Commercial Banking Market in the US Size, Forecast, and Competitive Landscape: Explore FB Bancorp's Potential in the US

Commercial Banking Market in the US 2025-2029

The US commercial banking market is a highly competitive and dynamic sector, characterized by a diverse range of services including loans, deposits, wealth management, and payment solutions, catering to businesses of all sizes and driving economic growth. The market is expected to grow by USD 50-200 billion at a CAGR of 2%-5% between 2025 and 2029. Exact values for this market can be accessed upon purchasing the report. Key companies in the commercial banking market in the US include:

• East West Bancorp
• First Republic Bank
• PacWest Bancorp
• Zions Bancorporation
• Others

FB Bancorp in the commercial banking market in the US

FB Bancorp, Inc. recently launched its IPO on the Nasdaq in October 2024 under the ticker symbol FBLA, creating a new opportunity for investors. FB Bancorp is a financial institution headquartered in California, offering a range of banking services including personal and business banking, loans, and wealth management solutions. FB Bancorp has built a strong reputation for its commitment to customer service, local community support, and innovative financial solutions. With a focus on growth and stability, FB Bancorp aims to provide tailored financial products that meet the evolving needs of its customers while maintaining a solid presence in the competitive banking sector.

How is the commercial banking market in the US segmented?

Product Type

• Loans and Credit
• Deposits
• Treasury and Cash Management

Consumer Type

• SMBs
• Large Corporations

Commercial business loans are a leading type of product offering, as they are fundamental for businesses to access working capital, fund growth, and manage cash flow, driving revenue for banks and supporting economic activity.

Why explore the commercial banking market in the US with Technavio?

Recent developments in the commercial banking market in the US reflect a combination of regulatory shifts, technology-driven transformations, evolving customer demands, and economic changes. Commercial banks are investing heavily in digital banking platforms, leveraging artificial intelligence (AI), machine learning, and data analytics to improve customer service and operational efficiency. Many banks are forming partnerships with fintech firms to offer innovative products, such as embedded payments, instant lending, and AI-driven financial services.

Commercial banks are increasingly aligning with environmental and social goals by financing renewable energy projects and adopting ESG criteria in their loan portfolios. This is part of a broader trend toward sustainable finance, where banks are also incorporating ESG standards in risk management and lending policies. The issuance of green bonds by banks has become more common, funding environmentally friendly projects like energy-efficient building construction or clean energy development.

What market dynamics are influencing the commercial banking market in the US?

Challenges: Interest Rate Environment

• Federal Reserve Policies: The Federal Reserve's monetary policy, particularly interest rate changes, significantly impacts commercial banks. Higher interest rates can boost banks' net interest margins (the difference between what banks pay on deposits and charge on loans), increasing profitability. However, higher rates also raise borrowing costs for businesses and individuals, which can dampen demand for loans, particularly in areas like real estate and consumer lending.

Opportunities: Technological Innovation and Digital Transformation

• Fintech Integration: Commercial banks are increasingly partnering with or competing against fintech companies that offer innovative financial services, such as digital payments, lending, and wealth management. Banks are investing in their own digital infrastructure to provide seamless online banking experiences, mobile apps, and embedded finance products.
• Automation and AI: Banks are using artificial intelligence (AI) and machine learning to improve operational efficiency, enhance risk management, and offer personalized financial services to clients. AI is also used in fraud detection, credit scoring, and customer support through chatbots.

Trends: Customer Expectations and Experience

• Demand for Digital Banking: As businesses and consumers become more tech-savvy, there's a growing expectation for fast, convenient, and mobile-first banking services. This demand is pushing banks to invest in digital platforms, mobile apps, and 24/7 customer support.
• Personalization: Businesses and individuals increasingly expect more personalized banking experiences. Data analytics and AI are helping banks offer customized products, such as tailored loans, investment advice, and cash management services, based on the unique needs of their clients.
• Cashless Society: The move toward a cashless economy is accelerating with more emphasis on digital payments, mobile wallets, and contactless transactions. Banks are adapting by enhancing payment platforms and integrating new payment technologies like real-time payments (RTP) and cross-border payments.

Questions to consider when investing in the commercial banking market in the US

What is the bank's financial health and performance?

• Profitability: How consistent are the bank's earnings growth? What is its Return on Equity (ROE) and Return on Assets (ROA)? These metrics provide insight into how well the bank is generating profit from its assets and equity.
• Capital Adequacy: Does the bank maintain adequate capital buffers (e.g., Common Equity Tier 1 (CET1) ratio) to absorb potential losses, especially during economic downturns? How well does it comply with regulatory capital requirements like Basel III?
• Asset Quality: What is the bank’s non-performing loan (NPL) ratio, and how does it manage credit risk? Is the loan book diversified, or is it concentrated in riskier sectors (e.g., commercial real estate, high-risk loans)?
• Efficiency Ratio: How efficient is the bank at converting revenue into profit? A lower efficiency ratio generally indicates better operational efficiency.

