Millennials change banks twice as often as other consumers. According to an Accenture survey of over 4,000 retail banking consumers in the United States and Canada, nearly one in five Millennials (18%) said they had changed their primary bank in the past 12 months, compared to 10% of senior consumers aged 35 to 54 and only 3% of those aged 55 and over. Although local / community banks were the biggest winners in this trend, 17% of Millennials who switched chose online-only banking. Surprisingly, slightly older consumers were even more likely to have opted for an online-only bank in the past 12 months, with 31% of consumers aged 35 to 39 saying they had done so.
Millennials also have distinct preferences for how banking services should be provided. Two-thirds (67%) of them said that the traditional and digital banking experience they receive at their current bank is only partially or not at all transparent, and almost half (47%) have said they would like their bank to provide tools and services. to help them create and track their budget. Almost half (48%) also said they would like their banks to offer video chat on their website or mobile / tablet app, compared to just 30% over 55 years.
“In 2015, as Millennials overtake Baby Boomers as the largest living generation in the United States, they become one of the most influential – and difficult – consumer groups for the banking industry,” said Robert Mulhall, Managing Director and Head of North America for Accenture Distribution and Marketing Services, Banking. “Not only are Millennials more likely to switch banks, many continue to migrate to online-only banks, posing a significant risk for traditional brick-and-mortar-based banks in the future. “
And while many banks and credit unions continue to add branches, research from Accenture suggests strategy is not the key to growth. An overwhelming majority (81%) of consumers said they would not change banks even if their local branch closed. This is a significant increase from the 52% of those polled in Accenture’s 2013 Retail Banking Study who said they would be unlikely to change banks if their branch closed. At the same time, 34% of consumers said the internet is the most important channel for banks to invest in over the next five years, followed by mobile (cited by 20% of respondents).
“This is a big change in the evolution of retail banking,” Mulhall said. “For the first time in our research, consumers ranked online banking as the number one reason to stay with their bank, ahead of branches and low fees. It is no longer a matter of proximity to the local branch which determines consumer choice, it is a question of which banks offer the most powerful online capacities and mobile applications.
Consumers trust their financial institution, but not enough for advice
When asked what type of business they trust the most to manage their data securely, the vast majority of respondents (86%) chose banks and financial institutions. That’s more than 10 times the number of people surveyed who chose payment companies (7%), mobile phone providers (2%) or consumer tech companies (2%). Only 1% of consumers said they trust social media providers the most to manage their data.
“Despite the many threats that banks face, they still have critical competitive advantages in today’s digital world,” said Dave Edmondson, Senior Managing Director of the North American banking practice of Accenture. “At the same time, our report highlights several trends that pose significant challenges for banks and should serve as a call to action to focus more on improving consumer perceptions and gaps in their banks. digital offers. “
The survey found that most consumers (79%) define their banking relationship as transactional or trivialized, rather than advice-oriented and offering high-margin products and services. These consumers said their relationship with their bank is defined by simple transactions like paying bills and receiving checking account statements.
Although consumers largely trust banks over other types of providers with their data, they look to competitors for more sophisticated, high-margin products. For example, the majority of consumers reported using other sources to purchase auto loans (70%), brokerage accounts (61%), retirement accounts (53%), financial advice (52% ) and home mortgage loans (52%). .
“Consumers’ perception that their banking relationship is transactional and not advice-driven is growing at a rapid pace,” said Edmondson. “Banks run the risk that consumers increasingly see them as a public service – a service for basic financial transactions – and not as the first choice for seeking financial advice. Banks need to become more relevant to the daily lives of consumers, including recommending suitable products and services, whether these options come from the bank or from third parties.
In the Accenture study, consumers said they would be interested in several value-added services provided by banks, including: discounts on purchases (54%); proactive bill payment services (53%); product recommendations (52%); end-to-end assistance with buying a car, such as helping with loan negotiation and providing vehicle recommendations (49%); and buying a house (46%).
How financial institutions should shape the future of banking
Accenture says meeting the banking expectations shaped by all customers, especially Millennials, requires an analytical foundation in addition to business and IT integration, agile operating models, and strong digital governance. According to Accenture, these fundamentals will be key to deepening customer relationships and intimacy so that banks can deliver the knowledge-driven experiences customers want:
Know the customers. Micro-segmentation allows financial marketers to better understand customers as groups, sub-segments, and individuals. He guides banks in resource orientation, product development and customer service through individual interaction models and as part of an omnichannel strategy.
Re-imagine the experience. With analysis, banks and credit unions can create consumer-centric journeys that go beyond conventional banking encounters. They can develop testing and learning approaches, using data analytics to inform continuous improvement efforts that reflect customer behaviors and feedback.
Change the distribution mix. Given the evolving role of the branch and the growing importance of digital, financial institutions need to rethink the distribution mix to make the most of the changing patterns of channel use by consumers.
Deepen and maintain loyalty. Financial institutions can retain their customers by combining implied loyalty – advice, matched gifts or services
like merchant-funded offers – with explicit loyalty (point-based systems), using the right data for a holistic, knowledge-driven loyalty program.
Evolve in everyday banking. Banks and credit unions need to bring together several elements – channels, customer experience, analytics, partnerships, digital platforms and innovation between them – to fuel a new value proposition for Everyday Bank.
Download the report
Accenture’s 2015 Survey Report on Digital Consumer Banking in North America, “A bank shaped by the customer”, is available as an instant download in PDF format (no registration required).