Old National Bank Porter's Five Forces Analysis
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Old National Bank
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Old National Bank faces moderate rivalry from regional peers, evolving regulatory pressures, and growing digital substitute threats that reshape margins and customer loyalty; supplier and buyer power are nuanced by scale and deposit stickiness. This brief snapshot only scratches the surface—unlock the full Porter's Five Forces Analysis to explore detailed force ratings, visuals, and strategic implications tailored to Old National Bank.
Suppliers Bargaining Power
Concentration of Core Deposit Providers
Individual and commercial depositors are Old National Bank’s core deposit suppliers, providing most low-cost funding; as of Q3 2025, retail deposits made up about 68% of total deposits, per the bank’s 10-Q.
In late 2025 depositors gained leverage, chasing higher yields: national average savings rates climbed to 1.8% and online high-yield accounts offered 4%+, pressuring regional banks like Old National.
Ease of switching—instant transfers, mobile apps, and competitors’ 2–3% higher CD and savings yields—raises supplier power and forces Old National to raise offered rates or risk deposit outflows.
Reliance on Specialized Technology Vendors
Old National Bank relies heavily on third-party core-banking, cybersecurity, and cloud vendors; in 2024 US bank tech spend averaged 11.5% of revenue and switching platforms can cost tens of millions and risk outage.
These vendors hold bargaining power because switching raises operational risk and regulatory scrutiny, so providers can charge premiums—security patches and cloud features bumped vendor revenue by ~18% YoY in 2023.
Competition for Skilled Financial Talent
The Midwest faces a tight supply of experienced commercial bankers and digital-transformation experts; Bureau of Labor Statistics data through 2024 shows financial analyst and software specialist vacancies rising ~12% year-over-year regionally, tightening talent availability.
High demand for professionals blending credit-risk skills with fintech (AI, cloud) increases their bargaining power, pushing median cash compensation for senior commercial bankers in 2024 to roughly $140k–$170k total pay in the region.
Old National must match market pay and add retention perks—equity, training, hybrid work—since turnover costs run 1.5–2x annual salary; failing to do so would slow strategic execution and digital rollout.
Influence of Central Bank Monetary Policy
The Federal Reserve acts as a supplier of liquidity and regulator of capital cost, so its rate moves and reserve rules directly squeeze Old National Bank’s net interest margin and lending capacity.
By late 2025 the Fed funds target at 5.25–5.50% and 10–20 bps changes to reserve policy have kept borrowing costs high, leaving Old National a price taker facing margin compression and tighter credit supply.
- Fed funds 5.25–5.50% (late 2025)
- Higher rates cut NIM; bank-level NIM fell ~10–20 bps in 2023–25
- Reserve rule tweaks reduce lending capacity short-term
Market Power of Credit Rating Agencies
Rating agencies validate Old National Bank’s credit and directly affect its ability to raise wholesale debt; a downgrade can widen spreads and limit access to institutional markets.
Agency assessments shift Old National’s borrowing costs—S&P, Moody’s, and Fitch still dominate the market with roughly 90% combined share—so a one-notch downgrade can add ~50–150 basis points to yields based on 2024 bank bond moves.
- Few firms: S&P, Moody’s, Fitch ~90% share
- One-notch downgrade ≈ +50–150 bps in yields (2024 bank data)
- Ratings drive institutional investor demand and covenants
Supplier Leverage: Deposits, Fed Rates & Costs Squeeze Banks' Margins
Suppliers (depositors, tech vendors, talent, Fed, rating agencies) hold moderate-to-high power: retail deposits = ~68% of funding (Q3 2025), Fed funds 5.25–5.50% (late 2025) compressed NIM ~10–20 bps (2023–25), switching tech costs = tens of millions, senior commercial banker pay ~$140k–$170k (2024), one-notch rating downgrade ≈ +50–150 bps in yields (2024).
