As I highlighted in my last post about the FICO Consumer Banking Survey Report, Millennials are five times more likely to close all accounts with their primary bank, and three times more likely to open a new account at different bank. When asked about satisfaction with their current primary bank, only 74% of Millennials are satisfied, compared to 77% of Generation X and 80% of Baby Boomers.
This should be a cautionary note for banks. Overall, Millennials are less satisfied and more likely to do something about it. Let’s now dig into some of the detail driving those numbers.
Top five reasons why Millennials switch banks
In our survey, 30% of Millennial customers indicated they have already switched a primary checking account from one bank to another. Here are their top reasons why they switched:
1. Fees were too high. In fact, consumers in all age groups cited high account fees as the most important reason they had left a bank.
2. Negative experience with a bank representative. This was the second most popular reason cited. Not only by Millennials but across all generations.
3. Inconvenient branch locations and too few ATMs. Here, concerns began to diverge between Millennials and other generations. Nearly a quarter of Millennials cited these two factors in why they switched banks, vs. only 10% for Generation X and Boomers. Interestingly, Boomers cited financial incentives as the third-highest reason, at nearly twice the rate of other generations. And Generation X cited negative fraud-related experiences at nearly three times the rates for Boomers or Millennials.
4. High ATM fees. Returning to concerns with fees, Millennials cited this concern at nearly twice the rate of Boomers or Generation X.
5. Negative experience related to not making an account payment. Millennials were three times more likely than Boomers and nearly five times more likely than Generation X to highlight this reason for leaving.
Suggestions for growing Millennial relationships
For Millennials, switching behavior is driven by the perception of high fees, convenience and customer service. Based on FICO’s experience with hundreds of financial services firms around the world, here are a few high-level ways to tackle two of the three areas:
1) Fee management both at the account and customer level (across deposits, cards and other accounts) is a critical element of balancing profitability and attrition risk, not to mention a potential regulatory issue. Recently, FICO worked with a major US bank to reduce attrition by implementing the right analytic tools to deliver consistent fee treatments and make effective fee waiver decisions on valuable, low-risk customers. The right analytic software is critical; learn more at www.fico.com/TRIAD.
2) Millennials are very sensitive to the treatment they receive when missing a payment. To build relationships with younger consumers over the long-term, banks should invest in pre-delinquency strategies and improvements in how communications are handled (voice, text, email). Learn more at www.fico.com/CCS.
Download the full survey report to get more insight into Millennials and banking.