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Younger customers open to alternative banks

Also amenable to doing without branches

Younger customers open to alternative banks

Younger bank customers are nearly twice as likely as older customers to consider switching to a branchless bank and to consider banking with major technology players if those companies offered banking services, according to a survey of nearly 4,000 retail bank customers in the United States and Canada appearing in two new reports by Accenture.

The survey found that 39% of customers 18 to 34 years old would consider switching to a branchless bank, compared with 29% of customers 35 to 55, and 16% of customers over 55.

The survey also found that significant percentages of consumers—particularly younger ones—would be open to banking with technology players such as Google, Amazon, and Apple if the companies offered such services. Among consumers ages 18 to 34, 40% said they would consider banking with Google, 37% would consider banking with Amazon, and 34% would consider banking with Apple. Those percentages were 23%, 23%, and 20%, respectively, for respondents age 35 to 54, and dropped to 5%, 7%, and 6%, respectively, for respondents over 55.

According to the survey, overall 72% of consumers age 18 to 34 would be “likely” or “very likely” to bank with at least one technology, telecommunications, retail, or shipping/postal company that they do business with if they offered banking services. More than half (55%) of consumers age 35 to 54, and 27% of those ages 55 and older said the same.

“Tomorrow’s consumer is coming of age with a very different perception of what a bank could be,” says Wayne Busch, managing director of Accenture’s North America Banking practice. “Those expectations could become profoundly disruptive to banks if non-bank entrants gain momentum and banks fail to adapt quickly. This will have important implications for the ‘digital generation’ spanning nearly all age groups.”

According to the survey, younger consumers were also more likely than older consumers to want their banks to offer more services and solutions to help them with financial management and purchases. Specifically:

  • More than half of respondents age 18 to 34 (55%) said they would like their bank to help with the “heavy lifting” of car-buying and provide discounts in that process, compared with 45% of those age 35 to 55, and one-quarter (24%) of those over 55.
  • More than half of the younger respondents (57%), compared with 47% of those age 35 to 55, and one-quarter (24 percent) of those over 55, said they would welcome more help from their bank in the process of purchasing a home.
  • More than two-thirds of younger respondents (68%) expressed interest in receiving real-time analysis of their spending from their bank, including “safe-to-spend” forecasts, compared with 56% of those age 35 to 55, and 34% of those over 55. Among the younger group, two-thirds (67%) said such services would make them more loyal to their bank compared with 67% of those age 35 to 55, and 38% of those over 55.

“Banking is widely viewed as a purely transactional activity, but people are seeking advice and relationships that improve their financial well-being,” says Robert Mulhall, a managing director in Accenture Distribution and Marketing Services. “In this digital era, the most successful companies focus on solutions, rather than products, to simplify their customers’ everyday lives. Banks also need to think this way.”

Juan Pedro Moreno, senior managing director of Accenture’s global Banking practice, said, “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. 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.”

John Ginovsky

John Ginovsky is a contributing editor of ABA Banking Journal and editor of the publication’s TechTopics e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each TechTopics issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and was managing editor and staff reporter for ABA’s Bankers News. Email him at jginovsky@sbpub.com.

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