Challenger banks and building societies are missing out on a huge growth opportunity by failing to target those under the age of 18, a new report by Aspect Software says. The report, based on research done by Vanson Bourne, says both challenger banks and building societies have reported solid growth in the past year.
Smaller institutions, those under 500 employees, have reported an increase in their customer base by 18 per cent. Those with 1,000 employees and beyond, have reported an increase of 10 per cent. But both are ignoring the under 18s, which is a serious mistake, according to the report. Just 28 per cent of respondents says they're consciously targeting under-18s.
Almost everyone (87 per cent) is going after the 31-40-year-old age group. “Given the propensity of customers to stay with their current account providers for years, if not decades (though the market may become more fluid with the recently-announced changes to the industry by the Competition & Markets Authority designed to make switching more straightforward), it would be a fair assumption that challenger banks would look to catch customers young as they are entering the system,” says Peter Littlewood, Finance Solutions Consultant at Aspect.
“But in the majority of cases that doesn’t seem to be happening, and they may be missing out on valuable opportunities as a result.”
“With many under-18s not having already entered the banking system – or at least, to any great extent – they’re less likely to possess an attachment to traditional ways of doing things, or have any significant loyalty to the Big Four. When we consider that challenger banks consider loyalty to incumbent banks as one of their biggest barriers to growth, capturing the youth market – the loyal customers of tomorrow – is going to be critical in determining which challengers win and which ones lose.”
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