Banks: sink or swim with FinTech players

November 30, 2015
/   Voices

Banking institutions must engage with emerging financial technology (FinTech) companies or risk being left behind by an industry that is currently undergoing one of the largest transformations ever seen.

Winning the Customer

November 27, 2015
/   Spotlight

It’s exhausting just trying to keep pace, let alone stay ahead. Every provider in every business feels the pinch.

Five ways payments will be different in 2024

November 24, 2015
/   Voices

Predicting the future of cash and card payment volumes is arguably a fool’s errand – but Payments UK, Britain’s new trade organisation for the industry, is in a good place to have a go...

Contactless cards: Opt-in or opt-out?

/   Voices

Australia is toying with the idea of creating an opt-in function for contactless cards, in a move that highlights the problems around coping with new payment technology and how fraud risks are handled.

Five EMV lessons for the US

/   Voices

The EMV liability shift has occurred in the US, so what can we expect to see happen in the coming months and years as a result of this change?

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

May 29, 2014
/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

What it takes to lure—and keep—the newest generation of consumers

 The whole point of the Internet is that it eliminates geographic boundaries.  When we’re online, we can go anywhere, and surely do. That’s why digital capabilities have revolutionized every industry from retail and healthcare to banking—if the same services can be had from half a world away, and for a lower cost, why not avail of them?

No one understands this trend better than those pesky millennials. These digital-heavy, mobile-savvy youngsters feel free to eschew brand loyalty and shop around for options on a whim, and the constant emergence of new technologies supports fickle habits. It’s exhausting just trying to keep pace, let alone stay ahead. Every provider in every business feels the pinch.

It turns out, however, that it’s more complicated than that.

The newest banking survey from consulting giant Accenture confirms many existing notions about customer tastes and preferences, and the opportunities that await institutions able to process them. At the same time, it uncovers seemingly contradictory ideas regarding how best to lure this new customer base.

The report makes clear that while winning over millennial customers is hard enough, keeping them can be even harder. Again, this is a generation that goes against traditional concepts of brand loyalty:  These individuals turn away from their primary financial services provider at nearly double the average rate of other age groups. The report survey reveals that 18% of consumers in this category switched their primary bank in just the past year, compared to 10% of customers 35 to 54, and just 3% of people 55 and older.

So where are they going? Some online-only startup, with operations based overseas?

Some might be, but it turns out that the big winners, at least in this iteration, are actually local and community banks, registering a 5% migration. Meanwhile, the large regional or national banks are the biggest losers, saying sayonara to 16% in this customer age group. At the same time, credit unions chalked up 3% growth in new millennial customers.

The reasons for this trend are surprisingly old-school: High fees and poor loyalty programs. Yes, the consumers seen as quitter disloyal definitely appreciate the merits of a good loyalty program. And don’t tune out the digital benefits just yet. Those same respondents also assert that they’re most likely to stay with their current bank if the online banking services offered bring true value.

In fact, this is the first time that this particular research effort has found that consumers rank online banking services (38%) ahead of both branch locations and low fees (both at 28%). In fact, the entire branch philosophy is in need of a major overhaul. It’s apparently just that big of a deal anymore—a massive 81% of millennials say they won’t switch banks if the local branch closes. This represents major shift in preferences. Only two years ago, 48% claimed they would find a new bank if their provider closed the local branch.

It gets more tricky when thinking about what it is these customers actually want from the bank. Commodity banking products and service are fine, but they often represent low-margin products. On the flip side, a majority of customers, 61%, choose other sources for brokerage accounts, 70% go elsewhere for auto loans, and more than half, 52%, find alternative providers for their home mortgages. That’s bad news on many fronts.

But then again, here’s a bright spot. As much as it seems customers are increasingly fickle, the Accenture survey actually suggests that banks have a strong foundation of customer trust. That’s a major advantage in this market.

In fact, while news of data breaches at recognizable brands often commands headlines, a stunning 86% of consumers trust their bank over all other institutions to securely manage their personal data. That’s far, far above mobile phone network providers, online retailers, consumer technology companies, and even social media providers.

Every survey is little more than a snapshot in time, but it still has valuable lessons to offer. Tis one from Accenture confirms that our industry has trust to count on, data to draw from, and innovation to build on. Most other businesses would love to have those advantages.


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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.