Big Banks Driving Millennials Away With Fees

Big banks are driving Millennials away—will they turn to your credit union for financial services?

Reporting from CUNA. Credit unions have fewer excuses not to cultivate the Millennial market. A recent survey from Accenture found that banks are helping spur growth at credit unions and other small financial institutions by driving the up-and-coming generation away with fees.

This on the heels of an Experian survey from earlier this week that revealed 75% of millennials are willing to ditch their current financial institutions.

Last year, credit unions saw millennial membership growth climb by 3%, according to Accenture, while big banks lost 16% of this demographic over the same stretch (Bloomberg.com Nov. 10).

Further illustrating credit union growth in this area, CUNA’s annual member/nonmember survey issue found that 18-to-24-year-olds now make up 28% of credit union memberships on average, up from 22% in 2013.

“Traditionally big banks have been able to dominate with physical presence, having extensive branch networks, name recognition and being able to spend a lot on advertising,” said Richard Barrington, MoneyRates senior financial analyst (Bloomberg.com). “But Internet banking has leveled the playing field, and “what were once advantages have now become liabilities.”

Similar to the Experian data, the Accenture survey also found that millennials are the most likely demographic to trade out their financial institution. They switch more than twice as often as any other demographic, the survey said.

As a result, credit unions have an opportunity to attract new members and, in turn, drive loan growth.

“I strongly believe credit unions are uniquely positioned to better serve and more-successfully attract millennial consumers,” Jon Haller, CUNA director of corporate and market research, told News Now. “Nearly 80% of the nation’s credit unions offer free checking accounts–well over four times the level among large banks, and nearly three times the level among smaller ones. This in addition to the fact that even if a credit union does charge a monthly fee, it’s less than half of what banks charge.

“Credit unions that can leverage this benefit, in combination with strong financial-advice programs and the cooperative nature of credit unions–a feature near and dear to many millennials’ hearts–are that much more prepared to bring more young adults into the fold.”

Questions about this story? Contact James Pearson: 206.340.4790, jpearson@nwcua.org.

Posted in CUNA.