Resources & Channels for Considering a Savings Account
Your research team was able to find information on the factors that affect consumers choices in opening a bank account. However, specific information on how consumers choose to open savings accounts was very limited. The information that was found and the strategy that was used to find this information is detailed below.
- According to Forrester Research, the three most-frequently cited factors that affect a consumer's decision to open a new bank account are fees, whether the bank has local branches, and friend/family recommendations. The top three reasons in a Cornerstone Advisors survey mentioned fees, bank locations, and overall value for money.
- People look for the best savings accounts that will help them achieve their goals. These goals differ by age.
- Baby Boomers and Gen X prefer to save for retirement by a rate of 34% and 32%. 17% of millennials have retirement as a goal for their savings accounts, but it is identical to the amount that save for a house (16%) and to get out of debt (14%). 24% of Baby Boomers save for financial stability and 12% save for emergency funds, like health. 16% of Gen X individuals save to get out of debt, and 14% save to build emergency funds.
- 60% of customers do not plan to open or close any accounts within a 12-month period. This is not due to loyalty, as 22% see all financial service companies as the same and 17% say it was too difficult or time-consuming.
FEES AND VALUE FOR MONEY
- There is not much difference in the top three reasons listed by Forrester when we break the numbers down by age. 48% of Gen X individuals and 47% of Baby Boomers say banks with the "lowest monthly fee" were most likely to get their business. 42% of Young Millennials and 39% of Older Millennials say the same.
- 45% of Millennials will actually leave a bank because of high fees.
- 35% of Millennials want value for their money when selecting a new bank, while 39% of Gen X individuals and 42% of Baby Boomers say the same. Millennials seek out banks with the best online and mobile banking tools by 35%, but Gen X and Baby Boomers are not far behind at 34% and 36% respectively.
PEOPLE SEEK CONVENIENCE
- According to a PwC survey, 65% of traditional bank primary customers say it is important to have branches in close proximity. 25% would not open an account with a bank that didn't have at least one local branch. 58% would rather open a savings account at a branch.
- Older customers value the convenience of having local branches more than younger customers. In fact, 68% of Millennials would rather put their money in national banks.
- Overall, 34% of people who do not open an account with an online bank say they prefer to have access to a local branch.
- A convenience that younger customers often seek out is those provided by online banks. 16% of 25-34-year-olds consider opening a savings account with an online-only bank within the next year.
PEOPLE SEEK ADVICE
- According to Forrester, 24% of people say the recommendations by friends and family were important in their selection of where to open a new bank account. Other more minor factors include existing relations with the institution they are already a part of, which 15% say is a factor. 5% do so on recommendation from a financial advisor.
- Referrals are more important to Millennials than to older customers. According to the FIS Performance Against Customer Expectations study, 75% of consumers between the ages of 18 and 26 choose their bank based on a referral.
- Banks would do well in seeking out referrals. Bank customers who come from referrals are 18% more likely to stay at the bank for longer periods of time and generate 16% more profits than non-referral customers.
The first strategy we used to find how consumers open new savings accounts is by looking through popular financial websites such as NerdWallet, Investopedia, and Forbes. We found some articles that speak on people opening banking accounts and others mentioning checking accounts, but we didn't find much information on savings accounts. Because of this, we changed our strategy.
Our next strategy was to look through reports and news stories for information on how people open new savings accounts. Like the first strategy, we were finding a lot of information on how people open banking accounts on a whole. However, some reports such as those by Accenture, FICO, and EY mentioned savings account and checking accounts together, hence, we believed a lot of this information could apply to consumer behaviors with savings accounts. We received some information on factors that consumers consider for new banking accounts, the amount of time it usually takes, where they go to research banks, and who they go to for advice. However, recent information on the time customers take to decide on opening a banking account was very limited, and we still wanted to see if we could find more specific information on savings accounts. For this, we decided to change strategy again.
Our next strategy was to look at reports and case studies that describe onboarding practices by banks to get customers to open savings accounts. Onboarding is the process of bringing new customers on, and we thought that by looking at case studies or reports on onboarding, we could see some information related to how banks get customers to make a savings account. However, most of the case studies we found such as ones by the FDIC and JPMorgan Chase only spoke on how they improved their overall banking activities through marketing and other tactics. Even the reports and case studies by digital banks that we found didn't mention many specifics on savings accounts. Hence, we ended our search and used the information we received from the reports on how consumers open new banking accounts. Also, the closest information related to time was from a 2014 report from EY, but it was more of a qualitative look on the time consumers spend to decide on whether to open a new bank account. We believe newer information could be derived from the newer EY report, which is behind a paywall.