News

Report: Millennials clearly moving away from bank account ownership

By one measure — i.e., checking and savings accounts — traditional FIs are losing out on younger customers, but by a broader measure, business from this demographic is actually growing.

April 11, 2016

A new report from Packaged Facts suggests a clear trend among millennials away from owning checking and savings accounts at traditional financial institutions even while using these providers for other products and services.

Survey analysis, captured in "Unbanked and Underbanked Consumers in the U.S., 4th Edition," challenges the long-standing banking model that relies upon checking and savings accounts as the foundation for broader, deeper customer relationships.

The report found that a different type of "unbanked" consumer is emerging — one who does not own traditional accounts because he or she has more, not fewer, options and might not even view these types of financial services as relevant today.

However, these consumers have not necessarily rejected traditional banks altogether.

According to the report, the number of 18–34-year-olds who had used a traditional FI in the past year for services other than checking or savings grew from 20 percent in 2008 to 38 percent in 2015.

These services might range from major loans to prepaid cards, money orders and coin-counting.

The idea that millennials are abandoning banks could be significantly overblown, the report concludes. Because while traditional financial institutions might be losing out on younger checking and savings accountholders, by a broader measure they actually are seeing an increase in business from this demographic. According to the study:

The question is whether that use translates into big-ticket revenue in the form of major loans or investment vehicles; steady, incremental revenue in the form of credit cards and prepaid cards — or merely an occasional piggyback on branch convenience for lesser products or services.