ECN 502 U S Banking & Financial Services Industry Report

This presentation examines the evolving landscape of competition within the United States banking and financial services industry. Over the past four decades, deregulation, interstate banking reforms, and the 2008 financial crisis have driven significant consolidation, reducing the number of banks from more than 14,000 in the 1980s to fewer than 5,000 today. The four largest institutions, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, now hold nearly half of total banking assets, raising concerns about market concentration and financial inclusion. The study explores the dual impact of this consolidation: while large banks benefit from economies of scale, smaller community banks struggle, contributing to the rise of banking deserts. At the same time, the rapid growth of financial technology firms has introduced new forms of competition and collaboration, reshaping customer expectations and access to financial services. With 24 billion dollars in fintech investments in 2024, partnerships between established banks and startups have fostered innovation and expanded digital access. However, regulatory frameworks, though vital for stability, often reinforce the advantages of large institutions. To promote a more inclusive and competitive system, the presentation recommends policies such as mandating open banking and data portability, strengthening antitrust oversight, supporting community banks, and creating regulatory sandboxes for fintech innovation. Overall, the analysis highlights the need for balanced reform to ensure that competition drives both efficiency and equity in the modern United States financial sector.