What is the bank’s risk management strategy?

• Credit Risk: How does the bank assess and manage credit risk, particularly during periods of economic uncertainty or rising interest rates? How diverse is its loan portfolio?
• Operational and Cybersecurity Risk: How well is the bank managing operational risk, especially with increasing digitalization and the threat of cyberattacks? What investments are being made in cybersecurity infrastructure?
• Liquidity Risk: Does the bank have adequate liquidity to meet potential outflows and funding needs? How does it manage its funding mix, including its reliance on deposit versus wholesale funding?

What role does technology play in the bank's strategy?

• Digital Transformation: How advanced is the bank in adopting digital banking technologies? Is it investing in innovative fintech partnerships or building out its own digital capabilities (e.g., mobile banking, AI-powered services)?
• Technology Infrastructure: What is the bank’s level of investment in technology infrastructure to support growth and security? How does it compare to competitors in terms of digital offerings?
• Cybersecurity Investment: How much is the bank investing in cybersecurity to protect customer data and mitigate risks from cyberattacks? How robust are its defenses against fraud and cybercrime?

What are the bank’s growth prospects?

• Loan Growth: What is the bank’s outlook for loan growth? Are there opportunities to expand its loan book, particularly in high-demand sectors like small business lending, commercial real estate, or consumer loans?
• Geographic and Sectoral Expansion: Is the bank expanding into new geographic regions or sectors? How does its expansion strategy align with current market trends (e.g., urbanization, remote work trends affecting office space demand)?
• Mergers and Acquisitions: Is the bank actively pursuing mergers and acquisitions? How does its strategy for consolidation affect market share, customer base, and cost structure?

For a detailed analysis of the commercial banking market in the US, buy the full report

How Can Technavio Reports Help Investors Make Better Business Decisions?

Key Features of a Technavio Report: 

• Comprehensive Market Analysis: Provides a detailed overview of the commercial banking market in the US, including market size, growth rate, segmentation, and regional analysis. 

• In-Depth

  Competitive Landscape:

  Offers insights into the competitive dynamics, market share and positioning, and product offerings of key players. 

• Future Market Trends: Identifies emerging trends and opportunities that can shape the future of the market. 

• Detailed Segmentation: Breaks down the market into various segments to help investors identify specific niches and target markets. 

• Expert Analysis: Provides expert insights and forecasts from industry analysts

FAQ

1. What role do interest rates play in the commercial banking market?

Interest rates play a significant role in commercial banking as they determine the cost of borrowing for businesses. When interest rates rise, loan costs increase, which can reduce demand for credit. Conversely, lower rates can make borrowing more affordable, encouraging investment and expansion by businesses.

2. How do banks manage risk in commercial banking?

Banks manage risk by implementing strict credit evaluation processes, diversifying their loan portfolios across industries, regions, and business types, and maintaining adequate capital reserves to absorb potential losses. They also use hedging strategies to protect against market and interest rate risks.

3. What are the main risks that banks face in commercial lending?

Major risks include:

• Credit risk: The risk that borrowers will default on loans.
• Interest rate risk: Changes in interest rates can affect the bank’s profitability, especially if loans have variable rates.
• Liquidity risk: The risk that a bank will not have enough liquid assets to meet its short-term obligations.
• Economic risk: Economic downturns can lead to higher default rates and reduced loan demand.

4. How do banks make money in commercial banking?

Banks earn money primarily through the difference between the interest they charge on loans (net interest margin) and the interest they pay on deposits. They also charge fees for services such as business account maintenance, payment processing, foreign exchange transactions, and loan origination.

5. How has the rise of fintech impacted commercial banks?

Fintech companies have introduced innovative financial services, often offering lower fees, faster services, and better user experiences. As a result, traditional banks are increasingly partnering with fintech firms to integrate these technologies into their offerings. Banks are also investing in their own digital infrastructure to remain competitive with online-only and mobile-first banking services.

Table of Contents

1. Executive Summary

2. Scope of the Report

3. Market Landscape

3.1 Market Ecosystem

3.2 Market Characteristics

3.3 Market Segmentation Analysis

4. Market Sizing

4.1 Market Definition

4.2 Market Sizing 2024

4.3 Market Size and Forecast 2025-2029

4.4 Historic Market Size (2019-2023)

5. Impact of Technology

6. Five Forces Analysis

6.1 Bargaining power of buyers

6.2 Bargaining power of suppliers

6.3 Threat of new entrants

6.4 Threat of substitutes

7. Rivalry among competitors

8. Market Segmentation

9. Customer Landscape

10. Drivers and Challenges

11. Market Trends

12. Competitive Landscape

13. Appendix

13.1 Research Methodology

13.2 List of Abbreviations