Reality #2: Older consumers do switch banks, and when they do, they’re worth far more than younger ones

Many in the banking industry don’t think older consumers represent a significant threat to bank switching as this segment tends to switch banks less frequently. Indeed, according to our research, a smaller share of older consumers (Generation X and older) switch as compared with those in younger generations (6 to 8 percent versus 24 percent respectively), making it easy to come to a similar conclusion.

But looking beyond the switching rate to the associated value leads to a different conclusion: although older consumers make up only 40 percent of all switchers, they drive 60 to 70 percent of the value associated with switching.

Reality #3: The primary bank is very much alive, and consumers hold multiple products there

Most consumers still have—and still favor—their primary bank. Instead of holding just one account there, they typically have three. Those products generate 20 percent of CLTV. When a consumer switches banks, that’s 20 percent of CLTV that moves to a competitor—along with the checking account.

Furthermore, as banks become more digital and as fintech/neobank options expand, there is a sense that consumers frequently shop around for their accounts, and they have more accounts. But our research also shows that almost nine out of 10 consumers have checking and savings accounts with only one or two banks.

Finding substantial bank-switching value

Banks that are willing to acknowledge these realities will truly understand where the value lies in bank-switching behavior: it is spread across age groups, and maximizing the value requires having the right strategy, proposition, and operations to support what each segment needs. Older consumers, for example, represent the biggest CLTV opportunity at $460 billion.⁴ In contrast, the younger set poses $180 billion in CLTV opportunity.

When older consumers switch banks, they are largely influenced by promotional offers, financial drivers (including cost, returns, and rewards), evolving needs, and the quality of customer service. Advertisements and digital capabilities have less influence on their changing banks.

Banks can do several things to retain or attract older customers, such as making service more personal and leveraging their relationships. In contrast, younger consumers are swayed to change banks mainly by the recommendations they receive, promotions, and the bank’s digital capabilities. Being active in their networks and having a strong digital presence are ways to attract or keep the younger set (see figure 3).