Payment options matter to account holders across generations, but it is the younger demographics most willing to switch their current financial institution (FI) over a lack of innovation.
PYMNTS’ May collaboration with PSCU, “Credit Union Innovation,” found that 29% of account holders overall would consider switching to an FI offering innovative payment products.
Nearly one-third of account holders willing to go through the friction-filled effort of transferring FIs over lack of payment methods may be alarming enough for institutions that have so far delayed offering these options. However, a higher share of younger consumers agreed with the sentiment, with 38% of bridge millennials, 39% of millennials and 38% of Generation Z consumers saying they would consider switching.
Losing these potential lifetime customers now starting or in the middle of their financial journeys means that innovation-lacking FIs could face higher long-term profitability issues if these consumers switch. As difficult as it may be to maintain targeted customer retention rates in the current ultra-competitive environment, luring consumers back after they’ve already left may be near impossible.
The Options Consumers Currently Demand
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Many, if not most, popular payment methods have or are quickly becoming must-haves for FIs hoping to retain their customer base. For example, contactless credit cards are becoming more widely accepted by merchants and other businesses, but only 47% of credit union (CU) members and 53% of non-CU members said their FI offers the option.
For tech-forward customers, which includes the younger digital-native younger generations, not having this method available may be simply unacceptable. Additionally, lack of offering Zelle could lead to the same consumer sentiment for the 71% of CU members who said their FI doesn’t offer the globally popular payment method.
Tech innovations, especially when it comes to consumer-facing payment offerings, are quickly becoming table stakes for FIs as customers demand increased connectivity and more money mobility options. As a large slice of younger consumers have made clear, FIs not stepping up could be left behind.
