It appears loyalty to a financial services provider might be waning, especially when considering younger users.
More than a fourth of financial services consumers (28%) said they are considering switching to a new financial services company, according to a new study released on Tuesday by Yes Marketing.
In its “Inside the Lifecycle of the Financial Services Consumer” report, Yes Marketing surveyed more than 1,000 consumers on their experiences with financial services companies and found that younger consumers are more likely to consider leaving their current financial services provider compared to their older counterparts.
The report indicated 40% of consumers ages 18 to 21 say they are considering switching to a new financial services company with more than a third of consumers ages 22 to 37 reporting the same (35%).
“With the rise in peer-to-peer services and fintech startups, consumers now have more options than ever when it comes to selecting a financial services provider,” Yes Marketing president Jim Sturm said in a news release.
“This trend, combined with consumers’ likelihood to stay long-term with the financial provider they selected, demonstrates how important it is for financial brands to have effective acquisition strategies that engage and build trust with new customers as they progress along their journey,” Sturm continued.
Yes Marketing noticed many of the factors influencing consumers’ decisions to use a new financial institution for the first time remained consistent across generations.
Overall, 42% of consumers report that competitive rates and fees are the most significant factor when considering new financial services companies, while 22% of consumers ranked the variety of available services as the most important factor.
The findings indicated the need for financial brands to provide specific information about rates, fees and services up-front to attract new customers, according to Yes Marketing.
When it comes to selecting a new financial institution, 42% percent of Gen Zers and 37% of millennials say the ability to manage services via a mobile app is a top-three factor when considering new financial services companies, compared to 18% of baby boomers. This indicates the priority younger consumers give to a convenient and mobile-friendly customer experience.
The findings also revealed that younger customers are influenced less by trust compared to their older counterparts, indicating an opportunity for marketers to emphasize trust in their messaging to older consumers.
When asked what service factors influence them to use a financial services provider they’ve never used before, 14% of participants ages 18 to 21 (Gen Z), and 19% of consumers ages 22 to 37 (millennials) selected, among their top three choices, trust in the company to protect their personal information, compared to 34% of consumers aged 38 to 52 (Gen X) and 47% of consumers aged 53 to 72 (baby boomers).
“In today’s highly competitive and crowded financial services landscape, the pressure is on for all financial institutions to demonstrate their value to consumers through high-quality services and data-driven content,” said Michael Iaccarino, chief executive officer and chairman of Infogroup, parent company of Yes Marketing.
“Financial institutions must identify the right service and technology partner to deliver relevant and engaging content that meets evolving customer expectations and creates strong brand loyalty to maximize customer lifetime value across generations,” Iaccarino continued.
Additional findings from the report include:
— Fifty-two percent of consumers ranked relevance as the most important marketing factor that influences their decision when selecting a financial services company they’re not currently using.
— More than two-fifths (42%) of financial services consumers say they rarely or never receive relevant marketing communications from financial services companies they’ve used before or are currently using.
— Nearly a quarter (22%) of consumers say they hear too frequently from companies across channels, while 8% say they do not hear from those same companies often enough.
To learn more about consumers’ priorities as they progress along their journey with financial services companies, download the full report here.