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PayPal, Amazon Could Give Banks and Credit Unions a Run for Their Money

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Banks and credit unions in the U.S. retain the trust of a majority of clients, but they are coming under growing pressure by younger consumers who are open to delivery of products and services by less traditional means, according to a survey released Thursday.

Raddon Financial Group, a research firm owned by the financial services technology company Fiserv, conducted a consumer research poll of 1,200 U.S. adults in February, representing millennials, Gen Xers, boomers and traditionalists, those born in 1945 or earlier. The survey sought participants’ attitudes toward traditional and nontraditional financial services providers.

The poll found that 49% of all respondents believed nontraditional entities would influence how all providers delivered their products and services in the future.

Still, just 38% said they would be likely to use a nontraditional provider. These were most likely to be:

  • PayPal: 26%
  • Amazon: 19%
  • Google: 16%
  • Apple: 16%

Fifty-one percent of all survey participants said they would seek financial services only from banks or credit unions. However, younger and older respondents differed considerably on this preference.

Sixty-six percent of millennials and 62% of Gen Xers said they would consider using a nontraditional provider for their future financial services requirements.

Enthusiasm for this idea dropped off dramatically among older respondents, as 41% of boomers and only 29% of traditionalists said they would give nontraditional providers a try.

“U.S. consumers continue to trust that banks and credit unions will provide them with the highest quality and most secure financial services available, and they believe that the emergence of nontraditional financial service providers has the potential to drive innovation in the industry,” Raddon’s vice president of research Bill Handel said in a statement.

“Innovation is essential if banks and credit unions want to remain at the center of consumer’s financial lives, as younger consumers have no qualms about going elsewhere if their demand for digital and mobile financial services are not being met.”

Today, mobile payments appear to be on an upward trajectory. Among Raddon survey participants, 32% of millennials expressed optimism that these would become a prime source of in-store payments in five years’ time.

Nineteen percent of boomers, 17% of Gen Xers and 10% of traditionalists shared their optimism.