PLANO, Texas — Nearly half of digital banking consumers would switch financial institutions for a significantly better digital experience, while nearly one-third have already opened an account elsewhere following a poor digital experience, according to a new national study from Alkami Technology.
The findings suggest digital banking has become a critical factor in attracting and retaining relationships as credit unions and community banks compete with large national banks, online-only institutions and fintech companies.
Alkami’s “Tailoring the Banking Experience to Each Generation” report found 85% of consumers consider the quality of a financial institution’s digital banking experience essential or important when choosing a new primary provider.
One-in-Two Would Switch
About one in two consumers said they would switch providers for a much better digital experience, while 31% said they have opened an account at another financial institution after experiencing particularly poor digital service, according to Alkami.
The study, conducted with generational researcher Jason Dorsey and The Center for Generational Kinetics, surveyed 1,500 active digital banking consumers. The sample was weighted to the 2020 U.S. Census for age, gender, region and ethnicity.
Generations Want Different Things
The research found significant differences among generations in what they expect from their banks and credit unions, challenging assumptions that younger consumers simply want digital services while older consumers prefer branches.
Among the findings:
- Gen Z consumers placed greater emphasis on financial education, with 57% looking to their primary financial institution for financial education.
- Millennials showed greater comfort with artificial intelligence, with 65% comfortable with AI-enabled experiences designed to help with spending, security and everyday money management.
- Gen X consumers placed a premium on access and control, with 91% saying phone support is important and 87% placing importance on online virtual assistance.
- Baby boomers put particular emphasis on security, with 92% saying protecting their data from fraudsters and hackers is important to their digital banking experience.
“Preferences are oftentimes reduced to stereotypes where younger generations only want mobile, or older generations only want to visit a branch for on-site service,” Marla Pieton, Alkami’s vice president of brand, public relations and influencer marketing, said in announcing the findings.
Instead, Pieton said, the differences reflect consumers’ life stages, financial complexity and comfort with technology.
Community Institutions Face ‘Relevance Gap’
The study identified what Alkami described as a “relevance gap” for regional and community financial institutions.
Only 38% of consumers using regional and community financial institutions said product recommendations from their provider had become more relevant during the past year.
That compared with 51% of customers using online-only providers and 50% of those using major national financial institutions.
Meanwhile, 44% of Americans who use digital banking said they wish their primary financial institution did a better job anticipating their financial needs and goals.
Alkami said the findings point toward what it calls “anticipatory banking,” in which financial institutions combine information about generational preferences with individual account-holder data to identify needs and provide more relevant services, guidance and offers.
Consumers Show Openness to AI
The report also found consumers are receptive to financial institutions using AI when they can see a clear benefit.
Alkami said 51% of digital banking consumers are comfortable with AI processing their financial data if doing so results in a better experience.
Security and fraud protection, saving time and helping consumers make better financial decisions were among the AI applications that generated interest.
Millennials showed particularly strong acceptance, with 65% comfortable with AI-enabled banking experiences involving spending, security and money management.
The findings come as financial institutions increasingly explore AI for customer service, fraud detection, personalization, financial advice and other functions.
Primary Relationship No Longer Means Exclusivity
The study also suggests that maintaining a consumer’s primary checking or banking relationship does not necessarily mean a financial institution has captured all of that person’s financial business.
“Consumers are not looking for a one-size-fits-all banking experience,” Dorsey, president of The Center for Generational Kinetics, said in the report announcement. “A primary banking relationship is no longer a promise of exclusivity.”
Consumers may remain with the same bank or credit union for years while moving parts of their financial activity to other providers that better address particular needs, Dorsey said.
He said financial institutions can use generational patterns as a starting point but should combine that information with individual account-holder data to make services more relevant.
The research is the fourth annual national study conducted by Alkami and its research partners examining generational attitudes toward banking.
