Digital Experiences Drive More Consumers to Big Banks: Report

While Americans favor credit unions for their close ties to their communities and high level of customer service, most still use large banks as their primary financial institution, as consumers – especially younger ones – 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 U.S. consumers.

Consumers’ views of credit unions were largely positive, with 89% of those who bank primarily with a credit union reporting satisfaction or high satisfaction (for consumers over 45, that percentage jumped to 96%). Among all consumers surveyed, they were three times less likely to think that credit unions are more concerned with profits than looking out for their members versus big banks, half agreed that credit unions care more about their members than big banks care about their customers, and 58% said they would prefer to do business with institutions that invest locally.

However, the biggest portion of survey respondents (570, or 45%) said they primarily conducted 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 had no bank account.

After analyzing all survey results based on age, Mobiquity concluded that younger generations’ desire for robust and convenient digital banking tools plays a large role in why credit unions trail large national banks in the race to become the financial institution of choice for consumers. Fifty percent of the over 60 age group said they primarily used a credit union or community bank, compared to 35% of those ages 18-29. And just 3% of people over 60 used a digital-only bank, compared to 13% of the 18-29 age group.

When asked what defines an “ideal banking experience,” the importance consumers placed on “great customer service” grew with age, while the importance they placed on “easy-to-use digital experiences” and a “wide range of digital services” fell with age. Those 60 and under consistently ranked “easy-to-use digital experiences” in their top three attributes while those over 60 ranked it fifth, the report stated. And 48% of consumers under 30 said they would switch to a credit union or smaller bank if it offered digital services comparable to those offered by large banks, versus 26% of consumers over 60, it said.

Mobiquity’s report also found:

• Sixty-six percent of consumers over 60 listed having “a branch location close to me” as one of three top factors that define an ideal banking experience, a significantly higher percentage than those ages 45-60 (54%), 30-44 (43%) and 18-29 (45%).
• The desire for “optimal account terms” (including low usage fees and high yields 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 30-44, 49% of those 45-60 and 57% of those over 60.
• 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 group named peer-to-peer lending in their top three factors influencing their ideal banking experience, compared to 11% of those 30-44, 13% of those 45-60 and 6% of those over 60. For cryptocurrency, those percentages were 14% for consumers under 30, 12% for consumers 30-44, 10% for consumers 45-60 and just 1% for consumers over 60.
• Older generations preferred financial institutions that invest in their local community, versus younger generations who preferred 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 30 said they were more concerned with investment in sustainability, compared to 17% of both the 30-44 and 45-60 age groups, and 16% of the over 60 group.

Matt Williamson, vice president of global financial services for Mobiquity, said that credit unions, being brands that are trusted but rarely dynamic, must recognize they are at an inflection point and act now to attract younger generations. Providing 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 tech, there is zero reason a credit union could not provide an equally seamless, friction free experience for their 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 younger generations’ digital expectations, Williamson recommended that credit unions focus on meeting them where they are, while recognizing that the “where they are” has changed. “What used to work is no longer enticing or relevant for the younger generations,” he said. “The branch experience is no longer a prerequisite to service and attracting new, younger customers. Gen Z’s and millennials’ expectations are entirely different from Gen X’s, and Gen Alpha (the generation succeeding Gen Z) will have even greater expectations than those that came before them. Slick, intuitive onboarding, with almost instantaneous execution, will become mere table stakes.”

Williamson also stressed that understanding the consumer journey, and how preferences differ according to generation, should be credit unions’ top priority – not choosing which hot, new digital tool to implement. “The authentic society values of millennials and Gen Zers differ from previous generations,” he said. “Our recent survey showed that baby boomers and Gen X liked the contributions and support to the local community offered by credit unions. Younger generations are concerned about ESG. They want to know that the environment, and diversity and inclusion, are key values held by their banking provider. Not just as a checkbox exercise, but authentically and actively.”