Millennials Actually Trust Traditional Banks More than Venmo

No matter what industry you’re in, the chance of success depends on the knowledge and insight you have regarding your customer base, which for both traditional banking institutions and fintech startups means focusing on millennials.

The millennial desire for speed, ease, and efficiency has been remarked upon almost exhaustively in fintech, from both a consumer and a professional standpoint. There are surveys, studies, and webinars offered weekly to financial institutions to help them better understand the tricky ways of the millennial customer.

The data provided normally focuses on how millennials are responding to the next newest thing in banking, be that a P2P lending service like Lending Club, a digital wallet or cryptocurrency exchange like Ethereum, or a payment platform like Venmo. Generally, the world’s first generation of digital natives respond to these new technologies pretty favorably.

Willing as they are to try new things, however, new FICO data shows that a majority of millennials believe traditional banking services are actually more trustworthy, and more secure, than these services.

“We didn’t see people totally ditch their bank; the uptick of people who were interested in or migrating to a fully digital bank is still pretty low,” said FICO senior director Joshua Schnoll, adding that this number hovers at around 2%. “One of the things that we saw is that the trust [in these banks] is a huge factor, and the security as well.”

According to data reported by FICO, 80% of millennials reported traditional financial institutions were trustworthy.

This is compared to just 50% when asked about Venmo or PayPal, and when asked about a P2P lending service or a digital wallet, the numbers get remarkably low: at 25% and 35%, respectively. And while the study does report that millennials are about two to three times more likely to switch banks than any other age group, Schnoll reports that this due to their high perception of banking fees, which they often view as nonsensical, as well as convenience of services provided, which is another huge factor to consider regarding the millennial customer.

“If traditional banks were able to provide this sort of ease, like they’re trying to do with the clearXchange network, that might be something to watch,” said Schnoll, adding that things like a subpar mobile app and difficult user experience can also lead to millennials switching banks or turning to services like Venmo.
The FICO survey does split millennials into two age groups, 18-24 and 24-34, respectively, and while the older group was around 10% more concerned with things such as identity theft and more controls for their debit and credit cards, both groups are far more likely to try out a new digital service or app than older generations, the survey reports.

To learn more about banking trends, join us at Bank Innovation Israel this November 1-3 in Tel Aviv. Learn more and register here.

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