Young people these days are less loyal to banks and less inclined to pay for their services, opening up a massive opportunity for non-traditional competitors.
That’s the word from KPMG, who surveyed 1,400 of their employees aged between 18 to 30 and found that young professionals are increasingly likely to bank with more than one institution and have higher expectations of banks, particularly when it comes to technology.
That doesn’t mean they’re willing to pay for these services, though.
According to Head of Financial Services Management Consulting at KPMG Daniel Knoll, “the bottom line is young professionals are very demanding and value conscious”.
This makes engaging Gen Y tricky for banks and ‘disruptors’ alike, but the opportunity for those who get it right is a big one: while Gen Y customers only made up 36 per cent of banking revenues in 2010, that’s expected to skyrocket to 70 per cent by 2030.
Bank loyalty for Gen Y is declining, with the number of young professionals who bank with four or more institutions tripling since 2012.
And although most young upstarts don’t shift their main bank account too often, the main reason cited for keeping their primary account at a particular bank was that it’s too hard to change.
Not surprisingly, Gen Y value digital channels for most banking services, with 98 per cent preferring online or mobile services for day-to-day banking.
The exception to this is taking out a home loan; 79 per cent would rather visit a branch when they’re about to sign up to a lifetime of debt.
In general young people are fiercely independent when it comes to sourcing information about financial products, with just 21 per cent relying on information provided by a bank.
Forty-nine per cent prefer to do their own research online, 25 per cent go off the recommendations of friends and family, while just 5 per cent outsource the decision to a financial adviser.
And on the subject of financial advisers, Gen Y just doesn’t use them.
Ninety-five per cent of this comparatively well-off sample don’t have a financial planner, while 84 per cent don’t feel they even need one.
The report found that a large section of young people believe they are not wealthy enough to need advice, and would rather focus on saving at this stage of life instead of sitting down with an expensive and potentially biased adviser.
Financial coaching, on the other hand, did resonate with 65 per cent of respondents, although again they’d probably not be willing to pay for it.
Overall, the report concludes that Gen Y have a distinct preference for how they interact with banks, but have not been particularly well served to date.