Gen Y on banking: Big brands are better

By By Alex Tilbury, From: News Limited newspapers, 6 September 2010

BIGGER is better is the prevailing attitude of younger Australians when they look for a financial institution.

Research by Datamonitor has found 74.2 per cent of Generation Y consumers aged between 18 and 30 have a strong preference towards the four major banks for their savings and transaction accounts.

But they are also much more likely to switch banks, and they like special offers and savings accounts based on recommendation from friends, it found.

Datamonitor senior analyst and author of the report Harry Senlitonga says young Australians demand convenience, access to branches and more ATMs. He says Gen Ys are more receptive to special offers on fees or interest rates, compared with other age groups.

"Gen Ys are twice as receptive as Gen Xs (aged 31 to 50) to special offers on transaction accounts, and nearly four times more than retirees," he says.

Their decisions are predominantly influenced by recommendations from someone they know, with 50 per cent of Gen Y members generally asking their friends, family or colleagues for advice when choosing their deposit providers.

"The key challenge for financial institutions targeting Gen Ys is to overcome their low level of loyalty," Senlitonga says.

"Gen Ys are up to five times more likely to switch their transaction account than the older generations.

"This indicates there is a strong need for deposit providers to offer incentive schemes to increase levels of customer loyalty within the institution."

Senlitonga says consumers are also looking for convenient, everyday banking from their deposit providers.

"Some 26 per cent of Australians switched in 2009 to providers with better banking infrastructure in the form of better branch and ATM locations facilities," he says.