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Why Do Millennials Shop For Checking Accounts?

In December 2014, a survey fielded to bank shoppers on FindABetterBank asked them why they were shopping for a new checking account. One-third of shoppers under 30 indicated that they don’t currently have a checking account vs. 18% of shoppers 30 or older. Other significant age differences include:

millennial_reasons_for_opening_checking_accounts

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Dissatisfaction with account fees. Account fees are a big reason why shoppers are dissatisfied with their institution, but shoppers 30 or older were more likely to indicate high fees as a factor in their rationale.

Locality is important to younger shoppers. Nearly 18% of shoppers under 30 cited moving as a rationale for shopping. Clearly, this group of young shoppers associates banking with physical locations. And while older shoppers indicated more sensitivity to branch and ATM locations, it’s not by much.

Bad experiences creates churn. Bad service is a major cause of attrition, and these data show that younger shoppers are slightly less motivated to switch because of it. However, switching because of a bad experience correlates more strongly with income than age – over 30% of shoppers with incomes greater than $175,000 cited bad customer service compared to 15% of shoppers with incomes under $50,000.

Small institutions appeal more to older shoppers. This is not great news for community banks and credit unions. The bigger “brands” resonate more with younger shoppers. As opposed to 10 years ago, some banks are national brands (e.g., Bank of America, Capital One) and more recognizable to younger consumers. Banks like BofA and Chase have been able to extend the notion of convenience beyond the physical realm to digital channels. This message appeals more to younger shoppers.


Insights from Rob RubinRob Rubin is Managing Director of Novantas Data Services. His research leverages insights captured from thousands of bank shoppers every day while they are actually thinking about- and in the process of shopping for a new bank.

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Comments

  1. Interesting stats. It’s always curious what makes different audience segments tick around need for a financial product. The one that surprises me most though is “Small institutions appeal more to older shoppers.”

    That doesn’t seem to jive with other research on millennials. Nielsen did a fairly deep dive on Millennials last year I believe (http://www.nielsen.com/us/en/insights/reports/2014/millennials-breaking-the-myths.html)

    Relevant to this piece they discover that Millennials are more likely to spend or choose a brand that exhibits social or community responsibility.

    Millennials overall are very thrifty an value savings (supported by the research above about wanting to get away from fees)

    And millennials value brand authenticity and localism in choosing a brand.

    All three of those seem to me that credit unions and community banks would be the perfect fit. I’d love to see a follow up to the question that got the result “Small institutions appeal more to older shoppers.” to see if it’s a perception that small institutions don’t have the resources, particularly digital ones in serving financial needs, because they certainly check the others.

    If that’s the case that would inform a strong marketing and PR campaign to educate about the benefits of banking with a credit union or community bank (thrify, localism and community/social responsibility) AND putting the tech/digital resources available up front and center.

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