MakovskyMonday, December 7, 2015
The 2015 Makovsky Wall Street Reputation Study revealed interesting data about millennials and their relationships with financial institutions. A staggering 69% of the millennials surveyed lack trust in the institutions that handle their money. The news gets worse if millennials get negative news about the firms that hold their assets. In that case, 75% of millennials said bad news would prompt them to find a new financial provider. For others, pricing played an important role, as 76% said they would leave their financial provider if they found lower fees elsewhere. Not surprisingly, 68% conceded that they would reconsider their financial service provider because of access to advanced and mobile technology, while 49% said they would consider banking on mobile platforms provided by tech giants such as Google, Apple, and Amazon.
The Makovsky findings form an interesting comparison with Accenture’s 2015 North America Digital Banking Survey, which studied 4,004 adults from January 19-26, 2015. Accenture found that millennials increasingly prefer local or community banks to major national or regional banks. Indeed, community banks in this survey gained 5% in millennial account holders, while major national and regional banks dropped 16% among millennials in 2014. Respondents cited higher fees from larger banks in their decisions to leave them, legitimating Makovsky’s finding that 76% of millennials would leave their financial institution over expensive fees. Importantly, the differences in fees among big banks (those with at least $10 billion in investments) and smaller ones are significant. MoneyRates.com found that big banks on average have fees for basic services, like general account maintenance and ATM withdrawals, that are $4 higher than smaller banks, and that only 17% of big banks offer free checking, while 31% of smaller banks do so.
Viewed together, these studies present interesting observations about millennials. It appears that millennials are at once pragmatic and untethered, motivated by convenience and desperate for as much information as they can consume. Nearly 7 in 10 millennials (68%) said that their decision about a financial institution could be shaped by access to mobile technology, and half (49%) expressed interest in banking with major tech brands. The synergy of these two factors shows millennials’ commitment to practicality and convenience, and aligns with the expansion of the mobile marketplace. Mobile lets millennials connect with their friends, families, and workplaces. Adding financial institutions to that list is not a disruption, but a welcome addition.
However, there’s an oft-cited counterpoint to the many positives in the proliferation of the mobile space: millennials are increasingly unattached to the personal relationships that previously served as the bedrock of sales and consumer-client relationships. This makes millennials far more likely than others to breach contracts or break commitments. In fact, according to the Accenture study, 18% of millennials switched financial services providers this past year. While some do so after finding a better price, others do so after learning new information.
The Accenture study also revealed that 81% of millennials compared pricing and read reviews online for financial institutions prior to committing to one. Across all age-based demographics, millennials in the Accenture study were the most interested in learning more about finance and the most willing to seek financial advice. This thirst for knowledge fits the millennial profile, as is the way in which the knowledge is employed.
These findings suggest that when appealing to millennials, consider their commitment to pragmatism and convenience. Consider that they are uniquely willing to change service providers if one is cheaper or has better reviews. And consider that they are attuned to a myriad channels by which they can access information on different services and offerings, looking for the perfect fit. Now that millennials outnumber baby boomers, it makes economic sense to track their distinctive likes and dislikes.