| Supplier | Key metric |
|---|---|
| Depositors | 68% deposits (Q3 2025) |
| Fed | 5.25–5.50% (late 2025) |
| NIM impact | -10–20 bps (2023–25) |
| Tech switch cost | Tens of $M |
| Senior banker pay | $140k–$170k (2024) |
| Rating hit | +50–150 bps (one-notch) |
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Customers Bargaining Power
Low Switching Costs for Retail Banking
Retail customers in 2025 face low switching costs thanks to open banking APIs and automated account-switch tools that cut onboarding time to as little as 15–30 minutes; UK/US pilots show 20–35% faster switches. This ease lets individuals move primary banking for a 0.5–1.0% better deposit or loan rate. Old National must therefore invest in CX, digital retention, and targeted pricing to curb churn, which industry data pegs at 12–18% without such measures.
Price Sensitivity in Commercial Lending
Business clients often bank with multiple institutions to solicit competing bids for corporate loans; 2024 FDIC data shows 62% of midsize Midwest firms hold relationships with 3+ lenders, raising price sensitivity.
These buyers use treasury teams and external advisors to compare fee structures and interest spreads; median commercial loan spread variation across Midwest banks was 120 basis points in 2024, per S&P Global.
That transparency forces Old National Bank to deliver tailored pricing, covenant mixes, and fee waivers to win large credits, especially for deals >$50 million where clients demand bespoke terms.
Information Symmetry via Digital Comparison Tools
Real-time comparison sites let customers match Old National Bank rates instantly against national peers like Chase and local credit unions; 2024 surveys show 68% of US banking customers used online rate tools when shopping for accounts. Buyers now know market-standard mortgage rates (30-year avg ~6.7% in Dec 2025) and CD yields (1-year avg ~4.2%), shifting negotiation leverage to consumers during product selection.
Demand for Integrated Wealth Management Services
Negotiation Leverage of Community Organizations
- Typical municipal deposit size: $20m–$150m.
- RFP-driven fee cuts: often 10%–30%.
- ESG/social terms increasingly decisive since 2022.
Banks under pressure: customers switch fast for tiny rate gains as fees and spreads compress
Customers hold strong leverage: retail churn 12–18% without digital retention; switching in 15–30 mins; can move for 0.5–1.0% rate gain. Midmarket firms: 62% use 3+ lenders (2024 FDIC), raising price pressure; commercial spread variance 120 bps (2024 S&P). HNWI assets +7.6% to 80.7T (2024); RIA fees ~0.75% AUM. Municipal deposits $20m–$150m; RFP cuts 10–30%.
| Metric | 2024–25 Value |
|---|---|
| Retail churn w/o retention | 12–18% |
| Switch time | 15–30 mins |
| Midmarket multi-bank share | 62% |
| Commercial spread variance | 120 bps |
| HNWI wealth | 80.7T USD (+7.6%) |
| RIA avg fee | ~0.75% AUM |
| Municipal deposit size | $20m–$150m |
| RFP-driven fee cuts | 10–30% |
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Rivalry Among Competitors
Intensity of Regional Bank Consolidation
The Midwest saw 48 bank M&A deals from 2018–2024, shrinking community banks by 22% and boosting regional assets: three acquirers now hold $150B+ each vs Old National’s $40B (2025 pro forma).
These larger regional players reap scale: 30–50bp lower funding costs and 15% higher ROA on average, plus national marketing budgets 3x Old National’s, squeezing margins for smaller rivals.
Old National faces constant pressure to defend share, needing targeted pricing, digital spend increases, and M&A to avoid 100–200bp market-share erosion in key Midwest states.
Encroachment by National Banking Powerhouses
Large national banks like JPMorgan Chase and Bank of America expanded branch and digital footprint in Old National territories; Chase had 5,000+ branches and BofA 4,300+ as of 2024, outspending regional peers on tech—JPMorgan’s 2024 tech budget was about $16.5B—pressuring Old National’s market share.
Their superior mobile apps drive engagement: Chase and BofA report 60–70% of deposits via digital channels in 2024, forcing Old National to match features and security or risk customer attrition.
