Industrial Banks in the US
Over the five years to 2018, the Industrial Banks industry has become more conspicuous in the public spotlight. They are often established by nonfinancial enterprises to provide consumer financing, to make intracompany transactions, or to simply enter the credit market. The Federal Deposit Insurance Corporation (FDIC) placed a moratorium on new industrial bank applications in 2007, which the Dodd-Frank Wall Street Reform and Consumer Protection Act extended in 2010. The moratorium expired in July 2013, approving new entrants into the industry for the first time in nearly six years. Although the moratorium has been lifted and industry grew faster than the overall banking sector over the five-year period, acquisitions and troubled parent companies caused the number of industrial banks to decline. However, the industry's attractiveness to financial technology companies and nonfinancial institutions is increasing, leading to a potential increase in new entrants over the five years to 2023. Entry into the industrial bank market is contingent on the holding company meeting the capital reserve requirements dictated the FDIC.
Industrial banks, also known as industrial loan companies, are financial institutions authorized to make consumer and commercial loans and to accept federally insured deposits. Either financial or commercial operators can own these types of banks. The Federal Reserve does not regulate industrial banks under the Bank Holding Act; instead, the state under which they are charted and the Federal Deposit Insurance Corporation regulates them.
This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.