Big Banks are Losing Their Millennial Clients
Big banks are seeing a pattern with their millennial clients who are shunning them to go local with their money.
Community banks are fast becoming favorable with a lot of younger customers as of 2014. A report by Accenture plc showed a 5% straight increase in the community bank account holders and these were all among the age range of 18 to 34 years. Credit unions showed a similar increase in their clientele but this was estimated to be only 3 percent. In comparison to this, the big regional and national banks have struggled to keep their millennial clients; however, they lost 16 percent of these clients due to this.
The reason for this was pronounced to be that bigger banks charge a higher fee for retail services. There has also been a rise in the fees for their account ATM withdrawals, maintenance, overdrafts and certain other services.
Tommy Oakes is a 24 year old working at Pay Simple- an e-commerce company. He began “bank shopping” right after graduation from college and ultimately chose USAA Federal Savings Bank. He further mentioned that this bank had no monthly fee charges, bundles investments and insurance, and reimburses ATM charges.
The semi-annual survey by Money Rate that was released in August discovered that big bank fee charges averaged $15.15 in comparison to the $11.52 that smaller competitors offered. Money Rates defined a ‘large bank’ to be one that has $10 billion in deposits.
Millennials are the only ones compared to other age groups who are switching banks at such a pace (18% on Jan 26th) because they are researching before they make a decision. An age group survey showed responses by millennials and revealed two factors: High fees and unsatisfactory reward programs were the cause of it.
Cam Fine, the president and CEO of CBA (Community Bankers of America), mentioned that millennials crave for the “high touch”. This can only be represented by banks that are locally owned. The idea is to find an institution that is focusing on their needs.
The Trade Group survey showed that millennials were interested in learning about finances and were most likely the ones to seek out financial advice. To attract these younger customers, community banks are compromising on their costs of offering services, so that they may retain long term gains in the form of these clients.
