate the number of cards issued by all the banks offices at that time, we arrive at the estimates of about 140 million debit cards and 115.4 million credit cards.
Moving forward to 2012, of 776 million active general purpose cards, 334 million were credit cards, 283 million were debit cards, and 159 million were prepaid cards. It is noteworthy that there were more credit cards active than debit cards then.
In the same year, despite the growth of ATMs, 59% of the total value of cash deposits were made via over-the-counter transactions compared to 41% made through ATMs. However, at that time, the frequency of cash deposits made through ATMs was higher than those made through bank branches and cash vaults.
As of 2016, mobile banking has gained traction, with 94% of consumers surveyed having checked an account balance or information regarding their recent transactions using mobile phones, 58% having transferred money between bank accounts electronically using mobile phones, and 48% having deposited a check in an account electronically using their mobile phone's camera.
Also, total non-cash payments including deposits made using debit and credit cards continue to rise at an annual rate of 5.3%, with $3.16 trillion worth of payments made using credit cards compared to $2.56 trillion made using debit cards as of 2015. However, in terms of frequency, the number of debit card payments (including payments with prepaid and non-prepaid cards) were higher with 69.5 billion payments in 2015 as compared to 33.8 billion by credit cards. The above-mentioned data was made available in December 2016 by the Federal Reserve Payments Study 2016, and with total non-cash payments set to increase at an annual rate of 5.3%, the same continues to hold good for trends in retail bank deposits today.
To sum it up, the general trends observed are that consumers are more likely to make deposits through ATMs and mobile banking, while over-the-counter deposits will continue to decline. While the frequency of deposits made using debit cards is higher, the value of deposits made by credit cards is greater. Banks also save more annually in real estate costs while continuing to gain increased deposits.