New research reveals millennials (25-34 years-old), a group at the peak of financial services usage, are 2 to 3 times more likely to close all accounts with their primary financial institution than people in other age groups. Millennials say fees (low balance, ATM, etc.) are the top reason Millennials switch banks.
FICO’s latest consumer research on why people switch banks found that Millennials (25-34 years-old), a group at the peak of financial services usage, are 2 to 3 times more likely to close all accounts with their primary financial institution than people in other age groups.
The same demographic said they are twice as likely to close all accounts and switch banks this year than they were last year. This could drive a high amount of customer churn, as this age group holds 6.27 financial products on average, compared to 5.79 for the entire US adult population.
When it came to reasons for switching, 45% of Millennials aged 25-34 cited high fees as a key reason for leaving their bank. For younger Millennials aged 18-24, the number was also high at 36%.
A negative experience when they missed a payment was the second biggest reason for 25-34 year-olds to switch banks. Inconvenient branch locations and too few ATMs were tied for third. In addition to these reasons, younger Millennials said they switched banks because they had a negative fraud-related experience.
While large national banks are by far the predominant primary financial institutions for US consumers, the survey revealed that 16 percent of 25-34 year-olds are considering opening an everyday banking product with an online-only bank in the next year. In the survey, only 2 percent of respondents said they currently hold such an account.
Some established banks have already acquired digital-only banks (BBVA acquired Simple a few years ago), while others are investing heavily in better digital products. Earlier this month, JP Morgan Chase, Wells Fargo, Bank of America and other large banks announced enhancements to clearXchange, which will now offer real-time, person-to-person payments on the platform.
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