Brandon Lee
There are a lot of banks in the world. As of 2023, there were over 10,000 global commercial banks, with the number growing by 1.5% in 2024. However, this figure doesn't include other types of banks, such as retail or investment banks. The US has the highest number of banks in the world, with over 4,000 small banks and over 11,000 registered banks and credit unions. The number of banks in the world varies depending on the source, with estimates ranging from 25,000 to 44,000. These banks differ in size and structure, from large national banks to small community-focused institutions.
| Characteristics | Values |
|---|---|
| Number of banks in the world | 25,000 full license banks, 40,000-60,000 quasi-banks, and 20,000-30,000 shadow banks and shadow banking activities |
| Number of banks in the US | Over 4,000 small banks, more than any other country |
| Number of banks in the US (including credit unions) | Over 11,000 |
| Number of global commercial banks | 10,153 as of 2024 |
| Total assets of 25,000 full license banks | USD 150 trillion |
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What You'll Learn
The US has the most banks in the world
The United States boasts the largest number of banks worldwide, a testament to its robust and diverse financial system. As of 2023, the US financial landscape is home to an impressive 4,395 banking institutions, according to the Federal Deposit Insurance Corporation (FDIC). This figure solidifies the country's position as a global leader in the banking sector. The US banking system is characterized by its breadth and depth, encompassing a wide array of institutions ranging from small community banks to global financial powerhouses. This diverse landscape ensures that businesses and individuals across the country have access to a variety of financial services, from basic deposit accounts to complex investment products.
One of the key strengths of the US banking system lies in its regional diversity. Unlike some countries where a handful of dominant banks hold the majority of assets, the US features a more balanced distribution of financial power. While New York may be the financial epicenter, with Wall Street serving as the symbolic heart of US capitalism, the reality is that financial institutions are spread across the country. Major financial centers can also be found in cities like Charlotte, San Francisco, Chicago, and Los Angeles, each contributing to the country's economic vitality.
The history of banking in the US is deeply intertwined with its economic growth and development. Over the decades, the US banking system has evolved and adapted to meet the changing needs of its citizens and the broader global economy. The country's banks have played a pivotal role in financing innovation and industry, from the agricultural revolution to the tech boom, and continue to be a driving force in the nation's economic prosperity. American banks have also been at the forefront of technological innovation in the financial sector, from the early adoption of online banking to the latest advancements in mobile banking and fintech.
The US banking sector's resilience was notably tested during the 2008 financial crisis, which exposed vulnerabilities and prompted significant regulatory reforms. In the aftermath, the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted to strengthen oversight, enhance consumer protection, and promote financial stability. This regulatory framework, coupled with the country's robust economic environment, has contributed to the continued growth and stability of the US banking sector. Today, American banks continue to play a critical role in facilitating economic growth, providing essential financial services, and fostering innovation.
The sheer number of banks in the US is a reflection of the country's dynamic and competitive financial landscape. It is a product of a long history of economic growth, innovation, and regulatory evolution. While the US banking system has faced challenges and setbacks, it has consistently demonstrated its ability to adapt, evolve, and maintain its global leadership position. The diversity and distribution of financial power across the country ensure that businesses and individuals have access to the financial services they need to thrive.
As the US continues to reinforce its position as a global financial hub, the country's banking sector remains a cornerstone of its economic prowess. The vast network of banks across the country not only facilitates domestic financial activities but also plays a pivotal role in international finance. American banks have established a strong presence on the world stage, influencing global financial markets and contributing to the interconnectedness of the modern economy. Their reach extends far beyond US borders, shaping the landscape of global finance.
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There are 44,000 banks and credit unions globally
The number of banks in the US has shaped its economy in several ways. Firstly, the large number of small banks in the US has resulted in a far bigger banking sector than would otherwise exist. This means a lot more loans, as loans are a critical way that banks make money. The plentiful availability of credit has been credited with the robust startup culture in the US. However, overly aggressive loan practices were a main cause of the 2008 financial crisis. Small banks also enable lending to be tailored to particular communities. For example, the Bank of Bird-in-Hand in Pennsylvania caters to the Amish community in the town of Bird-in-Hand.
Other sources give different estimates for the number of banks in the world. One source states that there are 25,000 full-license banks and 60,000 quasi-banks, with the number of unregulated "banks" and "quasi-banks" somewhere between 20,000 and 30,000 worldwide. Another source gives a figure of 10,187 global commercial banks as of 2023.
