More Consumers Open To Banking Without Traditional Banks

(David Goehring)

Is the future of banking not at banks? That might not seem too unrealistic, what with the rise in prepaid debit cards and the high number of consumers who are unable to obtain traditional banking products.

A new report [PDF] from consulting firm Accenture found that nearly 70% of Americans would consider banking with a non-financial services company such as Google, Amazon or Apple, the Washington Post reports.

Researchers asked the 4,000 Americans if they would consider banking with nearly two dozen non-traditional banking companies, such as the United States Postal Service, AT&T and Costco among others.

Most consumers said they would bring their business to PayPal or Square based on their past experiences with the companies. However, retailers and telecommunications companies, such as Costco and T-Mobile, weren’t far behind in the top ten choices. The report found that these options appealed to consumers for their digital service offerings and their ability to quickly adapt to new technology – a characteristic highly valued by younger consumers.

In fact, while traditional banking entities have adapted to digital banking opportunities, such as mobile deposits and transfers, nearly 27% of survey respondents said that if they chose to leave their current bank they would prefer an all-digital option.

Another appealing factor that played into consumers’ decision when considering switching to non-traditional banks is the likelihood that those companies offer services with no credit checks and no long-term contracts.

Retailers and telecommunication companies have slowly entered the financial services arena. Last month Walmart announced it would open its own money transfer service. The company has also partnered with American Express to offer alternative debit and checking accounts called Bluebird. The accounts come with no minimum balance requirement and no monthly maintenance, activation or annual fees, and target customers who are fed up with increasing fees at traditional banks.

In January, T-Mobile introduced a prepaid debit card that uses a money management app and a prepaid Visa card at zero cost to existing customers.

Some non-traditional banks are going even farther, the report found. Costco Wholesale offers services such as mortgages, investments and business banking through third-party lenders.

How Wal-Mart and Google could steal young customers from traditional banks [The Washington Post]