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Summary:

A new report from Accenture finds that our finances move into the virtual world, the younger set is growing more inclined to trust internet and retail brands with their money than traditional banks.

Your next bank might just be Google or Walmart if the younger generation of North American bread earners has anything to say about it. A recent survey conducted by Accenture found that many people between the ages of 18 and 34 were amenable to the idea of doing their banking completely online as well as getting their financial services from non-traditional financial service providers.

PayPal was at the top of the list, with 46 percent of that age group saying they would be “likely” of “very likely” to bank with the eBay-owned company. That shouldn’t be too much of surprise since PayPal is already a dominant player in payment services. But Google, Amazon, Apple and Walmart rounded out the top 5 list of potential alternate banking providers – not the first companies you’d think of when opening a checking account.

Accenture’s poll of 3,846 bank customers in Canada and the U.S. found that we’re becoming much more comfortable with the idea of “branchless” banking where all transactions, from depositing checks to applying for loans, are conducted in the web browser,  on the mobile phone or by telephone. When asked whether they would consider a branchless alternative when they next switched banks, 27 percent of those polled answered in the affirmative. Among the 18-34 demographic that number rose to 39 percent.

Of course, whether many of these companies would ever consider becoming banks is doubtful. They would be joining an industry much more heavily regulated than their own. I’m not sure if Google wants to add the Federal Deposit Insurance Coporation and Federal Reserve to its list of regulators.

Still for companies that are already getting heavily involved in their customers finances like PayPal, Walmart and even Amazon; banking might be the logical next step. One of the more interesting nuggets from Accenture’s report was about Square. While Square isn’t yet a well-known consumer brand, 50 percent of those polled that were familiar with Square – likely the small business owners that use its services — said they would bank with Square if they could.

Also being a virtual bank doesn’t necessarily require a company to become an actual bank. One of the more popular online banking services Simple doesn’t actually maintain any accounts. Rather it contracts out with Bancorp to and CBW Bank to hold its customers’ money – and deal with regulators – while Simple provides the front-end services.

 

 

  1. The last paragraph says it all. There is no regulations nor is there Deposit Insurance. However, all that regulation didn’t help out much in the 2008 fall out.
    Leslie

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  2. Michael W. Perry Tuesday, May 27, 2014

    I’m open to anyone who’ll let me tag my financial transactions within hours after making them. By the time that monthly statement comes out, I’ve often forgotten what the purchase was.

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  3. Oh yes, and the world revolves around America right? Wrong.

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    1. Kevin Fitchard Tuesday, May 27, 2014

      North America happens to be where Accenture did its survey, and I didn’t want to represent the views of one region as representing the globe. If it had been a global study then the headline would have reflected that.

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  4. Square was number one, above the others, and no mention of them?

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    1. Meaning, they are not in the graphic above, sorry for confusion.

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  5. The existing financial establishment has earned all of the trust and good will people feel toward them. Financial crisis, predatory foreclosures, usurious interest rates and unconscionable fees to name a few of the tools they used to gain that position. People will not trust them again without the (re)establishment of meaningful and effective regulation.

    I’m not in the survey group (way too old) and I chose a credit union over a bank a long time ago. The mutual ownership structure that existed when I started with them gave me a feeling of some control. That has eroded some as membership rules have gotten more lax and the membership has gotten more diverse and widespread, but so far, so good. I’d be open to using Square or Apple, Google and Intuit not so much. It’s time for a financial system makeover. Capitalism rum rampant hasn’t done us much good.

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  6. And yet the headlines singles out American, not “Younger NORTH Americans …” or “Younger Americans and Canadians …”

    No doubt Apple has the cash reserves, the micro payment model and hundreds of millions of client credit cards to muscle in as a middleware type of financial business. It might be the credit card companies that should be more worried about such encroachment by the above-noted firms than the banks per se.

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