Traditional banks are being sidelined among younger generations in favour of their digital counterparts , according to deVere Group.
Nearly three fifths (59%) of people born between 1980 and 1996 only ever use digital banking services or are planning to make the switch to do so this year.
Nigel Green, CEO and founder of deVere Group, says: “This is more bad news for traditional banks, which seem to have been in a perpetual game of ‘catch-up’ in recent years amid evolving customer expectations, regulatory requirements and tech advances.
“The poll’s findings are a big deal for old-school banks. Why? Two reasons: first, millennials because they’re the fastest-growing cohort of clients; and second, because they are becoming the beneficiaries of the greatest transfer of wealth in history.”
It is estimated that $68 trillion in wealth is to be passed down from baby boomers to their children and other heirs over the next few decades.
Green continues: “Millennials have grown up on technology. They are ‘digital natives.’ Against this backdrop, they seemingly became comfortable using fintech to help them access, manage and use their money rather than using a traditional bank.
“Mobile-first millennials expect easy, immediate access and control of their finances in the palm of their hand. They demand to be able to transfer money and pay bills in one tap or swipe. They want to be able to review their spending habits, be offered guidance, and have real-time access.”
According to Green, large traditional banks are struggling to keep pace with tech innovations and changing customer expectations.
Green notes that millennials are also attracted by the green credentials of new digital banks.
He adds: “Individuals and companies are increasingly embracing and expecting green, paperless banking This is partly fuelled by the pressing need for us all to drastically reduce waste and better protect the environment but also because a paperless system is, typically, a more convenient and efficient one.
“Traditional banks have a long way to go to catch-up with tech-driven challenger banks and fintech firms, which are intrinsically much greener and are leading the charge to a paperless future.”