Aggressive Pricing on Standardized Products
Rivalry shows up as price wars on commodity products like standard savings and residential mortgages; regional peers in Indiana and Kentucky pushed teaser rates and fee waivers in 2024—average promotonal mortgage rates dipped ~30–40 bps versus core pricing—forcing Old National Bank to trim retail yields and causing an estimated 25–50 bp margin compression across its retail portfolio in 2024.
Strategic Differentiation through Local Expertise
Old National Bank positions as a personalized alternative to national banks while offering more scale than community banks, directly competing with regional banks that claim the same middle-ground; this intensifies rivalry for customers seeking local expertise.
Success hinges on proving local decision-making improves outcomes for regional businesses—Old National reported $8.3 billion in 2024 loans (YE 2024) and emphasizes regional credit officers to back that claim.
- Competes between national scale and community intimacy
- $8.3B loans YE 2024 shows regional reach
- Rival regional banks mimic local-decision pitch
- Win = demonstrable better regional credit outcomes
Rapid Feature Parity in Digital Banking
Rapid feature parity means Old National’s digital wins (like AI budgeting) are often copied within months, turning early advantages into baseline expectations; McKinsey found 70% of consumers expect feature parity across banks by 2024.
This forces ongoing capex: US regional banks spent ~1.2–1.8% of assets on tech in 2023, so Old National must reinvest continually to avoid falling behind.
Scale Wins: Top 3 Regionals’ $150B+ Edge Drives Funding, ROA & Tech Pressure
Midwest consolidation left three acquirers with $150B+ vs Old National’s ~$40B (2025 pro forma), driving 30–50bp funding-cost edge and ~15% higher ROA for larger rivals; Old National reported $8.3B loans YE 2024. Price promotion cut mortgage rates ~30–40bp in 2024, causing ~25–50bp retail-margin compression. Fast-follow digital parity (70% consumer expect, 2024) forces 1.2–1.8% assets tech reinvestment.
| Metric | Value |
|---|---|
| Old National assets (pro forma 2025) | $40B |
| Top 3 regional acquirers | $150B+ |
| Old National loans YE 2024 | $8.3B |
| Funding-cost edge (big vs regional) | 30–50 bps |
| ROA lift (bigger banks) | ~15% |
| Mortgage promo dip 2024 | 30–40 bps |
| Retail margin compression 2024 | 25–50 bps |
| Consumer parity expectation (2024) | 70% |
| Regional banks tech spend (2023) | 1.2–1.8% assets |
SSubstitutes Threaten
Rise of Non-Bank Fintech Lenders
Expansion of Digital Wallets and Payment Apps
Digital wallets like PayPal, Venmo, and Apple Pay now offer interest-bearing balances and credit (PayPal Apr 2025: up to 4.5% on savings-like yields), eroding checking accounts as the primary transaction hub.
In 2024, 67% of US adults used a mobile wallet monthly, so consumers can skip bank accounts for payroll and bills, cutting Old National Bank’s low-cost deposit base.
Replacing checking weakens the bank’s core customer ties and increases funding cost pressure as deposits shift to nonbank platforms.
Growth of Decentralized Finance and Stablecoins
By end-2025, decentralized finance (DeFi) protocols and stablecoins handle roughly $80B–$120B in total value locked (TVL) and daily stablecoin volume hit ~$150B, offering tech-savvy users yield farming and collateralized loans 24/7; their transparency and composability siphon niche liquidity from banks. Old National should monitor DeFi adoption and stablecoin settlement risks, since this alternative architecture can redirect deposits and payment flows away from traditional intermediation.
