Certain financial preferences correlate to racial demographics in college students, a recent survey shows. The Wisconsin Bankers Foundation, formed by WBA in 2013, has research as part of its core mission to empower consumers in financial services. The Foundation partnered with the University of Wisconsin-Whitewater to conduct a survey designed to provide insights into the banking habits of college students.
Dr. Russell Kashian of UW-Whitewater's Fiscal & Economic Research Center, assisted by student researchers Neil McCants Jr. and Miguel Miranda, crafted a survey to assess the correlation between consumers’ demographic categories and their use of financial services, including reasons for choosing one financial institution over another, financial institution type (community, regional, national, or credit union), and use of P2P payment apps (Venmo, etc.).
The survey collected responses from college students of diverse backgrounds and experiences. Kashian then compared the survey responses by demographic to a set of expected responses (equal variation across all demographics). Banks can glean several actionable insights based on the results.
The study concluded race is a factor in the consumers’ choice of type of institution and in P2P app preference. “Our results found, interestingly, that the white students were statistically more likely to use a community bank, and Black students were more likely to use national banks, and Latinx students were more likely to use regional banks,” Kashian said. A possible explanation, he said, is that national banks are more likely to be in urban areas, whereas community banks tend to focus on a smaller, usually more suburban or rural, geographic footprint.
When it came to P2P applications, Black respondents were more likely to report using Cash App, Zelle, and Apple Pay, whereas white respondents were more likely to report using Venmo. Latinx respondents were more likely to report using no payment service. These results suggest a “first-mover advantage,” Kashian explained. “If you can get 17-year-olds to use your app, they’ll talk to their friends. There’s an affinity effect.” His theory is that whichever bank or fintech is first to penetrate a particular community will quickly become the app of choice.
Finally, the survey asked the students why they chose to do business with their bank. “For most of the students it was driven by family members,” Kashian explained. “The more likely bank to go to was the one their parents went to, across the board.” Even more interesting, the survey allowed respondents to enter in words or phrases as their answer, and a common theme that emerged was the strong role of mothers in bringing their kids to the bank to open an account. “The moms are the ones driving the engine,” said Kashian. In other words, if banks can get teenagers’ mothers to open accounts for them, those children are likely to remain with the bank when they become adults.
View the full survey results here.