New Study Adds Gen X and Boomers to the Millennial-Driven Growth in Alternative Banking
A new study by Novantas finds growing support for banking solutions from tech firms. 58% of the study’s 11,000 participants, including Millennial, Gen X, and Boomer-aged respondents, would “strongly consider Facebook, Apple, Google, or Amazon if they offered a checking service”. That’s up 14 points from their 2017 survey results.
Is your institution ready for this challenge?
Challenging Times for Financial Institutions
Here’s a generational breakdown of surveyed likelihood to switch:
Unsurprisingly, about 66% of those ready to embrace new tech banking solutions are Millennials. However, they weren’t the only ones. A substantial number of Gen X and Boomers made up the remainder. Even “older folks” are equating technology with convenience, and with simple platforms, the “learning curve” is minor.
The report concludes with one major point: No matter their age, any consumer can be lured to open an account (even a hypothetical one) with any of these big tech providers.
What do these consumers want?
Convenience. Yeah, it’s that simple. Every generation wants an easy way to access, gain insights on, and manage their money. The differences emerge in how to achieve this goal. For example, both Boomers and Gen X still want to have branches nearby (along with the always-on tech). A physical presence is less important to Millennials.
What about Service?
You provide great service. Whether you’re a community bank or credit union, it’s a major focus. We get it. Surveys continue to prove it. Unfortunately, this study found the service attribute rates low on a consumer’s scale of importance. They care, but really want the convenience the tech provides.
Ouch. We know how much you’ve put into this area.
Tech Firms Are Learning
This study focused on consumers’ perception of technology and convenience. Much of what they found was already known: Financial institutions continue to lag behind faster-moving innovators. Companies like “neo-banks” Chime, Varo, Simple, and others redefine what “banking” means.
Then, there’s the quiet growth of the big tech firms in lending (Amazon), checking (PayPal), and other financial services, all to gain experience in creating a “better-than-a-bank” solution.
What Can Financial Institutions Do?
As the study suggests, technology, such as digital account opening, is essential. Maybe the appeal of this functionality can account for some of the “missing” accounts? Checking accounts at financial institutions have decreased by nearly 100 million accounts since 2011.
If you look at these up-and-comers, seamless money management is a consistent theme. As is a dead-simple checking account. So, yours has to stand out! Today’s checking account is a commodity. Studies show a consumer willingness to pay between $5-$10 monthly for a package of money-saving benefits.
So take advantage of this subscription-focus! There are two popular options for sprucing up your checking account:
In their own ways, each works to enhance “stickiness”, generate more non-interest income, and further improve your account holder’s experience. The former does so by enticing users to use the account (and debit card) more, in exchange for loyalty bonuses. The latter offers a full suite of benefits at a low monthly cost.
No matter how you deal with the threat, the important thing is to…
Do. Something. Now.
More information on Value-Added Checking:
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