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How much do people care about the institutions where they bank? The answer may surprise you. Customers are simultaneously loyal and in the market for new places to put their deposits. PwC’s latest survey of 6,000 interest-bearing depositors in the U.S. sought to understand behaviors and feelings of interest-bearing depositors — what they’re looking for in a new financial institution, what they value and what would get them to make a switch.
As Greta Lovenheim, Customer Experience and Insights Principal at PwC, explains, we’re seeing a generational shift happening around what it means to bank — and there are many underlying reasons. “One-third of interest-bearing depositors are actively in the market looking for a new account and there’s no one-size-fits-all answer as to why,” Lovenheim said.
CMSWire recently spoke to Lovenheim about the results of PwC’s latest radar research on depositors’ experiences, for insights into depositors’ behavior and direction for institutions looking to entice new deposit customers.
Deposit Customers Are In Play
It’s easy to look around and see the current state of the world to gain insight into the minds of deposit customers. Fears of rising inflation and economic uncertainty drive customers to save money. “About a quarter of depositors are saving more than they were a year ago,” Lovenheim said.
This saving rate brings opportunities for customers to receive better experiences and opportunities for financial institutions to gain new business. “Customers are looking for better rates, better fees and better experiences,” Lovenheim said.
Not only are many deposit customers in the market for a new financial institution, a sizable minority of younger customers are also in play. In the survey, 40% of Millennials and Gen Z customers indicated they were in the market for a new account. This sizable demographic brings a lot of opportunities for customer acquisition and retention — but only if financial institutions address their unique needs.
Experiences Matter
One of the biggest factors influencing trust in financial institutions is a customer’s personal experience with that bank or credit union. PwC’s research says much the same. While there will always be customers driven by rates or fee avoidance, a sizable customer segment wants better experiences first and foremost. For this segment, if the financial institution delivers great experiences, they deprioritize fees or rates as what they value most.
The long-term implications of acquiring these customers can be tremendous. “Experience seekers tend to view their savings account as an entry point to any potential new banking relationship,” Lovenheim said. “If offered the right experience, they’ll grow their relationship with that bank beyond just their savings.”
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Some financial institutions might not feel they can compete with larger national chains on pricing of rates and fees. Lovenheim notes this perception may be more keenly felt at credit unions, smaller regional banks and community banks.
Lovenheim also pointed out that while regional banks, credit unions and community banks might be getting 49% of depositors, they’re only getting 38% of Millennial and Gen Z customers. Digging deeper, Lovenheim explored several reasons why younger generations might be passing up on these financial institutions. “First, we see people move money to bigger and more established banks for their perceived safety and soundness. Younger generations might not be exceeding the FDIC insurance cap, but they still want their money in a place with perceived stability — particularly after the news about recent banking turmoil.”
“Younger generations are also two times more likely to seek out a new bank for better digital and mobile tools,” Lovenheim continued. “That digital experience is certainly important to older generations but it’s especially crucial to Millennials and Gen Z. Also, the younger generations are actively working and saving more. All these things combined make this younger group in the market for a new bank that suits their experience needs and prioritizes better experience and safety.” Credit unions and regional banks may want to confirm they’re offering the same level of experiences that the younger customers need if they hope to capture more of this demographic.
Customers Value Both Physical Access and Digital Capabilities
It’s important to recognize that delivering great experiences isn’t limited to technology. Customers looking for new financial expectations count several items under the umbrella of “experience” — including branch access, extended in-branch advice and teller availability. “When you think about customer experience, understand both what the customer needs and what their goals are,” Lovenheim said. “Can they easily set and track the goals important to them? While it’s important for customers to be able to do this digitally, some also want to be able to go to a branch or get on the phone and talk to someone about it.” Having a mix of physical and digital tools goes a long way to creating great customer experiences.
Conclusion
Customer behaviors are changing everywhere — not just how they do their banking. “Customer expectations aren’t just being set by banks; they’re also being set by other online experiences with tech, shopping and social media providers they use daily,” Lovenheim said. “Customers don’t differentiate by sector in the same way a lot of businesses do.” By understanding and addressing customers’ wants and needs, financial institutions can gain new customers and market share.
Learn more about attracting and retaining deposit customers — and how the right tech can harness the data to help drive those efforts.
