Skip to Main Content

Commercial Banking

The Industry Today

Commercial banking in the United States is a broad and diverse industry. It covers the very large banks financing U.S. and international corporations, community-based “mom and pop” banks catering to the banking needs in their local community, and “thrift” institutions (savings banks and savings associations), so-called because their original purpose was promoting small investor “rainy day” savings and financing home mortgages. Add to the mix credit unions, which are nonprofit institutions that compete with banks and thrifts for consumer banking customers. They provide many of the same financial services (checking and savings accounts, credit cards, equity credit lines, and home mortgages) as banks and savings associations, but they don’t write business loans.

The U.S. banking industry had 4,375 commercial banks and savings associations as of Quarter 3, 2020 (according to the Federal Reserve Bank of St. Louis) and 4,853 federally insured credit unions with 132.6 million members, as of June 30, 2022 (according to the National Credit Union Association). Due to a heavy wave of consolidation since the mid-1980s, the industry is concentrated among the largest banks. The 50 largest banking companies currently generate about 70 percent of commercial bank revenue annually. Comparing all banking organizations—banks, savings associations, and credit unions—commercial banks control about 75 percent of total banking industry revenue, followed by smaller banking institutions such as savings associations (17 percent) with credit unions contributing another eight percent of annual industry revenue.

Breaking further out of the banking landscape, banking organizations play up their strengths along functional lines. Consulting firm Booz Allen Hamilton breaks down these market niches as follows:

  • Universal Bank: Banks like JPMorgan Chase leverage their balance sheets across many different lines of business and have the advantage of product bundling and low cost.
  • Securities Service Expert: An example is BNY Mellon; these banks can leverage high-volume businesses on top of core securities servicing.
  • Market Specialist: HSBC, Standard Chartered, Societe Generale. These banks stress their local market intelligence to gain operational efficiency.
  • High Touch Servicer: Brown Brothers Harriman, Northern Trust. These banks focus on investment services for high-net-worth customers.
  • Niche Players: U.S. Bancorp. These banks offer specialized services supported by long-standing ties to local markets and clients.

In recent years, fintech companies, challenger banks, and other non-financial services firms have begun to offer financial services to consumers, businesses, and other organizations that were once offered solely by traditional banks. Examples of fintech products and services include mobile payments, insurance (known as insurtech), crowdfunding platforms, distributed ledger technology, blockchain and cryptocurrency exchanges, small- and medium-sized business lending, robo-advising and stock trading apps, and budgeting apps. “Consumers are drawn to fintech services because propositions are simpler, more convenient, more transparent, and more readily personalized,” according to the accounting firm EY’s FinTech Adoption Index.

The Forbes Global 2000 is an annual ranking of the top 2,000 public companies in the world in a range of categories. In total, 292 banks were on the 2022 Global 2000 list, up from 289 the previous year. Forbes ranks the companies using a combination of four metrics: sales, profit, assets, and market value. In 2022, the top U.S.-headquartered companies were JPMorgan Chase (ranked #4), Bank of America (#9), Wells Fargo (#18), Citigroup (#27), Morgan StanleyMS (#36), and Goldman Sachs (#37). According to The Banker’s Top 1000 World Banks Ranking for 2022, total assets for global banks reached $154 trillion, up from $124 trillion in 2018.

There are several key organizations in the banking industry.

  • The American Bankers Association describes itself as the “united voice of America’s banks—small, regional, and large.” Its members employ 2 million women and men, hold $23.8 trillion in assets, safeguard $17.2 trillion in deposits, and extend $11.2 trillion in loans. It provides extensive continuing-education programs, publishes the ABA Banking Journal, and offers 10 professional certification programs in the areas of bank marketing, wealth management and trust, compliance and risk management, and retirement services
  • Independent Community Bankers of America (ICBA) represents 5,000 community banks in the United States. They “provide roughly 60 percent of all small business loans, make more than 80 percent of agricultural loans, have nearly 50,000 locations nationwide, and employ nearly 700,000 people," according to the ICBA. The association offers certification credentials, continuing education classes, webinars, and workshops. It also publishes Independent Banker magazine.
  • The Securities Industry and Financial Markets Association is a trade organization for broker-dealers, banks, and asset managers. It offers the Securities Industry Institute, an executive development program for securities industry professionals held at The Wharton School of the University of Pennsylvania.
  • The Credit Union National Association advocates on behalf of all of America’s credit unions in the areas of regulatory relief, tax issues, payments and technology, and charter enhancement, among others.
  • The Mortgage Bankers Association represents companies that originate, service, securitize, invest in or insure residential and/or commercial/multifamily mortgages. It offers continuing education opportunities; hosts mPact, a network for young professionals in the real estate finance industry; and publishes Mortgage Banking.
Featured Companies