Young adults just starting out may be a stronger-than-ever target for retail banks – just one of several findings from Acxiom® Corporation’s (Nasdaq: ACXM) inaugural Retail Banking Consumer Dynamics study, designed to help marketers understand shifting consumer behaviors emerging from the recession.

Young adults are avoiding running up debt, becoming consumers to watch as they take advantage of favorable conditions to make large-ticket purchases such as homes and furniture. “It’s a unique time to establish relationships with these young customers and communicate with them about products such as mortgage financing, retirement savings and investment education,” said Randy Watson, Acxiom vice president of account management.

Acxiom’s benchmark study, the first in an ongoing series, helps financial institutions understand their challenges in growing their business across three fronts – a crisis of trust, regulatory changes and the emergence of virtual and mobile banking. Among the findings, based on 12 consumer segments identified by Acxiom:

Affluent Families: A Delicate Balancing Act

  • Affluent Families don’t want to yield much when it comes to their lifestyle aspirations and needs, but they recognize the need to better control their finances during a downturn
  • While they appear more likely to purchase high-ticket items in the near future, they are also attempting to pay down debt and pay as they go with cash when possible

A Consumer to Watch: Young Adults

  • Young adults in the Starting Out segment are in tune with today’s excellent real-estate values, mortgage rates and government tax credits
  • They may have modest means, but these consumers are more likely than the other 11 segments to purchase a home within the next six months
  • “Their strong intent to make significant purchases, combined with renewed financial responsibility, indicate a unique opportunity for retail banks to build a more robust relationship with young adults early on – which could lead to potential long-term and loyal customers,” said Watson.

Customers and Their Banks – Relationships in Transition

  • Everyone has made adjustments in response to economic pressures, with 38% of respondents focused on paying down debt
  • Regardless of economic status, 1 in 4 customers will shop around before buying financial products
  • Mainstream and Retired segments are more likely than Affluent consumers to prefer local or community banks, while Affluent consumers lean toward national, super-regional/regional banks and credit unions
  • 32% of respondents said they would consider distributing their business across multiple institutions, indicating that consumers are still wary of financial institutions and prefer to spread their risk across banks, with Affluent segments most likely to spread their wealth

Although a Threat, Virtual Banking Still a Small Piece of the Pie

  • Although virtual banking, such as ING Direct, may be growing, it still represents only 3% of all banking relationships
  • Respondents who said they prefer virtual banking are made up mainly of affluent, younger market segments. Given the increasing importance of these markets, this indicates the channel is not to be ignored and traditional brick-and-mortar banks may want to consider incorporating an online-only banking solution with incentives as part of a multichannel product offering.

“The bottom line is that the recession and the banking crisis have had a long-lasting impact on consumers’ preferences and financial behaviors,” said Watson. “Now, more than ever, financial institutions need to pay attention to important emerging segments such as young adults, focus on competing at the product level instead of the overall brand level and continue to engage consumers in a multichannel relationship.”

For a copy of the study and to learn more about the consumer segments included in the study, visit www.acxiom.com/retbankcondyn. For more information on Acxiom products and services, call 1-888-3ACXIOM or visit www.acxiom.com.

About Acxiom

A global leader in interactive marketing services and infrastructure management, Acxiom connects clients with their customers through deep customer insight, powering effective and profitable marketing initiatives and business decisions. Our consultative approach spans multiple industries and incorporates decades of experience in consumer data and analytics, information technology, data integration and consulting solutions for effective marketing across digital, Internet, email, mobile and direct mail channels. Our secure, high-performance technology services deliver consistent value and reliability. Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas, and serves clients around the world from locations in the United States, Europe, Middle East and Asia-Pacific. For more information about Acxiom, visit www.acxiom.com.

Acxiom is a trademark of Acxiom Corporation.

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