Tech-driven easy and convenient digital interactions are gaining a lot of significance in lives of young consumers and becoming a key factor for considering while choosing the bank.
A survey conducted by internet-based market research and data analytics firm YouGov reveals that 61% young consumers are willing to change their banks and switch to new age neo-banks from traditional banks to get a digital-only banking experience.
The survey further suggested that one-third respondents have made changes in their banking preferences by moving out of their primary bank in the past five years, and out of the total about 30% made the shift for a more convenient banking experience.
While 26% switched banks for better interest rates, 27% preferred better financial products and benefits.
“While convenience was the main reason to switch for all the surveyed respondents, nearly a quarter (23%) switched in order to move to a bank that offers digital services or is a digital only bank, highlighting the building appetite for online banking in the country,” the report stated.
The shift is expected to pick up pace going forward, as over half of the total 1,017 respondents said they are likely to switch from a traditional to a digital bank in the near future.
“Banking has been considered for long as a more traditional industry with high switching costs but with the advent of digital banking services, we can see the switching costs come down,” said Deepa Bhatia, general manager, YouGov.
Among Gen Z, and Gen X, millennials, 61%, are most likely to switch to a fully digital bank in the future for services such as 24X7 accessibility to banking, remote banking experience in place of crowded branch visits and ease of banking, all of which are provided by a digital bank. Cashbacks and rewards appeal more to the millennials than the GenX, while the older cohort is more likely to find the round-the-clock accessibility as well as ease and convenience of banking the biggest advantage of digital banking, as per the survey.
“Millennials, those aged between 30 and 40 years old, one of the most sought-after cohorts have been particularly open to switching their primary bank accounts and are fairly open to digital banks. Banking needs to learn about the changing motivations of their customers so as to better serve them and retain the,” said Bhatia.