Study shows they would bank with other service providers
If the big banks want to turn millennials into customers who are as loyal as their parents were, they better increase their online and mobile presence.
A new survey of Canadian and U.S. consumers found that younger bank customers are nearly twice as likely as older ones to consider switching to a branchless bank like Tangerine or opt to bank with major technology players if that option were available.
Nearly 40% of customers 18 to 34 years old said they would consider a switch, compared with 29% of those aged 35 to 55 and 16% of those over 55, according to Accenture, a global management consulting, technology services and outsourcing company.
“The game is changing for banking in Canada and the U.S., and tomorrow’s consumer is coming of age with a very different perception of what a bank could be,” said Jodie Wallis, managing director of Accenture’s Canadian banking practice.
“These new customer expectations will prove disruptive to banks if non-bank entrants gain momentum and if banks do not adapt quickly.”
While Canadian banks have made some movement in that direction, they need to figure out how to properly integrate their online presence with their call centres and physical branches while also offering personal digital financial advice, she said.
“The banks have to figure out how to get really good at being omni-channel, at having branches but also making those branches one part of an ecosystem of channels that includes online and mobile and potentially others that we haven’t even thought of,” she added.
“It’s figuring out, “What does the experience need to be online? What’s an experience that approximates some of the things the millennials enjoy or are used to?”
Younger consumers also suggested they were more likely than older ones to want their banks to offer more services to help them with financial management and purchases, such as buying a car or a home.
And 40% said that if technology player Google offered banking services, they would consider banking with it. Another 37% said they would consider banking with Amazon and 34% with Apple.
Overall, 72% of respondents in the two countries aged 18 to 34 said they would be “likely” or “very likely” bank with at least one technology, telecommunications, retail, or shipping/postal company that they do business with if they offered banking services.
In Canada, 60% of bank customers aged 18 to 34, and 47% of those age 35 to 54, said they would bank with such a player.
“Digital technologies are dissolving the boundaries between industry sectors. For banks, simply being more digital versions of what they are today will not be enough to assure success in the future,” said Juan Pedro Moreno, senior managing director of Accenture’s global banking practice.
“They will need to move beyond their traditional role as enablers of financial transactions and providers of financial products to play a deeper role in the lives of their customers by applying digital technology in new ways and by offering tangible value and advice based on transaction information.”
Accenture conducted the survey online with 3,846 bank customers in North America between March 10 and March 18, 2014. About 70% of the respondents were in the United States and 30% were in Canada.
Accenture says its survey has a statistical margin of error of plus or minus 1.5 percentage points, although the polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.