Where are the younger consumers banking?

Nov 26, 2019
Narmi Staff Contributor

Many financial institutions in the United States have been struggling to attract their next generation of customers. While this issue is far from new, the sense of urgency to fix the problem is becoming more and more palpable. From regulators to investors to board members, the issue of an aging customer base has become one of the top concerns at community banks and credit unions.

One of the best ways to tackle this issue is to look at where younger generations currently bank, why they bank there, and how your bank or credit union can better deliver the value proposition they seek.


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Where do they bank now?

The largest financial institutions have been the most successful at attracting younger account holders. Over a third of all customers at the four largest US banks are between 18-34 years old whereas this age range only makes up a fifth of all accounts at the average community based financial institution.

While most Millennials have expressed a willingness to use non-bank alternatives, given the regulatory environment, the vast majority continue to use a traditional bank or credit union. If the regulatory landscape in the United States changes to permit more de novo banks or non-traditional alternatives, the incumbents could experience a major loss of business. All financial institutions should operate under the assumption that competition will increase considerably over the next 20 years as location becomes a less relevant aspect of retail banking, and the threat of new entrants becomes a reality.

Why do they bank there?

Web and Mobile Friendly Services

The online and mobile face of the institution has become increasingly important. Large institutions invest considerable amount of money to keep their websites, online banking, and mobile banking up to date. They also use these platforms to empower users to resolve issues and research products and services. Call centers and in branch representatives continue to enhance the customer experience, but self-help channels are increasingly important.

Marketing and Awareness

A large marketing budget allows these institutions to build strong brand awareness and to offer large incentives to targeted demographics.

Security and Safety

Large financial institutions are often perceived as being more secure and safe both from a financial and cybersecurity perspective.


The largest financial institutions have a large geographic footprint and a large ATM presence. A large ATM network and/or foreign ATM fee reimbursement are must haves for financial institutions.


All demographics appreciate a well-designed product and service, and a modern design is often highly correlated with perceived trust. Many of the largest banks have invested in upscale, modern experiences across all channels.

Social Proof

Younger generations rely upon friends and family for financial advice. This creates a favorable effect for those institutions that successfully attract younger account holders.

What Can Your Institution Do?

Think Local

While the largest institutions have a large, diverse geographic presence, your institution can differentiate by focusing heavily on a small, well-defined geographic footprint. Instead of building new branches, focus instead on building brand equity within this geographic area and increasing your ATM presence. Remodel branches with an upscale, modern design that focuses more on higher touch services such as mortgage dispersals.

Think Global

A strong local presence is vital to attracting customers. Allowing your customers to continue to bank with you no matter where they move is vital to retaining customers. Make it as convenient as possible to continue to bank with you and enhance engagement, so that switching institutions is not an option. Technology continues to not only increase competitive pressure, but also allow smaller financial institutions to successfully compete against the largest companies.

Have a Modern Design

An upscale, modern design is strongly correlated with increased trust and business. Ensure that even your most design minded customers would be proud of your brand, debit/credit cards, website, online banking, mobile banking and branch.

Multi-Channel Customer Service

Smaller institutions typically cite customer service as their competitive advantage. While younger generations do value a strong, high-touch customer service experience, they also expect to find most of their answers via lower touch channels. Empower your users to resolve issues quickly, on their time, and in their preferred manner.

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Where are the younger consumers banking?