A lack of financial understanding means that millennials are potentially losing out on the opportunities and advantages provided by building societies, concludes the latest research from Intelligent Environments, a leading provider of innovative financial services technology.
The study, which questioned 2,000 millennials on their attitudes towards the building society sector, found a worrying lack of understanding into the benefits of opening a building society account, with nearly half (48 percent) unable to name any advantage.
Similarly, a third (33 percent) stated that they could see no reason to use a building society.
Demonstrating a worrying grasp on the financial sector, 73 percent of millennials confessed that they didn’t know the difference between a bank and building society, while a further 45 percent were unsure of why they’d use a building society instead of a high street bank.
The research revealed further millennial attitudes, including:
- 37 percent considered building societies as “old-fashioned”
- 29 percent did not feel they were relevant to their financial situation
At the same time, the study found over a fifth (22 percent) of millennials thought building societies lack online banking tools. A serious misconception when, in fact, 90 percent of the UK’s top twenty building societies offer some form of online functionality.
Recognising their lack of knowledge, half of millennials expressed an appetite to better understand the advantages of using a building society. What’s more, the community focus and member-ownership of building societies is likely to appeal to the generation’s social conscious – with over a quarter (27 percent) noting the fact that they work in the interest of their members, rather than shareholders or financers, as a crucial advantage.
Commenting on the study, Hilary McVitty, Head of External Affairs at the BSA said:
“With more than half of respondents wanting to know more about building societies, this research shows the enduring power of member-ownership. With more than 23 million members, building societies engage most directly with Millennials when they are looking to buy their own home. Today, one in three mortgages from our sector is for a first-time buyer, with an average age of 32. Many societies are partnering with a range of innovative technology providers to engage customers and there is always more to do. Consumers are clear with us that they want both face to face and digital options.”
The solution could lie in increased tech investment – with digital-first services proving to be a big draw for millennials. Nearly a third (32 percent) said that they would be more likely to open an account with a building society if they offered an ‘easy-to-use’ smartphone app; while 43 percent would consider opening an account if the building society offered online management tools.
Simon Cadbury, Director of Strategy & Innovation at Intelligent Environments, adds:
“These findings are a wake-up call for the building society sector. Clearly there is still much to be done as the industry ensures it remains as relevant and central to the lives of Millennials as it has been to previous generations. At its heart, this is an issue of customer engagement – and building societies must find new, innovative ways to interact with its customer base, ensuring they are delivering a service that answers both current and future demands.”