Low or no-fee banking is trending with 24 to 34-year-old millennials, according to a new FICO Survey. So much so, that for 45% avoiding banking fees is the top reason why they change banks. And they are more serious about skipping banking fees than other generations. They are two to three times more likely to shut down their bank accounts and go elsewhere when facing fees.
Continuing with this trend, millennials are also two times more likely to find a new bank than they were last year. Also like their older counterparts 38% of younger millennials aged 18-24 are also opt to switch banks when facing high fees.
The willingness of millennials no matter what their age to switch banks when fees get in the way can cost banks not only time, but money. Millennials typically have more financial accounts in play than the other generations.
“The increased volatility in this 25-34 year-old age group can be a costly exercise for incumbent banks, due to the increased marketing and operational costs required to win new customers, especially if they are only replacing the ones that have left. Banks will need to address millennials’ sensitivities to bank fees and a desire for convenience in order to arrest churn and build loyalty,” said Joshua Schnoll, senior director for FICO.
Bad banking experiences promote switching too
As you might expect having a negative experience with a bank can give millennials an itch to switch. It was the second biggest reason they gave for finding a new bank, whether that bad experience was due to missing a payment or some other issue. Lack of accessibility in terms of where branches are located and lack of ATMs were the third reason they gave for leaving.
What about the younger millennials? Experiencing some kind of banking fraud often spurred them on to go shopping for a new bank.
National banks and online banks trending
National banks are very popular with millennials, according to the study with 68% preferring them over other institutions.
But older millennials are also very interested in doing business with digital banks, with 16% thinking about going with an online only bank over the next 12 months. Yet right now just 2% currently have an account with one of these digital banks.
FICO carried out the survey online, contacting just about 1,000 consumers based in the U.S who were over 17 years old.