Young people often seem more free-spirited and less tied down than older generations. This certainly appears to be the case for a number of Millennials when it comes to banking. A recent FICO survey found this demographic to be two to three times more likely to close all accounts with their primary financial institution (FI) than those in any other age group.
“The increased volatility in this age group can be a costly exercise for incumbent banks, due to the increased marketing and operational costs required to win new customers, especially if they are only replacing the ones that have left,” Joshua Schnoll, FICO’s senior director, said in a press release.
Specifically, the survey data indicates 45 percent of Millennials (ages 25–34), and 36 percent of younger Millennials (18–24), are closing their accounts and taking their money to other FIs because of fees. What’s more, having a negative experience after missing a payment was the second reason Millennials switched FIs. This is followed by inconvenient branch locations and too few ATMs. Younger Millennials also named having a negative fraud-related experience as another reason for changing FIs.
Offering more digital services may be one way to retain this switch-happy demographic. Oracle Financial Services recently released findings from a survey of 4,500 Millennials, entitled: “The Millennial Migration: How Banks Can Remain Relevant In Their Decision-Making Eco-System.”
The study found more than 25 percent of respondents relied entirely on mobile to conduct their banking business, while 70 percent communicated with their FIs most often via mobile or desktop. Additionally, 75 percent said they were at least somewhat reliant on mobile banking to manage their accounts.
Additionally, the study highlights the need for a mobile-first mindset when it comes to attracting and retaining Millennials, stating, “Millennials are more digitally savvy and their standards are high, being familiar with other digital players who have set benchmarks.”
