The US banking system includes about 7,100 commercial banks, 1,200 savings banks, and 8,000 credit unions, with combined annual revenue of about $630 billion. Large commercial banks include Bank of America, Citibank, JPMorgan Chase, and Wells Fargo. ING Direct and Navy Federal Credit Union are among the largest savings banks and credit unions, respectively. The industry is concentrated: the 50 largest firms generate more than 60 percent of revenue. Commercial banks account for 81 percent of industry revenue; savings banks, 13 percent; and credit unions, 6 percent.
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. Smaller banks can compete successfully in segments where customer service or knowledge of the local market is more important. The industry is capital-intensive and highly automated: annual revenue per employee is close to $300,000.
Many banks and thrifts aggressively offered adjustable rate and subprime mortgages during the housing boom of the early 2000s only to find themselves saddled with loan defaults and extensive losses when the housing bubble burst. Deep exposure to subprime mortgages and mortgage-backed securities caused bank failures, government takeovers, and involuntary mergers.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products are bank loans, account services, brokerage services, credit card ...
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