When it comes to banking, location matters.
According to our latest analysis of bank quality and security across America, the consumer experience can vary greatly from state to state - from the rates of return on common banking products such as savings accounts and CDs, to overall satisfaction and stability.
What's driving these differences?
Banking is changing radically. Between branch closings, an increased emphasis on technology, and near-zero interest rates, the past few years have been a turbulent time for the banking industry. However, talking about the industry as a whole does not capture how different banking conditions can be from one area to the next. The industry is highly fragmented, with roughly 6,500 FDIC-insured banking institutions. While a few of these are large national institutions available in most areas of the country, most are smaller regional or local banks.
This mix of banking options can land consumers on the positive or negative end. To uncover the banking landscape in each state, MoneyRates.com looked at four criteria:
- Availability of choice. This was based on the number of banks based in each state.
- Stability. This was determined by the percentage of a state's banks which failed during 2014.
- Customer satisfaction. MoneyRates calculated the average scores from the most recent JD Power Retail Banking survey for the banks with locations in the state.
- Competitiveness of interest rates. The MoneyRates America's Best Rates study identified a few banks that are bucking the low interest rate trend. MoneyRates then ranked the states based on how many leading banks from that study have locations there.
Based on those criteria, here are 2015's best states for banking:
- Kansas. This might not strike you as a major banking center, but Kansas ranks in the top 10 for the number of bank headquarters. One benefit of so many choices may be that Kansas also ranked well in the number of high-rate paying banks available, and despite being home to over 300 banks it suffered no failures last year. Overall, banks doing business in Kansas also ranked above average in the JD Power consumer survey.
- Missouri. Given the traditional rivalry between Kansas and its neighbor to the east, perhaps it is fitting that Missouri was edged out of first place by the smallest possible margin - which flip-flopped the top two states from last year's study. Like Kansas, Missouri scored well on customer satisfaction, the availability of banks, and had no failures last year. However, it trails Kansas in the number of America's Best Rates banks.
- Iowa. Like Kansas and Missouri, Iowa is home to over 300 banks and had no failures last year. However, it trails Kansas in the availability of America's Best Rates banks, and trails Missouri in the average consumer satisfaction score for its banks. Still, it was above average in both of those categories.
- Texas. With more than 500 banks, Texas has the second most banks of any state in the union (trailing only Illinois). Despite having such a large banking community it had no failures last year. Texas also did pretty well in the availability of America's Best Rates banks, but scored a little below average on customer satisfaction.
- Nebraska. Yet another mid-western state to make the top 10, Nebraska did well on availability of America's Best Rates banks and had no failures last year. It was also above average in the other two categories.
- Massachusetts. The first of three northeastern states to make the top ten, Massachusetts suffered no bank failures last year, while ranking above average in the other three categories.
- Tennessee. Despite having no America's Best Rates bank branches in the state, Tennessee scored very well in customer satisfaction. It was also above average in the number of banks based in the state, and suffered no failures last year.
- New York. As you might expect, New York was above average in terms of number of banks, as well as availability of America's Best Rates banks. It also had no failures last year, but ranked a little below average in customer satisfaction.
- Kentucky. The only knock against Kentucky's performance is that no America's Best Rates banks have branches there. However, the state suffered no bank failures in 2014, and was above average in the other two categories.
- New Jersey. America's Best Rates banks are well represented in New Jersey, and none of the state's banks failed last year. The state was slightly above median in total number of banks, but did fall well below average in customer satisfaction.
Keep in mind that even if you don't live in one of the best states for banking most states offer several choices, and online banking is increasingly breaking down geographic barriers. So, if you are not satisfied with your bank, shop around for bank rates and weigh other factors that matter to you. There is a good chance you will find better options.
Related: The Worst States for Banking 2015
Related: Banking scores across all 50 states.
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