Millennials, the so-called digital native group who’ve never known a world without the internet, mobile phones and social media are said to lead all the relevant trends and drive innovation at companies who must change how they do business to reach them. But do they really lead digital banking?
Why all the buzz about millennials?
Simply put they’ve become the largest living generation in the United States. They’re predicted to exceed 80 million people and make up half of the US workforce by 2022. Many companies have developed strategies to reach this consumer group as well as given them a seat at the table as it relates to corporate decision making.
How do customers want to interact with their banks?
According to a 2017 FIS study, over 70 percent of all banking interactions, regardless of age group are digital. Mobile and Online Banking are the top channels of choice for Millennials, Gen Xer’s and Baby Boomers alike while Branch, ATM and Telephone are the least preferred channels. For most banks, over half their customers are active Mobile users. According to Malauzai Software, 54 percent of all banking customers have conducted a transaction through Mobile in the last 30 days.
Citi released a study in late 2017 that surveyed over 1000 of their customers about their motivations and desires for Mobile Banking. They found the top features that are driving engagement for Mobile Banking users were in order of importance, Bill Pay, Account Alerts, Mobile Deposits, Balance or Wire Transfers, and Spending Summaries by Category. Mobile Banking customers are on top of their relationship with the bank. 71 percent report they are more aware of their financial standing compared to just 49 percent that use mobile less than once a week. High mobile usage also translates into higher satisfaction. Mobile Banking users are more likely to say they’ll stay with their bank.
Who do US customers want to manage their finances with?
According to FIS’ study, the overwhelming majority of customers look to their primary institution to help them with life needs like buying a home, investing for the future, buying a car, paying for school or starting a business. Despite customer’s intentions, digitally savvy competitors are grabbing market share. Less than 41 percent of customers hold a credit card or investment account with their primary bank and many of those competitors have sophisticated tools and offerings that are luring away large numbers of consumers.
"Everyone is a digital citizen and banks and financial institutions must keep pace meeting the expectations of all their customers"
Are banking behaviors really generational or just driven by life stage?
FIS found a lot of similarities between Senior Millennials (ages 32-37) and Gen Xers (ages 38-52) in grouping them by life-stage. Both groups prefer digital banking but don’t use mobile as much as their younger Millennial and Gen Z counterparts. Both Gen Xers and Senior Millennials bank most frequently online followed by mobile. American Banker released a study in December of 2017 revealing that 71 percent of Millennials would rather go to the dentist than set foot in a bank branch. And while Gen Xers and Baby Boomers may not be afraid of bank branches as much as their dentist, it’s still the least preferred way to bank for all generations.
CSG International found in a 2017 survey of Millennials that 71 percent are willing to grant access to all their mobile data to personalize their experience and are more likely to use Person-to-Person and other digital payment options. However, the P2P gap is closing as more Gen Xers and Baby Boomers are using those services. One example is the Zelle network which is becoming a standard at many banks and began advertising heavily at the beginning of 2018.
Despite being tech savvy, Millennials don’t lead everything
Interestingly, Nielsen found that Gen Xers actually spend more time on social media than Millennials. Perhaps most surprising was that Baby Boomers are better at digital security than Millennials. The Daily Dot found that across the globe Baby Boomers were more tech savvy than expected. 42 percent of Boomers use strong passwords, and only 15 percent share them. Their perception in the marketplace as being cautious may be serving them well in one regard, only 16 percent report having their data compromised in the past year.
Do Millennials indeed lead Digital Banking?–Myth!
Digital is the preferred way of banking across all demographics and while Millennials have a higher propensity to use mobile and newer payment methods like P2P, that gap is shrinking rapidly. Everyone is a digital citizen and banks and financial institutions must keep pace meeting the expectations of all their customers.