Banks and financial institutions are often warned that they are ill equipped to deal with the wave of fintech and new challengers. Since calling BS on popular opinions seems to be my forte, I’ll go ahead and challenge this one as well. The recently published World Fintech Report 2017 by Capgemini, LinkedIn and Efma continues this tradition with chapter titles such as “In face of fintechs, traditional firms struggling to apply innovation”. But a closer look at the data shows the picture is actually not that black and white. One of the main instruments of fear is the claim that millennials are not as loyal to financial institutions. This point has been shown in multiple surveys and articles (examples here and here ). Multiple studies claim between 40 percent to 50 percent of bank customers are ready to switch. World Fintech Report had its own take on loyalty with this chart: Look closely at the right column: only three percent of respondents claim to have forsaken traditional banking firms all together. Is this really a cause for panic? “Wait,” one might say. “Even if customers stay with incumbents, traditional banks still need to compete with each other using advanced user experiences, artificial intelligence and other buzzwords.” However, it seems that even for tech savvy millennials, such offerings play a very small role when choosing a new bank. This is from a report on the banking habits of professional millennials by financial marketing agency Bank Clarity: Good tech-based solutions are only number 6 on this list. It is important to note that reasons for choosing a bank and reasons for leaving a bank are different. Most people who switch banks do so for reasons that are out of the bank’s control: relocating, changes to marital status and the like. Unprompted by major life changes, most people just stay put. Over 60 percent of professional millennials still bank where they did in college. Out of those, about 60 percent still bank where their parents did. 60 percent seems to be a magic number. An EY report shows that just under 60 percent of Americans trust their banks to keep their money safe. Americans trust their banks less when it comes to other aspects but that doesn't seem to matter much. For most people, banks do what they need to do well enough: keep people’s money. So they stay. Banks and fintechs are playing a different game. As shown in this chart from World Fintech Report, while banks excel in trust related issues, fintechs excel in customer experience and ease of use. The sad news for fintechs: customers do not switch financial institutions because of those features.