Deposit displacement is killing banks and credit unions. In a new study published today, Cornerstone Advisors estimates that more than $3 trillion has moved out of traditional financial institutions and into fintech investment and high-yield savings accounts in the past few years.
While younger generations—Gen Z and millennials (Zillennials)—are often assumed to be driving this shift, the study found that Gen Xers and baby boomers accounted for 65% of the funds flowing into fintech investment platforms.
The rise of #cryptocurrency is amplifying this threat. Cornerstone’s research found that:
▶️ 25% of Gen Z and 33% of millennial investors hold crypto assets.
▶️ On average, Zillennial investors have 25% of their investable assets in cryptocurrencies--20% have more than half their portfolio in crypto.
▶️ A third of zillennials and ~20% of Gen Xers plan to invest in crypto this year.
Banks and credit unions that dismiss crypto as a fringe fad risk are missing the broader investing shift that’s pulling deposits—and entire relationships—out of the traditional banking ecosystem.
At the center of the situation is the changing role of the checking account. Increasingly, Americans treat their checking accounts like paycheck motels—temporary places for their money to stay before it moves on to higher-yield savings accounts, investment platforms, and other alternative financial services.
On average, Americans rate their primary checking account a lukewarm value rating of just 7.8 out of 10, with younger generations even less impressed. More than a third of Gen Zers and 40% of millennials say they’d be “very likely” to open a new checking account if they found a better option.
So what would a "better option" look like? We posed three hypothetical accounts to consumers:
1️⃣ a checking account the account holder could directly make investments from;
2️⃣ a checking account that rewarded the account holder for moving money into an investment account with the same provider; and
3️⃣ a checking account bundled with credit score management, subscription management, and bill negotiation.
More than half of Gen Z and Millennials consider each of the three hypothetical accounts a better value than their current checking accounts.
For more details and recommendations, please download the (complimentary thanks to InvestiFi) report 𝗦𝘁𝗲𝗺𝗺𝗶𝗻𝗴 𝘁𝗵𝗲 𝗗𝗲𝗽𝗼𝘀𝗶𝘁 𝗢𝘂𝘁𝗳𝗹𝗼𝘄: 𝗧𝗵𝗲 $𝟮 𝗧𝗿𝗶𝗹𝗹𝗶𝗼𝗻 𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝘆 𝗳𝗼𝗿 𝗕𝗮𝗻𝗸𝘀 𝗮𝗻𝗱 𝗖𝗿𝗲𝗱𝗶𝘁 𝗨𝗻𝗶𝗼𝗻𝘀. Link in the comments.
Kian Sarreshteh Todd Clark Sarah Lambert Al Dominick Steve Williams Mary Wisniewski Sam Kilmer Elizabeth Gujral
