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June 13, 2014

Younger people far more open to alternative banking, says Accenture survey

Younger people are more likely to consider alternative banking, according to the results of a recent Accenture survey.

The poll, which focused on 18- to 34-year-olds and culled data from nearly 4,000 bank customers in the U.S. and Canada, showed that 39 percent - nearly 4 in 10 - would consider working with a financial institution that relies exclusively on online lending. Comparatively, 29 percent of North Americans in the 35- to 55-year-old and 16 percent of those older than 55 would be open to these options.

Many open to banking with tech firms
The survey found that a significant fraction of participants would be willing to obtain banking services from major technology services providers - such as Google, Apple and Amazon - if these were available. Of those in the youngest age group, 40 percent said they would bank with Google. Another 34 percent said they would do the same with Apple, and 37 percent specified they would obtain banking services from Amazon.

However, in the next-oldest age group, the fraction of people willing to bank with these major technology services providers fell sharply, to 23, 20 and 23 percent, respectively. For the next demographic, there was a far lower fraction willing to take part in these endeavors. Of respondents older than 55, 5 percent said they would bank with Google, while 6 percent specified this for Apple and 7 percent noted they would conduct this activity with Amazon.

Top banker notes threat of tech companies
Jamie Dimon, chief executive of JPMorgan Chase, spoke to this potential threat at a shareholder meeting in February, according to The Financial Times.

"You'd be an idiot not to think that the Googles and Apples . . . they all want to eat our lunch. I mean, every single one of them. And they're going to try," he stated, the media outlet reported.

The top banking executive may have cause for concern. The Accenture poll revealed that 72 percent of those aged 18 to 34 would be either "likely" or "very likely" to obtain banking services from at least one technology, retail, telecommunications or shipping firm if this company offered services traditionally provided by lenders. The portion who specified this fell to 55 percent for those in the next-oldest age group, and 27 percent of those who are above the age of 55.

"Tomorrow's consumer is coming of age with a very different perception of what a bank could be," Wayne Busch, managing director of Accenture's North America Banking practice, said in a statement released along with the survey. "Those expectations could become profoundly disruptive to banks if non-bank entrants gain momentum and banks fail to adapt quickly. This will have important implications for the 'digital generation' spanning nearly all age groups." 

It is important to note that this song has been sung before, according to The Financial Times. Since the 1990s, many have warned about traditional banks losing their market share to organizations that rely exclusively on online lending. However, this threat never materialized.