A designed, strategic plan to alter consumer perceptions
WINDSOR, Conn., Dec. 25, 2015—As banks look to expand their business beyond traditional retail banking, longtime loyal customers and Millennials represent key opportunities for growth, according to a new study from LIMRA.
With so many loyal customers, banks and credit unions would seem to be in an enviable position to grow as more than half their customers have been with the same institution for 10 years or more.
The challenge is in perception, as 69 percent of customers use their bank primarily to deposit their paycheck and pay bills. Less than 1 in 4 see their bank as a place to invest money or build wealth. The low-interest rate environment reinforces this view as posted returns on CDs hover around 1 percent and savings accounts pay next to nothing.
“Because of these perceptions, banks that offer insurance and investment products may struggle,” said Patrick Leary, corporate vice president, Distribution Research for LIMRA. “Our research shows customers who have a financial plan through their bank are more engaged and more likely to purchase these products. They view their bank or credit union relationship in a different way.”
Findings from Banking on Loyalty compared customers who have a financial plan through their bank or credit union with those who do not have a plan. Customers with a plan are more likely to view their bank as a place to build wealth and less likely to see it only as a place to deposit paychecks and pay bills. They are also twice as willing to purchase insurance and investment products from their bank or credit union.
Millennials represent another ideal target market for financial planning as they have more of their savings and investments at their primary bank or credit union than other groups.
“Older Millennials are now in their 30s and starting to build wealth, buy homes and start families,” said Leary. “They are also less likely to have a relationship with a financial advisor or insurance agent.”
Millennials are an attractive market for financial planning as 4 in 10 said they would consider a plan through their bank, compared with only 22 percent for other customers. In addition, 60 percent of Millennials say it’s very important to have all their financial needs met in one place.