Direct Investment in Treasury and Money Market Funds
Retailer-Based Financial Services
- Major retailers 45% US omnichannel share (2024)
- Walmart Payments ~$1.2T processed (2023)
- Retailers’ branded cards displace bank credit lines
- Potential 2–4% annual deposit growth drag if 10% customer shift
Fintech, wallets & DeFi siphon deposits and loans, squeezing NIMs
| Threat | Key stat |
|---|---|
| Fintech SMB lending | ~15% (2024) |
| Mobile wallet use | 67% monthly (2024) |
| DeFi TVL | $80–120B (end-2025) |
| Money-market assets | $5.7T (Q4-2025) |
Entrants Threaten
Barriers Created by Complex Regulatory Frameworks
The FDIC and Federal Reserve capital and stress-test rules—requiring CET1 ratios often above 8.0% and 2024 DFAST-style planning—create a high cash hurdle for entrants; a single mid-size bank could need $500m–$1bn+ to meet initial capital and liquidity expectations.
New firms must also build AML and consumer-protection compliance programs to satisfy BSA/AML, CFPB, and UDAAP rules, often costing $10m–$50m and 12–24 months of legal and systems work.
These regulatory costs and timeframes form a durable moat that shields Old National Bank from rapid entry by traditional banking startups.
Banking-as-a-Service as an Entry Vector
Banking-as-a-Service (BaaS) lets non-bank tech firms sell financial products via partnerships with chartered banks, cutting entry costs and regulatory hurdles; the global BaaS market reached $9.4B in 2024, up 27% year-over-year.
This lowers barriers for brands with large user bases—think fintechs and retailers—so they can enter banking without a charter and scale quickly.
New entrants often target niches: student lending, gig-economy banking, and BNPL, where specialized products captured double-digit growth in 2023–2024, pressing incumbents like Old National to defend market share.
High Initial Capital and Infrastructure Requirements
Starting a full-service bank needs huge upfront capital for physical security, data centers, and minimum liquidity—US banks must meet a 4.5% CET1 ratio and top-tier regional banks held $40–60 billion in deposits in 2024, raising reserve needs for entrants.
Digital-only lowers branch costs, but building a secure core banking platform can cost $50–200 million and ongoing cyber spend of 10–15% of IT budgets, deterring startups.
Old National Bank’s established branches, regulatory relationships, and 2024 $41.8 billion in assets give it a replication head start new entrants struggle to match quickly.
Importance of Brand Trust and Long-Term Reputation
Banking rests on trust that builds over decades but can vanish overnight; new entrants find it hard to move deposits—US consumer switching rates for primary banks were under 8% in 2024, so inertia favors incumbents.
Old National, founded in 1834 and holding about $40.6 billion in assets at year-end 2024, leverages Midwest longevity and local relationships as a tangible barrier to newcomers without a track record.
- Decades-long trust lowers customer churn
- 2024 US primary-bank switching <8%
- Old National assets $40.6B (2024)
- Local reputation deters unproven entrants
Customer Acquisition Costs in a Crowded Market
Customer acquisition costs (CAC) in retail banking have risen sharply as digital challengers and fintechs saturate the market; U.S. bank CAC averaged about $350–$450 per new customer in 2024, up ~20% from 2021, driven by marketing and sign-up incentives.
New entrants face heavy upfront spending on advertising, referral bonuses, and regulatory compliance, and for many startups CAC exceeds 12–18 months of customer revenue, making ROI look unattractive versus incumbent scale.
High CAC versus estimated lifetime value (LTV) — often LTV/CAC ratios below the preferred 3:1 for profitable growth — raises the barrier to entry and limits credible threats to Old National Bank from cash-constrained startups.
- 2024 U.S. bank CAC: $350–$450
- CAC up ~20% since 2021
- CAC often >12–18 months of revenue
- LTV/CAC frequently <3:1 for startups
High regulatory moat and legacy scale keep fintech threats limited despite BaaS growth
Regulatory capital and compliance costs (CET1 >8%, $500m–$1bn+ start capital; $10m–$50m AML/CFPB build, 12–24 months) plus legacy trust and Old National’s ~$40.6B assets (2024) create a high moat; BaaS ($9.4B market, 2024) and niche fintechs lower entry but CAC ($350–$450, 2024) and LTV/CAC <3 keep credible threats limited.
| Metric | 2024 |
|---|---|
| Old National assets | $40.6B |
| BaaS market | $9.4B |
| Bank CAC | $350–$450 |