The American Bankers Association (ABA) is the self-described champion of the banking industry: It’s the loudest voice for banking interests on Capitol Hill and guides most of the country’s financial institutions, including staff training and risk management.
Most Americans use the ABA’s most well-known legacy — the ABA number — for everyday transactions like direct deposits and automated clearing house (ACH) payments, but the American Bankers Association impacts almost every facet of banking in the United States, from consumer education to industry trends.
What is the American Bankers Association?
Founded in 1875, the American Bankers Association (ABA) is the primary trade association for U.S. banks. As with other trade associations, it serves as a foundation for everything that’s going on in the banking space.
And while the ABA isn’t the only banking trade association, it is the longest-running and largest trade association.
The ABA supports banks on their paths toward sustainability, offers guidance in the wake of regulatory changes, and advocates for the industry’s interests to help solve pressing issues like charter flexibility, student debt, cannabis banking challenges, and shifting technology standards. It also serves as a resource for banks looking for industry news, educational materials, and career development tools.
What does ABA stand for in banking?
The ABA is a trade association, but there’s also the ABA routing number the American Banking Association created over a century ago. In 1910, the ABA formed the country’s first routing number system so financial institutions would have a unique identifying number to use for transactions.
Why was the ABA created?
The American Banking Association was formed to solve a massive problem: The banking system was falling apart, causing a recession and nationwide bank closures.
The problem started in 1792 when the first financial institution — the Bank of North America — had the first major bank run (where customers withdrew their money in mass amounts), leading to financial panic across the U.S.
In the following decades, the banking system hobbled along. But the Panic of 1873, caused by a stock market crash in Europe, was particularly painful. It led to 101 bank failures and caused many railroad companies to go bankrupt.
At this point, it was clear that something needed to be done. That's when two bankers, James Howenstein and Edward Breck, decided to band together and create a solution: To form a unified force to advocate for its members.
So Howenstein and Breck invited bankers from across the country to join them. In July of 1875, 349 US bankers met in Saratoga Springs, NY, for the first convention of the American Bankers Association.
The American Bankers Association today
After its inception, there were still major economic crises and bank failures. But the ABA foundation gave savings associations, national banks, and other institutions a platform for discussing issues and forming solutions.
Today, the ABA offers far more than just financial stability for American banks.
It has evolved into an advocate, educator, guide, and resource center for ABA members and their employees across the country. Additionally, the ABA is a driving force behind banking innovation by promoting technological advancements in the financial industry.
What does the ABA do?
The ABA primarily supports financial institutions through advocacies to improve banking practices, training to help individuals further their careers, research, and lobbying to improve legislation around banks and financial practices.
Advocacy
The ABA brings prominent issues to the table and works with banking regulators, policymakers, and the administration to create solutions that reflect the banking industry’s best interests.
A few of the key advocacy issues the ABA is working on include:
- Expanding access to banking
- Helping banks reduce their environmental impact
- Supporting affordable housing initiatives
- Forming sound policies around digital assets
- Making fairer regulations surrounding the tax-exempt status of credit unions
Without the ABA’s strong advocacy for the betterment of American banking, financial institutions would struggle to support their customers’ needs.
Training
The American Bankers Association offers comprehensive training tools to help individuals advance their careers and enable banks to support their staff better.
Members have access to the following:
- Online training opportunities, which range from educational videos and webinars to certification programs for mortgage lenders, commercial lenders, banking CEOs, and more
- Banking industry conferences with expert speakers on topics like bank marketing and cultural/societal inclusion
- Textbooks and workbooks that are designed to be used in a classroom setting for everything from College Accounting to Legal Foundations in Banking
- Online and in-person ABA schools help banking staff improve their knowledge in critical areas, such as compliance, data and analytics, and risk management
In short, the ABA offers a wealth of knowledge with financial and commercial usages that aim to improve the modern-day banking experience.
Research
In addition to advocating for banking interests and providing an educational foundation for bankers, the ABA has become a core resource for industry news, research, and analysis.
It’s the go-to source for timely news updates on consumer spending habits, bank performance benchmarks, reports on the Federal Reserve Bank, and everything else going on in the industry. The ABA even has podcasts with expert speakers and unique industry insights.
How many members are in the American Banking Association?
While the ABA doesn’t specify its number of member banks, its banks employ about 2 million people in the U.S. The association serves banks of all sizes, including:
- Community banks
- Mutual banks
- Agricultural banks
- Money center banks
- Credit unions
- State-chartered banks
- Savings associations
- Trust companies
- Local chapters
The ABA also wholly supports the Federal Reserve System to ensure decisions and next steps are always done right. Member satisfaction is at an all-time high, with 96% of members renewing annually.
What is an ABA routing number?
As a bank account holder, you have an ABA routing number and bank account numbers. Both are found on the bottom of your checks but differ in purpose:
- An ABA number is the bank’s nine-digit routing number, which is unique to your bank.
- Your account number refers to the number that’s linked to your bank account.
When you transfer funds, these two numbers make the magic happen: They verify your bank and your account. With that information, money is sent securely and efficiently, so you can make payments, send direct deposits, receive funds, and more – without worrying about whether your money lands in the right place.
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