The Rise of the Overbanked and the Opportunity to Serve Them

Meet Alvin, a Silicon Valley executive in his late-30s. Alvin has accounts with three banks, an online brokerage account and has borrowed from no less than nine lenders in the past five years.

In today’s world, why wouldn’t he? Quick and easy enrollment processes, fee-free offers, mobile apps to keep on top of things and competitive shopping information make finding and maintaining several open accounts with multiple financial institutions free and easy for Alvin.

Financially literate, technologically savvy and affluent, Alvin is a member of the overbanked.

The overbanked are consumers who hold open deposit accounts with three or more financial institutions. According to Dennis Chira, an Oliver Wyman survey in January 2016 showed the overbanked account for ~10 percent of the banking population, have an annual household income of ~$170,000 and hold household assets of ~$900,000.

With many of today’s banking customers having multiple accounts at multiple financial institutions, progressive FIs are looking for ways to increase their share-of-wallet to fuel future growth. This may be particularly timely, as recent Mercator Advisory Group CustomerMonitor Survey Series research has shown a trend toward consumers choosing fewer institutions in which to bank. This means potential opportunities for those FIs that are listening to their customer’ and members’ needs as they strive to grow their market share and become their clients’ primary financial institution.

Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group

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