There is good news and bad news for credit unions and millennials.
The good news is that 20% of millennials in the age group, 18-24, use credit unions as their primary financial institution.
The bad news is that only 10% of millennials, age 25-34, use credit unions as their preferred financial institution, according to the latest consumer finance trend survey released Thursday by FICO, a San Jose, Calif.-based analytics software company.
There’s more bad news.
FICO’s survey also revealed that only 42% of credit union members are using their institution’s mobile app, compared to 64% of customers at large national banks. This bad news could yield opportunities for credit unions.
For the second year in a row, the FICO survey showed the No. 1 reason that consumers leave their primary financial institution is the perception of high fees. Of those consumers who have switched institutions, 49% listed high fees as the top reason.
For millennials, fees are still the top reason for switching, followed by poor customer service or ATM/branch convenience issues.
“Credit unions should market attractive rates and low fees to existing and potential members, given how highly it rates in their consideration process,” Joshua Schnoll senior director at FICO, said. “In addition, credit unions can more intelligently manage debit and credit accounts by leveraging transactional data and behavioral patterns to help prevent attrition. This will enable them to make the best pricing cross-sell offers or fee waivers for each customer.”
FICO’s survey also revealed that there might be an opportunity for credit unions to win 25-34 year olds, as the survey showed these millennials are two to three times more likely to close all their accounts with their primary financial institution in the next 12 months.
Looking at consumers of all ages, the survey revealed that 14% of respondents with accounts at major banks said they are likely to close all their accounts in the next 12 months, compared to just 4% with credit unions. Capturing some of these customers when they are looking to switch presents opportunities for credit unions to increase their share and keep it, according to the survey results.
Offering a mobile banking app and or expanding its functions, usefulness and performance may also help credit unions attract and keep millennials.
The survey showed that millennials want to be able to manage their accounts from their smartphones and receive messages via app and SMS.
More than 90% of millennials own a smartphone and 66% use a bank app several times a week while 30% access the bank app once or more a day, according to FICO.
