The Changing Banking Market

Public antipathy toward large financial institutions  may have been building throughout much of the past decade but it surely peaked during and immediately following the recent recession and the financial crisis that helped precipitate it.  One result appears to be a changing market structure for deposits and loans at financial institutions in NH and across the country.  The recession in our state was less severe than was the recession of the early 1990’s, and less severe than was the recent recession  in  many states because of the the overall health and strength of our state’s banking institutions.  Nevertheless, one fallout from the financial crisis appears to be a growing market share for credit unions in the state.  As the chart below shows, since the recent recession, deposits at credit unions have grown much faster than deposits at NH banks overall.  Deposits at NH community banks have grown faster than deposits at all NH banks, suggesting that deposit gains by credit unions have come largely at the expense of large banks in the state, as deposit growth for all NH banks is much lower than the growth among just community banks.  Prior to the recession and financial crisis, deposits at NH community banks were growing faster than were deposits at credit unions.

It would be unfortunate if community banking institutions that have had strong commitments and links to their local communities  and regional economies are tarred by the actions of institutions from afar. Beyond that, a fundamental change in the market shares for financial services could  have significant impacts on the regulation of financial services, on government revenues , and on market shares as the tax exempt status of credit unions contributes to their ability to compete and capture market share.  The increased concentration of deposits in the banking industry that occurred during much of the 1980’s and 1990’s may now  be occurring among credit unions.  As the services credit unions offer and their branching look more and more like those of banks, their ownership and regulatory structure may be the only thing that distinguishes them from banks.

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Explore posts in the same categories: Banks, Credit Unions, Financial, Household Finances, NH Economy, Recession

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2 Comments on “The Changing Banking Market”

  1. Muriel Says:

    Do you have statistics/information about whether the (smaller) credit unions are able to keep pace with online security requirements, as compared to the large(r) banks?


    • Muriel,

      I don’t have any information or data on that. The growth of CU’s seems to be increasingly concentrated at a few large institutions in each market. A cursory review of some of the larger institutions in several states suggests a much greater level of sophistication and breadth of services (including online) than most smaller CU’s. It may be inaccurate but my assumption is that the broader, more sophisticated services they offer is matched by their more sophisticated security efforts but I have more anecdotal than empirical support for that assumption.

      Brian


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