Reaching critical mass?

Over the past three years, digital has not only continued to spread in US banking but broken through some important barriers.

Reaching critical mass

US retail revenues after risk cost increased to $560 billion in 2017, up 16 percent since 2011. Most of the revenues are concentrated in one income segment and one age group (with, of course, some overlap): the lower mass, which produced 40 percent of total revenues, and older households (those of people aged 50 and older), which generated 60 percent of total revenues. The fastest growth was in the high-net-worth (HNW) segment, in which revenues more than doubled.

It is exactly in these segments—lower mass, older people, and HNW segments— where digital finally reached a tipping point in recent years. Today, 77 percent of all the sociodemographic segments (weighted by revenue) we studied are influenced by digital: at least 60 percent of the households use the internet to research banking products and services,1 while six years ago, this figure was only 35 percent. While in 2011, digital influence was much more prevalent in younger and wealthier cohorts, by 2017, US banks had broken a demographic wall. Today, all middle-aged segments, and even the majority of the older segments (aged 50 and older), are digitally influenced.

What will happen next? Banks now face broad demand for digital solutions. Yet truly deep, digital, end-to-end processes are not yet widespread. Only 26 percent of the US population use digital channels to start the purchase of banking products (compared to 40 percent in Scandinavian countries),2 but the share of sales that are completely digital from start to finish was only 12 percent in 2017.3 Accordingly, we expect the next wave of digital growth to come not from growing breadth but increasingly from growing depth: customers using digital not just during search but, more and more, for the whole journey. If US banks follow the Northern European path, we will see real shifts in market shares and positions in the coming years.

Detailed views on the economics of banking are available by request from Panorama Global Banking Pools by McKinsey. Should you want more details or have any questions, Panorama’s help desk ( is happy to provide methodological and analytical assistance.