Majority of consumers would not switch banks if
their local branch closed; Millennials switch banks twice as often
as other consumers
Bank customers in North America overwhelmingly trust their banks
far more than all other institutions to securely manage their
personal data, according to a new report on the banking industry by
Accenture (NYSE:ACN).
The report, titled “Banking Shaped by the Customer,” is based on
a survey of more than 4,000 retail bank customers in the United
States and Canada and is the most recent report in Accenture’s
multi-year research on the banking industry.
When asked what type of company they trust most with securely
managing their data, the vast majority of respondents –
86 percent – chose banks and financial institutions. This
is more than 10 times the number of respondents who chose payment
companies (7 percent), mobile phone providers (2 percent) or
consumer technology companies (2 percent). Only 1 percent of
consumers said they trust social media providers the most to manage
their data.
“Despite the many threats that banks face, they still possess
competitive advantages that are critical in today’s digital world,”
said Dave Edmondson, senior managing director of Accenture’s North
America Banking practice. “At the same time, our report
highlights several trends that are causing significant challenges
for banks and should serve as a call to action for them to focus
more on improving customer perceptions and gaps in their digital
offerings.”
For instance, the survey found that most consumers (79 percent)
define their banking relationship as transactional or commoditized,
rather than advice-driven and offering high-margin products and
services. These consumers said that their relationship with
their bank is defined by simple transactions like paying bills and
receiving checking-account statements.
The survey also found that consumers shop around and choose
sources other than their primary bank for high-margin products. For
example, the majority of consumers said they went to other sources
to purchase auto loans (70 percent), brokerage accounts (61
percent), registered retirement accounts (53 percent), financial
advice (52 percent) and home mortgage loans (52 percent).
“Consumers’ perception of their banking relationship as
transactional and not advice-driven is growing at a rapid pace,”
Edmondson said. “Banks run the risk that consumers increasingly
view them as a utility — a service for basic financial transactions
– and not as the first choice for seeking financial advice. Banks
need to become more relevant to customers’ everyday lives,
including recommending suitable products and services, whether
these options come from the bank or third parties.”
Consumers said they would be interested in several value-added
services provided by banks, including: discounts for purchases (54
percent); proactive bill-pay services (53 percent); product
recommendations (52 percent); end-to-end assistance with car
buying, such as help with negotiating a loan and providing vehicle
recommendations (49 percent); and buying a home (46 percent).
Millennials switch banks twice as often as other
consumers
When looking at millennials, consumers aged 18-34 years old, the
survey found that banks can’t rest on their laurels and must do
more to retain them as customers.
Though millennials overwhelmingly said they are satisfied with
their online banking experience at their primary bank (cited by 92
percent of millennial respondents), they also change banks more
often than customers in other age groups. Nearly one in five
millennials (18 percent) said they switched from their primary bank
in the past 12 months, compared with 10 percent of customers
aged 35-54 and only 3 percent of people 55 and
older. Though local/community banks were the biggest “winners”
of this trend, 17 percent of millennials who switched chose
online-only banks. Surprisingly, slightly older consumers were even
more likely to have switched to an online-only bank within the past
12 months, with 31 percent of consumers aged 35-39 years old
saying they did so.
Millennials also have distinct preferences for how banking
services should be delivered. Two-thirds (67 percent) of
them said that the traditional and digital banking experience they
receive at their current bank is only somewhat or not at all
seamless, and nearly half (47 percent) said they would like their
bank to provide tools and services to help them create and monitor
their budget. Nearly half (48 percent) also said they would
like their banks to offer video chat on their website or
mobile/tablet application, compared to only 30 percent over 55.
“In 2015, as millennials overtake baby boomers as the largest
living generation in the United States, they are becoming one of
the most influential – and challenging – customer groups for the
banking industry,” said Robert Mulhall, managing director and North
America lead for Accenture Distribution and Marketing Services,
Banking. “Not only are millennials more likely to switch banks, but
many continue to migrate to online-only banks, which poses a
significant risk for banks in the future.”
Local bank branch less important to consumers
Accenture’s survey also found that consumer relationships with
local bank branches are changing. An overwhelming majority (81
percent) of consumers said they would not switch banks if their
local branch closed – a significant increase from the
52 percent of respondents in Accenture’s 2013 retail banking
study who said they would be unlikely to switch banks if their
branch closed. At the same time, 34 percent of consumers said
that online is the most important channel for banks to invest in
over the next five years, followed by mobile (cited by
20 percent of respondents).
“This is a big change in the evolution of retail banking,”
Mulhall said. “For the first time in our research, consumers ranked
online banking services as the number one reason for staying with
their bank, ahead of branch locations and low fees. It’s no longer
a question of proximity to the local branch that is driving
consumer choice, it’s a matter of which banks are offering the
strongest online capabilities and mobile applications.”
“Banking Shaped by the Customer,” Accenture’s 2015 North America
Consumer Digital Banking Survey Report, is available for
download.
Methodology
The report is based on an online survey of 4,004 bank customers
in North America conducted for Accenture by Market Knowledge Online
between January 19 and January 26, 2015. Approximately 70 percent
of the respondents (2,803) were in the United States and 30 percent
(1,201) were in Canada. The survey has a statistical margin of
error of 1.55 percent.
About Accenture
Accenture is a global management consulting, technology services
and outsourcing company, with more than 323,000 people serving
clients in more than 120 countries. Combining unparalleled
experience, comprehensive capabilities across all industries and
business functions, and extensive research on the world’s most
successful companies, Accenture collaborates with clients to help
them become high-performance businesses and governments. The
company generated net revenues of US$30.0 billion for the fiscal
year ended Aug. 31, 2014. Its home page is
www.accenture.com.
AccentureDamon Leavell,
+1-917-452-4083damon.leavell@accenture.com
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