The World's Best Banks 2021: Financiers To The Looming Economic Recovery
A year ago, as the Coronavirus pandemic spread, the world entered lockdowns and the economy to ground to a halt. To keep businesses going and households current on their bills, policymakers leaned on banks like never before. The banking system became the crucial cog in which stimulus was filtered into the economy as a bridge to get to the other side of the pandemic.
Lenders were able to raise record amounts of debt and equity for businesses building emergency stockpiles of cash, and they were integral in the distribution of stimulus payments and other economic relief. Mobile banking technologies helped consumers handle their finances from home, and financial markets displayed unwavering confidence in banks. With vaccines now being distributed worldwide, banks stand on the frontlines of an extraordinary success.
The global economy is staged for a big comeback, led by the United States, where gross domestic product is expected to surge 5%-plus. Unemployment rates are quickly falling—the U.S. economy added nearly one million jobs last month—and job openings sit at record levels. Consumers inoculated from the virus are increasing their spending. Meanwhile, stock markets and real estate transactions continue to hit new record highs. Lenders will soon release reserves they set aside during the dark days of the pandemic, and forecasts of their profits are trending higher alongside interest rates and the economy.
“Within days of realizing that Covid-19 was a global pandemic that would virtually close down large parts of the world’s economies, the U.S. government moved with unprecedented speed,” JPMorgan CEO Jamie Dimon recently reflected in his annual letter to investors. “Fortunately, banks were part of the solution - unlike in the Great Recession.”
The tremendous performance of banks is reflected in Forbes’ third annual list of the World’s Best Banks, which we publish in partnership with market research firm Statista.
Statista surveyed more than 43,000 customers in 28 countries around the globe for their opinions on their current and former banking relationships. Banks were rated on an overall recommendation and satisfaction, as well as five subdimensions (trust, terms and conditions, customer services, digital services and financial advice). Between 5 and 75 banks were identified as top banks in each country, based on the total evaluations collected, the number of banks in the specific country and the scores achieved.
This year’s list includes a record number of award winners, reflecting consumers’ increasing confidence in their banks. Some 500 banks worldwide were awarded by consumers as among the World’s Best Banks. The United States led the way with 75 banks receiving awards, followed by Japan at 50 banks. We added five new countries to our study—Taiwan, United Arab Emirates, New Zealand, Saudi Arabia and Singapore—bringing total markets addressed by the list to 28.
The big trend on this year’s list is the continued rise of digital banks, which are gaining ground in customers’ eyes in Asia, Europe, Latin America and the United States.
N26, a Berlin-based digital bank founded in 2013, was the top-performing bank worldwide according to our survey. It won awards in five countries, tying Citibank in overall awards, and placed as the top-ranked bank in Austria and Italy. The lender, which saw customers increase 40% to 7 million in 2020, placed #2 in France, #4 in Spain, and #13 in its home market of Germany.
Like many digital banks, N26 deploys new technological infrastructure and efficient operations to pass on savings to customers in the form of reduced fees and other costs. N26 does not charge fees for minimum account balances or account maintenance, and even avoids lucrative overdraft fees. Valued by private investors at $3.5 billion, N26 is expanding fast and targeting new markets like the United States for its digital-first banking offerings.
“We will continue to bring exciting everyday banking features to millions of additional customers who still feel stuck in the offline world,” says Valentin Stalf, the bank’s co-founder and CEO.
Across Europe, digital banks are gaining ground. In Switzerland, Neon, a mobile bank that has eliminated credit card fees entirely, placed #1. Challenger banks in the United Kingdom—a crop of newer lenders gaining market share by lower costs and increasing services—represented eight of the 20 award winners, including the top four spots. First Direct, the considered the original challenger bank, ranked #1, while Starling Bank ranked #2, Monzo #3, and Revolut #4.
In Japan, digital banks led the way. SBI Sumishin Net Bank, an online bank created in part by Masayoshi Son’s Softbank Group two decades ago, ranked #1. The second spot was occupied by Ratuken Bank, a lender created by one of Japan’s largest media and internet conglomerates, Ratuken, ranked #2. Sony Bank, an internet bank created by Sony Group in 2001, ranked #3.
KakaoBank, a mobile-only bank created by mobile calling and text giant KakaoGroup in 2016, was the top-ranked bank in South Korea. Nubank, the world’s most valuable privately-held bank with a valuation of $25 billion, ranked #1 in Brazil.
Younger banks continue to gain ground on our list because we poll consumers and score banks based on issues like customer wait times, overall value, surprise fees, and the quality of digital services. In 2021, our survey was conducted in 14 languages worldwide, polling consumers on at least fifteen separate factors. The ranking is entirely driven by consumer surveys, unlike our list of the best and worst banks list in the United States, which is based on financial ratios like non-performing assets and revenue growth.
Large incumbent banks are taking notice of the digital lenders nipping on their heels and adding services. In Israel, for instance, Pepper was the #1 rated bank. The digital bank was created in 2015 by Bank Leumi, one of Israel’s largest and oldest banks, to capture customers increasingly moving their finances online. In Canada, Tangerine, a fast-growing digital bank controlled by Scotiabank, ranked #3.
Digital banks are also gaining popularity in the United States. Varo Bank, which recently was the first digital bank to be approved for a national banking charter by FDIC and Federal Reserve, ranked #37, while Chime ranked #43. Online-only banks Discover and Capital One ranked #17 and #25, gaining a handful of spots.
The largest banks in the U.S. are investing heavily to expand services and keep their customers. In his annual shareholder letter, JPMorgan Chase CEO Jamie Dimon warned of “enormous competitive threats — from virtually every angle,” highlighting the increasing competitiveness of digital banks. Chase, which ranked #26 in the U.S., has invested tens of billions of dollars in its technological capabilities.
Citigroup is similarly investing in digital services. Overseen by CEO Jane Fraser, the former head of its retail banking operations, Citigroup, #75 on our list in the U.S., has been among the most aggressive large banks to strike ties with technology companies. It created a digital checking account product with Google Pay in November 2019, and has struck partnerships with technology companies in Asia including AliPay, WeChat and Line. Bank of America and Wells Fargo didn’t make our list this year.
Small is also good. Springfield, Missouri-based Great Southern Bancorp ranked #1 in the U.S. and was the second highest rated bank overall. Four of the highest-rated banks worldwide were small regional lenders. Maine’s Bangor Savings Bank ranked #2 in the U.S., while Massachusetts-based Rockland Trust Bank and Fargo, North Dakota-based Gate City Bank ranked #3 and #4. USAA Bank, a lender open to members of the U.S. military and their families, ranked #5 in the U.S., losing its top spot.
Author: Antoine Gara