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Study: Nontraditional providers will drive financial industry innovation

Not surprisingly, the younger the consumer, the more more likely that a nontraditional provider would be considered a reasonable choice.

August 28, 2015

Nearly half of U.S. consumers believe that nontraditional providers will drive innovation in the financial services industry. At the same time, only 38 percent of consumers would actually consider a nontraditional provider for their future financial services needs, a new survey reveals.

The survey, conducted by research firm Raddon Financial Group, a subsidiary of Fiserv, found that consumer likelihood of using a nontraditional provider such as PayPal, Amazon, Apple or Google broke down sharply along generational lines, with younger consumers much more favorable to the idea.

The 1,200 U.S. adults who took the  Raddononline survey in February represented four generational groups:

• traditionalists — those born between 1922 and 1945;
• baby boomers — born between 1946 and 1964;
• Generation X — born between 1965 and 1978; and
• millennials — born between 1979 and 1999.

Among all consumers, 51 percent said they would use only a traditional provider. However, preferences were clearly divided among generational groups. Only 29 percent of traditionalists said they would consider using a nontraditional provider for future financial services needs, while 41 percent of, 62 percent of Gen Xers and 66 percent of millennials were open to the idea.

Optimism about the growth of mobile payments also broke down along generational lines, Raddon found. Twenty percent of consumers believed that mobile payments would become a major source of in-store payments within 5 years — 10 percent of traditionalists, 19 percent of baby boomers, 17 percent of Gen Xers and 32 percent of millennials agree.