NEW YORK—A new study indicates Millennials switch banks twice as often as other demographic groups and are beginning to shift to online-only financial institutions.
Accenture’s report, Banking Shaped by the Customer, shows that banks and credit unions can’t rest on their laurels and must do more to retain Millennials.
The survey reached more than 4,000 retail banking customers in the United States and Canada between January 19 and January 26, 2015.
Though Millennials in the report overwhelmingly said they are satisfied with their online banking experience at their primary FI (cited by 92% of Millennial respondents), they also change financial institutions more often than customers in other age groups. Nearly one in five Millennials (18%) said they switched from their primary FI in the past 12 months, compared with 10% of customers aged 35-54 and only 3% of people 55 and older.
“Though local/community banks were the biggest ‘winners’ of this trend, 17% of Millennials who switched chose online-only banks. Surprisingly, slightly older consumers were even more likely to have switched to an online-only bank within the past 12 months, with 31% of consumers aged 35-39 years old saying they did so,” the study said.
Millennials also have distinct preferences for how banking services should be delivered. Two-thirds (67%) of them said that the traditional and digital banking experience they receive at their current financial institution is only somewhat or not at all seamless, and nearly half (47%) said they would like their bank to provide tools and services to help them create and monitor their budget. Nearly half (48%) also said they would like their banks to offer video chat on their website or mobile/tablet application, compared to only 30% over 55.
“In 2015, as Millennials overtake baby boomers as the largest living generation in the United States, they are becoming one of the most influential – and challenging – customer groups for the banking industry,” said Robert Mulhall, managing director and North America lead for Accenture distribution and marketing services, banking. “Not only are millennials more likely to switch banks, but many continue to migrate to online-only banks, which poses a significant risk for banks in the future.”