New Survey Suggests Young Consumers Are Not Loyal to Their PFIs

Financial institutions will have to work harder to keep their young consumers.

Although young consumers are less loyal to their primary financial institutions than older consumers, they are less likely to move to another bank or credit union because of technology offerings, and they are also skeptical about banking with big tech companies such as Google and Amazon, according to a new survey from LendKey Technologies in New York City.

Millennial and Gen Z respondents were less likely (42%) than those 35-54 (52%) or 55+ (57%) to consider themselves loyal to the PFI that holds their primary checking account. Women were slightly more loyal to banks than men (54% versus 49%). Overall, 52% of respondents said they were loyal and 37% said they were not.

What’s more, despite the growing focus on technology and mobile banking to improve member experience, only about one in five cited technology as a motivation for switching financial institutions.

According to the online survey of more than 1,000 adults, better fees and interest rates would entice 57% of them to switch, followed by customer service (39%).

Even though there have been highly publicized data breaches at financial institutions, only more than 25% of the survey’s respondents said cybersecurity would motivate them to move their business to another bank or credit union.

Another survey finding was that 61% of respondents would not turn to Google or Amazon for their banking needs. That includes half of millennial and Gen Z respondents, 55% of Generation X and 71% of those over 55. Overall, only 11% said they would bank with Google and 12% with Amazon.

The survey also suggested there is considerable misinformation about student debt.

While a majority of former college students have comparison-shopped for cars, clothes or insurance, only 8% said they did so when it came to finding an education loan.

Across age and gender lines, few respondents said they had searched for the best rate and terms for a student loan, with just 16% of those 18-34, 9% of those 35-54 and 3% of those 55 and older having “shopped around.”

LendKey said this data suggests students need a greater understanding about the student loan process because 41% said they believed loans come from schools themselves, while 14% incorrectly guessed angel investors are providing loans to the public.

Additionally, one in five guessed that private and individual investors provide loans, which is partially true, while almost two-thirds correctly answered that large banks offer student loans, but only half of former or current students correctly said credit unions offer student loans.

The survey also found that millennial and Gen Z borrowers were more likely than older peers to believe that a government program will eventually relieve their student debt burden.

Thirty-seven percent said they were hopeful, compared with 31% of those 35-54 and 29% of those 55+. Overall, about half (47%) are skeptical about such proposals. A substantial number, 19%, said they do not know enough about the topic.

“Far too few consumers take the time to educate themselves about student loans, despite the fact that they may incur thousands of dollars in unwarranted education loan interest that may impact their financial future for years, perhaps decades, to come,” Vince Passione, CEO and founder of LendKey, said. “This is one of the few asset classes where consumers have not been taught to shop around.”