Millennials are more likely to manage their finances through social media, as well as payment and fintech companies, but have not given up on branches any more than other generations.
Those are some of the findings from the latest Fiserv Expectations & Experience Survey, which revealed many consumers comfortable using nonfinancial providers for banking activities such as paying bills, transferring money to others, and taking out loans.
The Brookfield, Wis.-based financial technology firm’s consumer trends survey also found three types of consumers poised to change banking. Millennials, high net worth individuals and people who live in urban areas are far more likely to be open to new innovations and companies offering financial services.
“Technology and payments companies may give banks and credit unions a run for the money as consumers become comfortable using these companies for financial activities, an undeniable signal for financial institutions to take note,” Mark Ernst, Chief Operating Officer, Fiserv, said. He added, it’s critical that financial institutions think of themselves as technology providers to capture the opportunity to expand upon existing customer relationships and meet the demand for fast, convenient solutions that make people’s lives easier. “The best and most convenient options will be the ones that win out.”
Sixty-five percent of millennials are comfortable managing their finances through a payments company, compared to 26% of non-millennials. In addition, 63% of millennials are comfortable managing their finances through a technology company, compared to 24% of non-millennials. Millennials are nearly five times as likely as other generations to be comfortable managing finances using a social company, at 34% for millennials and 7% for non-millennials.
Approximately one-third of millennials are comfortable using a social media company for any type of transaction asked about in the survey, compared to approximately one-seventh of consumers overall. “Younger consumers are far more likely to say they would be comfortable using nonfinancial organizations for everything from taking out loans and transferring money to managing their money in general,” the report suggested. This speaks to comfort levels conducting various types of transactions with nontraditional providers.
However, the report noted, this does not mean millennials have abandoned traditional banking. Ninety percent have credit unions, large national banks, community banks or other regional providers as their primary financial organization.
While branch visits are down its baby boomers and seniors driving the decline. In 2017, 54% of consumers visited a branch within the past month compared to 61% in 2016 according to Fiserv research. The share of millennials’ (50%-49%) and Gen Xers’ (53%-49%) branch visits remained close to last year’s survey, but the number of boomers (67%-57%) and seniors (79%-63%) visiting their financial organizations dropped sharply.
When it comes to bill payment, 88% of consumers are comfortable paying bills through a financial institution, 52% through a payments company, 40% through a technology company, and 16% through a social company.
For taking out a loan, 82% are comfortable doing so with a credit union or bank, 32% with a payments company, 29% with a technology company, and 14% with a social company.
Results are similar for other financial activities, including managing money, tracking budgets, and transferring money to others, with consumers indicating the highest levels of comfort with financial institutions, followed by payments and technology companies, and trailed considerably by social media companies.
The trends survey discovered emerging financial services such as voice banking will play a key role in maintaining consumer relationships. Half of all consumers reporting they used a voice-activated device feature in the past year. Among them, 70% used the feature to search for information, 56% to ask directions, and 26% to perform a banking function within the past 30 days.
When asked specifically about accessing voice banking via their financial institution, 15% of consumers expressed interest, including 33% of millennials. Interested consumers said they would like to check account balances (68%), pay a bill (46%), and transfer money between accounts (38%) through a voice-activated device.
