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Home Lead-In

Why Younger Bank Customers Could Leave In Droves

by Rarzack Olaegbe
2 years ago
in Lead-In, Click Send
Reading Time: 3 mins read
Artificial Intelligence (AI) & Banking, The Future of Banking and Smart Financial Technologies for business.

Artificial Intelligence (AI) & Banking, The Future of Banking and Smart Financial Technologies for business.

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A friend closed her account with one of the banks last week. She could not take it anymore. She had approached the bank to transfer her funds into one of her subsidiary’s accounts. At another branch. In the same bank. Close to her residence. However, she wanted the former account closed. The bank said no.

She approached the relationship manager. The manager apologised. Promised to activate the request. She did not. My friend returned to the bank two months later. She spoke with another manager. Another manager told her the cause of the delay. People problem. Above all, the branch would not want to lose the customer to another branch. The bank has lost a customer. She would tell her friends. Her friends would tell their friends. Do you get the drift? 

 

On The Other Hand

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More banks could lose customers. As shown by the recent research of www.pymnts.com, many of the banks could lose nearly 40% of Gen Z and millennials due to a lack of innovation. The research explained that potential customer loss could outweigh the cost of investing in payment methods that consumers demand.

It said payment options matter to account holders across generations. Although the younger demographics are most willing to switch their current financial institution over a lack of innovation.

PYMNTS’ May collaboration with PSCU, “Credit Union Innovation,” found that 29% of account holders overall would consider switching to a financial institution offering innovative payment products. The collaboration discovered that almost one-third of account holders could leave the friction-filled effort of transferring banks over the lack of payment methods. This may be alarming enough for institutions that have so far delayed offering these options.

Although a higher share of younger consumers agreed with the sentiment. 38% of bridge millennials, 39% of millennials, and 38% of Generation Z consumers said they would consider switching. If banks lose these lifetime customers now, or in the middle of their financial journeys, does it mean that banks that lack innovation could face higher long-term profitability issues if these consumers switch?

The research postulated that as difficult as it may be to maintain targeted customer retention rates in the current ultra-competitive environment, luring consumers back after they have already left might be near impossible.

From hindsight, it would be difficult to lure my friend back again. The bank in question did not tick any of the boxes. It failed to engage my friend: phone call, email, or short message system. The so-called relationship manager failed to manage my friend. All right. Let us assume it was a people problem. If that is not the function of a manager, what is it?

Aside from this, tech innovations – which many neo-banks and online payment firms have brought to the game especially when it comes to consumer-facing offerings – are becoming options for customers. This is because bank customers now demand increased connectivity and more money mobility options. The collaboration concluded that a large slice of younger consumers have made it clear that financial institutions that are not stepping up could be left behind.

 

On The Other Hand

A neo-bank with other branches would never let the customer go. It would speedily accede to the request. The neo-bank has nothing to lose. The fund is still domiciled in its till. There is a marriage between the parties. That the fund leaves a bank branch is immaterial. Well, what do I know? I am not a banker.

In the short term

Do not blame the relationship manager.

Who gets the blame?

Blame japa!

 

 

 

Tags: Bank Customers
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