UK youth bank account switchers could be on the rise0
Youth is riddled with contradiction. As mentioned in a previous post, our mBanking research suggests that on the one hand they can be demanding and carefree, nervous but reckless. But they’re not all alike.
One key learning from the research is that there are a few notable differences and variations when it comes to young peoples’ attitude to mBanking in one country, compared to young peoples’ behaviour in other countries.
UK youth (16-24 year olds) are quite unique in the trust they place in their banks (despite the slew of scandals embroiled by financial institutions).They are least worried about mobile banking (with only 49% expressing concern compared to 84% in Brazil). And they are least likely to switch banks if the mobile banking app is hard to use. Why is this? Are British youth more apathetic or more forgiving? Is their loyalty unconditional or are young peple simply adverse to the inconvenience of switching banks?
Our research suggests customers are shopping around – just not at the same pace as some of their counterparts elsewhere in the world.
Young Brits may be relatively sluggish to adopt mobile banking (only 53% were using mobile banking in the Fall of 2014 vs 71% in Singapore); and by the same token, slower to switch; but switch they will; once security has been compromised (50%) or functionality has been weakened. When the hassle of staying outweighs the hassle of moving, we can expect a lot more movement in the industry.
This is an important message to banks when we consider that since September 2013, the process of switching banks in the UK has become a lot less painful. Following a recommendation from the Independent Commission on Banking, Britain’s 50m current account holders can now move their bank account to another provider within seven days.
In September 2014, the UK Payments Council released data that showed that the number of current account switchers surpassed one million, a rise of nearly 20% year on year as the new account ‘switch guarantee’ was established to drive competition.
In the past, just as kids might support the same soccer or football team as their family, so too would they bank with the same institution. Today, banking is fast losing it ‘fan’ status and becoming a consumer service like any other; subject to the demands of their consumers.
To limit the risk of customer attrition, banks need to be proactive in courting, protecting and serving their customers, not just from each other but from rival providers beyond the financial sector offering the same services. After all, if Apple can give you payment services and your mobile operator can give you a loan… why do you need a bank?
For more on how the UK ‘Generation mBanking’ stacks up against those in Singapore, Mexico, Brazil and the US, please check out our report.