The discrepancy in the number of banks reported by different sources may be due to variations in what is classified as a "bank". Some sources may only include full-license banks in their count, while others may also include quasi-banks or credit unions. Additionally, some sources may only consider banks that operate on a global or commercial scale, excluding smaller or community banks from their calculations.
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28 banks have over $1 trillion in assets
There are 44,000 banks and credit unions around the world. Of these, 28 banks have over $1 trillion in assets. These banks are spread across the world, with 11 in Europe, 11 in Asia, and 6 in North America.
While these 28 banks serve audiences globally, the vast majority of financial institutions are smaller organizations that focus on providing tailored financial products to small communities. The average asset size across the top 250 banks is approximately $87.2 billion. The median asset size is $14.5 billion.
In the United States alone, there are over 11,000 registered banks and credit unions, with a collective asset value of over $19 trillion. The largest 20 banks in the US manage almost 50% of the country's deposits, including four banks with over $1 trillion in assets. For example, Bank of America holds $2.59 trillion in consolidated assets, with $2.44 trillion (94%) in domestic assets.
Banks are increasingly adopting AI for operations like loan approvals, which exposes them to more third-party risk. They are also exploring Financial Media Networks (FMNs) to monetize their data and tap into the growing digital ad spend market.
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US banks have fewer derivative assets than non-US banks
There are over 11,000 registered banks and credit unions in the United States, according to the FDIC and NCUA. These institutions collectively hold over $19 trillion in assets and serve over 300 million financially active Americans. The US banking sector offers its customers the most options globally when selecting a financial institution.
However, the US banking sector exhibits a diverse landscape, ranging from large national/multinational banks with a broad geographic reach to smaller community banks focusing on niche markets. The largest 20 banks in the country manage nearly half of the nation's deposits, with four banks holding over $1 trillion in assets.
In contrast to US banks, non-US banks may have a different reporting framework for their derivative assets. For instance, the United States employs US GAAP accounting standards, which primarily report the net derivative position. On the other hand, non-US banks in other regions might use IFRS standards, potentially leading to differences in how derivative assets are presented in their financial statements.
The variation in accounting standards can result in US banks appearing to have fewer derivative assets than their non-US counterparts. This discrepancy is not due to a lower engagement in derivative activities but rather a consequence of the accounting treatment. It's important to recognize that accounting standards can significantly impact the reported figures, and a direct comparison of derivative assets between US and non-US banks should consider these differences in reporting frameworks.
While the exact number of banks globally varies depending on the source, it is estimated to be around 25,000 full-license banks, with an additional 60,000 quasi-banks. The total assets of these 25,000 licensed banks amount to approximately USD 150 trillion, which is twice the size of the global annual GDP.
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The US has over 4,000 small banks
The large number of small banks in the US has had a significant impact on the country's economy. On the one hand, small banks are seen as a strength, providing tailored lending services to particular communities. They have better knowledge of the risks and opportunities in their local areas than giant multinational institutions. Additionally, the existence of numerous small banks means that there is more competition within the US financial system, which can be beneficial for consumers.
However, small banks can also pose a risk to the economy. They are more vulnerable to economic shocks or local disasters, as they tend to be less liquid and have lower capital than major banks. During the 1920s, there were nearly 30,000 banks in the US, but many of these small banks collapsed, causing people to lose their savings and spreading financial contagion through communities. More recently, the 2008 financial crisis was partly caused by overly aggressive loan practices by banks.
To address these concerns and protect small banks, the US introduced federal deposit insurance in 1934, guaranteeing deposits in any bank for up to $2,500 (equivalent to $250,000 today). This helped stabilize the banking system and allowed small banks to compete with larger banks by improving their perceived safety.
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Frequently asked questions
Estimates vary depending on the source and the type of bank being counted. One source estimates that there are 44,000 banks and credit unions around the world, while another source estimates that there are 25,000 full-license banks and an additional 60,000 quasi-banks.
The United States has over 4,000 small banks, with some sources giving a higher estimate of over 11,000 registered banks and credit unions.
A quasi-bank is an unregulated financial institution that operates similarly to a traditional bank but without a full banking license.
Small banks are often community-based and cater to specific financial needs, such as those of the Amish community. Large banks are typically national or multinational and offer a broader range of financial products and services.
