The US, China, UK, and EU are the major banking sectors in the world.

Given that the US champions free-market capitalism and fierce competition abroad, it is surprising that its banking regulation is far from the most relaxed.

So with that in mind, are US banks competitive in 2023?

An in-depth comparative analysis with international competitors and regulators is required for understanding how the US stacks up.

However, gauging adaptability to newer markets and increasingly important services like international payments is also crucial, beyond just reflecting on past performance.

The Landscape of American Banking 

In 2022, there were 4,135 FDIC-insured banks in the US. While we are used to markets acting like organisms – being ever growing in nature – this figure declines every year in America. In 2000, there were almost double that of today, at around 8,198. The reason for this steady decline is mostly down to industry consolidation, along with a heightened regulatory burden. 

By comparison, the UK only has 365 banks as of 2023; though this is a figure on an opposite trajectory. In Canada, there are just over 80 banks with CDIC insurance, while the EU has over 5,000 – 1381 of which are accounted for by Germany alone, with Poland, Austria, Italy, and France being the next contributors.

When it comes to market share, JPMorgan Chase leads the way at 8.27%, with Bank of America second (6.24%), Citibank third (4.56%), Wells Fargo fourth (4.43%), then a huge drop-off thereafter (sub 1.6%). Hence, the Big Four, but does this remain the case when it comes to market share of domestic deposits? 

BankMarket Share (total assets)Market Share (domestic deposits)Market Cap
JPMorgan Chase8.27%7.36%423.50B
Bank of America6.24%6.85%219.64B
Wells Fargo4.43%5%150.85B
U.S. Bank1.51% 1.62%51.97B

The Role of Community Banks

Community banks have a long-standing history in the US, particularly given its old capital-based economy. Community banks tend to lack national or global reach, and instead have just a few branches to serve a local community. These were highly important in handing out personal and small business loans, along with basic banking services, dating back to the 19th century.

With around 4,000 community banks, most of what makes up the US’ high number of banks are these, highlighting that they’re unique to the States in their importance. Community banks provide similar benefits to microfinancing in terms of tailored services and a strong customer relationship with a local focus to the services.

However, the market share of community banks has fallen from around 40% in 1994 to under 20% today. The cause of this reduction in influence is threefold:

  • Consolidation – Large banks have been leveraging economies of scale and acquiring smaller banks
  • Technology – Modern tech advancements have favored large banks with resources for investment and innovation
  • Regulation – Dodd-Frank Wall Street Reform and Consumer Protection tightened up the banking environment, leaving smaller banks with disproportionately higher compliance costs.

Innovation and Services 

With smartphones infiltrating our lives in every aspect, banks had to react. The drive towards smartphone banking favored newer fintechs who can leverage the latest technology and infrastructure more quickly. Alternatively, large banks partnering with fintechs has become common, though it’s caught the eye of US regulators.

Beyond customer facing innovation, developments in AI and risk assessment have favored banks who have the resources to invest in them. Given the recent bank runs along with losses on crypto exchanges, having robust security isn’t just a regulatory requirement, but a way to acquire consumers.

Mobile banking has been adopted abroad faster than in the US, with European banks being faster to adapt to real-time payment systems. For example Revolut, a London-based fintech (licensed bank in Europe but not the UK) offers deposits, multi-currency spending, crypto and stock purchases, and bill-splitting capabilities. In Asia, QR payments are a must, with even street sellers accepting them since the early 2010s.

International Payments: A Challenging Sector

International payments is another area that US banks are falling behind in. As research shows, it’s very common to pay between $30-50 for US bank wire fees when sending money abroad, as it navigates a complicated network, sometimes coming into contact with several banks before reaching the recipient.

In Europe, SEPA (Single Euro Payments Area) can make transfers at much lower costs, and sometimes for free. It’s as simple as typing in the IBAN number of the recipient – a system that is much more streamlined and standardized than the US. Of course, Euro-to-Euro makes things easier, but there are currently British neobanks like Starling who will charge between 0.5% and 1% for the currency exchange – much lower than the US bank fees and exchange rates of the Big Four. Within the Starling app, it’s also possible for Brits to open a Euro account with an IBAN at the click of a finger.

While non-banking fintechs can offer such rates in the US, it’s important to note that Starling is FCA-regulated licensed bank and therefore backed by FSCS deposit insurance. Beyond the slightly more lax banking regulations, it may be that European banks provide cheaper international payments because their economies are more interconnected; it’s on the mind of consumers when choosing a bank, which reflects in their competitive strategies. For example, traveling abroad on vacation, importing goods, and setting up a business overseas are all more common in Europe than the US.

Employee Compensation: A Comparative Analysis

Salaries are high in the US, but they’re particularly high in banking. A first year analyst at an investment bank starts at $100,000 in the US, but only $81,000 in the UK, and even less in Germany and Australia. What’s greater than the salary differences is the bonuses, with US bonuses ranging from 30-400% greater compared to the UK.

Compared to Canada, the difference in salaries average a similar amount to the difference between CAD and USD – roughly 20-30%. Because of this similar nominal figure when currency differences are ignored, Canada often reacts – but with a lag – to US bank pay increases. 

Bonuses for investment bankers are expected to be down by around 25% in 2023 according to Johnson Associates, while bonus pools for debt and equity underwriting may drop by 10%.

Large global banks are expecting a bonus increase, while it is regional bankers that expect a 10-20% drop.

Regulatory Environment 

As touched on a few times, it is US banking regulations that underpins much of the context for US banking competitiveness.

Unlike many other countries, it’s both federal and state regulations that are at play. Most notably, the Dodd-Frank Wall Street Reform and the Consumer Protection Act, which came off the back of the 2008 banking crisis, brought in reforms to reduce future systemic risks.

Greater transparency and accountability, restricting proprietary trading and conflicts of interest, along with the Consumer Financial Protection Bureau were introduced.

Compared to the EU’s Single Supervisory Mechanism (under the ECB), which regulates a large group of different countries, the US regulatory framework is more fragmented.

There are simply more regulating bodies in the US, and it has prevented overseas companies like Revolut from entering the market.

One area of competitive advantage in the US has been data-driven innovations, because the EU’s General Data Protection Regulation (GDPR) has imposed strict data protections.

The US has a less unified approach in data privacy, which leaves more room for revenues and innovation.


The US bank competition remains a nuanced subject with many influences.

On the one hand, the US economy is seemingly more robust than Europe’s, it has more capital, attracts highly skilled immigrants via higher salaries, and has vast economies of scale.

But, a fragment regulatory framework has stifled not just innovation, but overseas competition from entering the US market.

For the competitiveness of American banks, the focus should be on leveraging the US’ highly skilled IT workforce via technological advancements along with lowering international money transfer fees.

For regulators, it must be better streamlining and to make compliance easier to ensure community banks – a historically important player in the rise of the US’ economy – are not overburdened.