Why many young Americans are dumping big banks and moving their money to smaller banks and credit unions.
It appears that size matters, at least when millennials are selecting a bank.
Young Americans (between 18 and 34) are increasingly ditching big banks and taking their business to smaller, local banks and credit unions, according to a recent banking survey from Accenture.
While large national and regional banks lost 16 percent of millennial banking customers last year, community banks saw a 5 percent increase in young account holders and credit unions experienced a 3 percent bump.
Most of the time, a millennial’s decision to dump a big bank comes down to money, more specifically banking fees. Larger financial institutions typically charge customers more for overdrafts, ATM withdrawals, account maintenance and other services than their smaller counterparts, who often offer free checking and no monthly fees.
Millennials also noted that big banks tend to have weaker loyalty reward programs.
According to the survey results, “millennials choose their banks for online banking services, reasonable fees, branch convenience and loyalty rewards programs.”
In an interview with Bloomberg, Cam Fine, president and chief executive officer of Independent Community Bankers of America, said: “Millennials in particular crave more high-touch. They want to make sure people are paying attention [to their needs.]”
The Accenture survey also found that as a group, millennials switch their banks at nearly double the rate of other banking customers. Last year, 18 percent of millennials switched their primary bank.
According to the report, millennials do their homework before selecting or swapping banks. They research the prices banks charge for services and check out consumer banking reviews online.
“Banks that try to retain millennial customers by serving them like they have served their parents and grandparents do so at their own peril,” the report said.
Banking experts said there’s a good chance that smaller banks that win millennials’ loyalty now could keep them as customers in the future.
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