44pc of millennials bank with BoA, Chase
In a 2019 survey of US consumers. Cornerstone Advisors found that 44% of Millennials (21 to 37 years old) considered one of three megabanks-Bank of America, JPMorgan Chase, and Wells Fargo-their primary bank. The question is why: Why do so many Millennials bank with the megabanks?
We can rule out #1. The megabanks got rid of free checking years ago, and there are plenty of credit unions and digital banks that have better rates on savings and loans. Answer #2 is a possibility, but there's no way to prove that. Sure, plenty of
Millennials say that branch location is a factor in their decision of who to bank with.
But how many are going to admit "Hey, I'm just a mindless idiot who put zero thought into my decision on who to bank with, so I chose the one with the most branches"? So that leaves #3-megabanks have the best service in the business-as the predominant reason for why so many Millennials bank with the large banks.
There's probably not one regional banker, community banker, or credit union executive in the industry who believes that. They pride themselves on competing on their (self-perceived) superior service.
The problem is how they define "service." From the bankers' perspective, service is something provided by their employees in branches and call centers. From the consumers' perspective, however, service means getting stuff done-and for many consumers (Millennials, in particular) the way to get stuff done is through their mobile devices.
There has been an evolution in how bankers think about digital (i.e., online and mobile) banking. Originally, it was about transactions-checking account balances, transferring funds between accounts, paying bills. Then-despite the prevailing belief in the industry that, for some strange reason, consumers wanted to open bank accounts in branches-bankers slowly and reluctantly came to accept the fact that digital banking could be about sales as well as about transactions.
Accepting service as a purpose for digital banking has been a harder sell.
The reality, however, is that service has become a key part of mobile banking.
S&P Global analyzed the functionality of 70 large banks' mobile banking offerings, identifying 18 value-added features (i.e, beyond the basic transactional capabilities).
Common service-related features like turning off or reporting lost cards is available at nearly three-quarters of the 70 banks studied. The ability to provide travel notifications is found in about four in 10 of the large banks' mobile apps, chat or chatbot capabilities in 30% of the banks' apps, and branch appointment scheduling functionality in about a quarter of the apps.
Mobile banking service isn't evenly distributed across the 70 banks, however.
On average, the four megabanks (BofA, Chase, Citi, and WF) offer nearly 16 of the 18 value-added mobile banking features on their apps. Banks in the $50 billion to $1 trillion range average 10 features, and banks in the $10 billion to $50 billion range have, on average, just seven of the 18 features.
For each of the 18 features, the percentage of megabanks with that feature on their apps exceeds the percentage of the banks in the next tier offering that feature. And, in turn, that percentage is greater than the percentage of banks in the smallest tier offering the feature.
Financial institutions with less than $50 billion are between a rock and a hard place here. Not because of their size, but because, compared to the largest banks, they're more likely to rely on vendors for their mobile banking platforms. And that makes them dependent on their vendors' technology roadmaps and development schedules.