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Digital experiences draw more consumers to big banks: report

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While Americans favor credit unions for their close ties to their communities and high level of customer service, most still use the big banks as their primary financial institution because consumers — especially younger consumers — believe the big national banks offer superior digital experiences.

That’s according to a new report from Mobiquity, a Waltham, Mass.-based provider of digital products and services. The report’s findings were based on a December 2021 survey of 1,269 US consumers.

Consumer opinions of credit unions were overwhelmingly positive, with 89% of those who do business primarily with a credit union saying they were satisfied or very satisfied (for consumers over 45, this rose to 96%) . Of all consumers surveyed they were three times less likely to think credit unions are more concerned with profits than researching their members compared to big banks, half agreed that credit unions care more of their members that big banks don’t care about their customers, and 58% said they would prefer to do business with institutions that invest locally.

However, the largest portion of survey respondents (570 or 45%) said they primarily do business with a large national bank. Of the remaining respondents, 305 (24%) said they primarily used a credit union, 237 (19%) used a community bank, 126 used a digital-only bank (10%), and 31 (2%) said they didn’t have a bank. Account.

After analyzing all of the survey results by age, Mobiquity concluded that younger generations’ desire for robust and convenient digital banking tools plays a significant role in why credit unions follow the big national banks in the race to become the financial institution of choice for consumers. Fifty percent of people over the age of 60 said they mainly use a credit union or community bank, compared to 35% of people aged 18 to 29. And only 3% of people over 60 have used a digital-only bank, compared to 13% of the 18-29 age bracket.

When asked what defines an “ideal banking experience”, the importance consumers placed on “great customer service” increased with age, while the importance they placed on “digital experiences easy to use” and to a “wide range of digital services” was decreasing. with age. People 60 and under consistently ranked “easy-to-use digital experiences” in their top three attributes, while people over 60 ranked it fifth, according to the report. And 48% of consumers under 30 said they would choose a credit union or smaller bank if it offered digital services comparable to those offered by big banks, compared to 26% of consumers over 60. years, he said.

The Mobiquity report also revealed:

  • Sixty-six percent of consumers over 60 listed having “a branch near me” as one of the top three factors that define an ideal banking experience, a significantly higher percentage than those 45-60 ( 54%), 30-44 years old (43%) and 18-29 (45%).
  • The desire for “optimal account terms” (including low user fees and high returns on interest-bearing accounts) also increased with age, with 41% of consumers under 30 including it in their top three attributes, compared to 43% of those aged 30. 44, 49% of 45-60 year olds and 57% of over 60 year olds.
  • The younger consumers were, the more they cared about their financial institution offering peer-to-peer lending options and the ability to invest in cryptocurrency. Thirteen percent of the under 30 age group cited peer-to-peer lending among their top three factors influencing their ideal banking experience, compared to 11% of 30-44 year olds, 13% of 45-60 year olds and 6% of over 60s. years. For cryptocurrency, these percentages were 14% for consumers under 30, 12% for consumers between 30 and 44, 10% for consumers between 45 and 60, and just 1% for consumers between the ages of 30 and 44. over 60 years old.
  • Older generations prefer financial institutions that invest in their local community, while younger generations prefer institutions that invest in sustainability. Sixteen percent of consumers under 30 found community investments important, compared to 22% of those 30-44, 25% of those 45-60, and 28% of those over 60. Twenty-four percent of people under the age of 30 said they were more concerned about sustainability investments, compared to 17% of the 30-44 and 45-60 age groups, and 16% of those over 60.

Matt Williamson, vice president of global financial services for Mobiquity, said credit unions, being trusted but rarely dynamic brands, must recognize they are at an inflection point and act now to attract younger generations. . Delivering digital experiences on par with those offered by big tech companies is key to meeting the needs of today’s consumers, he noted. “With the democratization of access to digital technology, there’s no reason a credit union can’t provide such a seamless and frictionless experience for its customers,” he said. “With open banking concepts, they could offer third-party services to their customers, further increasing the value of the relationship.”

To better meet the digital expectations of younger generations, Williamson recommended that credit unions strive to meet them where they are, while recognizing that “where they are” has changed. “What worked before is no longer appealing or relevant to younger generations,” he said. “Agency experience is no longer a prerequisite for serving and attracting new, younger clients. The expectations of Gen Z and Gen Y are entirely different from those of Gen X, and Gen Alpha (the generation following Gen Z) will have even greater expectations than those that came before them. Smooth and intuitive integration, with almost instantaneous execution, will become simple table stakes. »

Williamson also stressed that understanding the consumer journey and how preferences differ across generations should be the top priority for credit unions, not deciding which new digital tool to implement. “The authentic values ​​of millennial and Gen Z society differ from previous generations,” he said. “Our recent survey showed that baby boomers and Gen Xers liked the contributions and local community support offered by credit unions. Younger generations are concerned about ESG. They want to know that the environment, diversity and inclusion are key values ​​held by their banking provider. Not just as a tick box exercise, but in an authentic and active way.