LAKE FOREST, Ill.– The word “checking” is “going the way of the word “slide rule,” according to a new analysis that offers a number of “startling” insights into how the checking account market is changing in the U.S.
There are 687.7 million checking accounts holding more than $2 trillion in checking deposits in the U.S., and that number is falling–except at credit unions and other providers such as Walmart–where total deposits are climbing, that analysis has found.
The new study by Moebs $ervices also reveals that big checking gains are being made by retail firms, such as Walmart, using fintech firms, and that this shift could someday even eliminate the term “checking.”
“Wells Fargo ranks number one, yet, has lost 19.1% of its checking since 2011, while Bank of America, ranked second, has gained 8%, and JP Morgan Chase, a distant third, has gained 15.9%,” explained Michael Moebs, economist and CEO at Moebs $ervices. “Wells Fargo’s checking loss is mostly due to its fake account scandal, yet it is still first in checking.”
Moebs said the new checking study is a first.
“No one has ever ranked financial institutions by the number of checking accounts,” said Moebs. “The results of this study are startling.”
The top nine insured deposit FIs have 43.1% of total checking accounts (both consumer and business) and 42.8% of all transaction deposits, he said. The top nine insured depositories are ranked by 10 million checking accounts or more.
The report shows thrifts and non-depository firms, such as investment banks, industrial banks and credit card banks, are the big losers, having lost 88-million checking accounts since 2011.
Credit unions have gained 18.7% in checking since 2011, yet most CUs have checking portfolios with less than 10,000 accounts per credit union, Moebs noted.
“The biggest winners are Walmart and other non-traditional firms using third-party depositories and fintech firms. Overall non-traditional firms now have 12.4% of all checking,” said Moebs. “Walmart is staking out a huge position in the checking business, and is doing so with a low amount of checking deposits, but high swipe fee revenue to offset its interchange costs.”
Moebs noted that 50 years ago there were more than 40,000 depositories offering checking accounts and no Walmart to compete with.
“Today there are less than 10,000 FIs offering checking, and many non-traditional firms,” said Moebs. “In 2010 there was a fundamental shift in the checking business when Bank of America decided to forsake the overdraft market by not allowing debit card ODs, and then three years later reducing its checking offerings from 11 to two accounts. Total checking peaked in 2011 at insured depositories, except for CUs. The decline in checking is due to a fundamental change in pricing.”