Competition in the Banking Industry: An Empirical Study

According to recent studies, U.S. bank customers have been dissatisfied with banks and bank fees; therefore, some bank CEOs need to understand the relationship between the rise of cryptocurrencies, third-party payment services, and traditional bank startups. Using Porter’s five forces theory, the purpose of this quantitative, ex post facto, study was to determine if the dollar value of U.S. cryptocurrency startups, and U.S. third-party payment service startups predict U.S. bank startups. The sample of twenty-four records consisted of initial public offerings (IPO’s) within each month of the two-year period aggregated by variable dollars publicly listed in the Securities and Exchange Commission (SEC) Electronic Data Gathering Analysis and Retrieval (EDGAR) database of S-1 forms for 2022–2023. The findings indicated a significant relationship between U.S. digital currency startups, U.S. third-party payment startups, and U.S. bank startups, F (2,23) = 13.456, p < .001, R2 = .562. In the final model, strong for digital currencies (t = 4.912, p = .003, β = .714). and third-party payment services (t = 1.132, p = .001, β = .165) were significant. A key recommendation is for bank leaders to develop strategies for banks to compete with digital currencies and third-party payment services. The implication for positive social change includes the potential for bank and business leaders to retain economic stability and employment for bank employees while positively impacting low-income, unbanked customers.