FICO has been looking at millennial banking habits for a number of years now, and banking loyalty is one area of particular interest to us and our clients. Our research and studies by others have consistently shown that millennials are much more likely to switch banks than other generational groups, and that their loyalty to banks is much lower than to other categories of products/services. Below is some data from a recent study that shows financial services at the bottom of the heap.video of millennials discussing bank loyalty highlights some of those areas.
Here are several interesting takeaways:
- One reason cited for not changing banks was the “hassle factor” of moving online banking.
- Many large banking institutions are viewed as interchangeable (same high fees and poor service), so consumers have little desire to switch from one to another.
- Often millennials will supplement their primary banking relationship with additional services that meet specific needs, such as fast and easy money transfer to friends via Venmo (a topic I’ve blogged about before). With the explosion of new financial start-ups, millennials have many opportunities to shop around. CB Insights has an interesting graphic illustrating the “deconstruction” of traditional banking services by these start-ups.
- Fees are cited as the number one reason millennials (and, in fact, all generational groups) leave a bank. In our consumer banking research, we found that millennials who discover credit unions are finding a banking alternative to which they are very loyal. That said, our research has also shown that millennials continue to bank in large numbers with big national banks.