LONDON: Almost all UK millennials are ready to change their bank but one chief marketing officer has warned against getting pulled into a "doom loop" of discounting to attract new customers.
A study from the Rufus Leonard agency, which surveyed 1,000 18-34 year olds, found that 99% were prepared to switch banks, with 12% saying it would take as little as a free monthly coffee to persuade them.
"The key finding is that existing banks and money brands are seen merely as a safe store for their money and somewhere to move it around," Iain Millar, head of innovation at Rufus Leonard, told The Drum
. "It's a transactional relationship, involving no brand loyalty and its value is judged on price alone."
But there were some incentives for this group to stick with a money brand, notably sustainability, which one in three rated higher than the digital experience. And many remained wedded to a more traditional banking experience with six in ten (59%) visiting their local branch at least once a month.
Miller observed that millennials would make up three quarters of the workforce in the next ten years and that financial brands needed to address their concerns.
He saw a gap in the market for a money brand that was capable of building "a new kind of relationship that inherently builds trust, loyalty and lasting value for millennial customers".
Over at TSB, the bank that came (back) into being after parent Lloyds Banking Group was forced to sell off 600 branches as a condition of accepting state aid, chief marketing officer Nigel Gilbert was critical of the role of marketing has played in banking in recent years.
"The covenant of trust when I started out has been broken completely in banks," he told Marketing Week
, adding that "the bank itself hasn't really respected the discipline of marketing" as the focus had been on selling rather than promoting values.
Short-term incentives such as discounting for new customers, he argued, simply attracted promiscuous consumers and alienated existing customers.
"New people will churn because they are promiscuous and the other people will churn because they are fed up," he said. "That means you're in a doom loop."
To break out of that, bank brands need to have meaning, value and purpose, he said. That created advocacy and attracted people at a higher value which was a far more sustainable growth strategy.
Data sourced from The Drum, Marketing Week; additional content by Warc staff