Mobile banking ultimatum: Provide digital banking convenience or risk a fail with Millennials
Millennials and Mobile Banking. That’s an anxiety-producing combination: each alone is one of the biggest disruptive forces in banking today. And our anxiety is well founded: according to Viacom Media Network’s 2013 Millennial Disruption Index, the banking industry is at the greatest risk for disruption. But buried in the data about Millennials is some good news, and some nuggets of gold for community banks and credit unions. Here are some insights about why mobile is key to Millennials and why Millennials are a surprisingly good client population for you to target.
The current Millennial mobile experience: high mobile usage, and high dissatisfaction
Millennials use their phones extensively for financial transactions – in fact, three out of four say they are reliant on their phones for banking. And, they aren’t satisfied with their experience.
- 93% of Millennials use mobile to manage some aspect of their financial lives, according to Jumio Corp’s 2016 Millennials Speak Out on Mobile Banking. In fact, 80% of Millennials have applied or attempted to apply for a bank account via their mobile device. Market Street Research’s study reveals that our youngest adult consumer segment uses specific mobile banking features much more than older generations (Exhibit 1, below).
- 86% of Millennials are dissatisfied, according to Jumio, with their mobile experience through their traditional banks. What’s the biggest rub – the point where most Millennials abandoned an attempted transaction? You guessed it – forgetting their password. So make resets easy and fast, and pursue biometric security advances.
These are huge proportions of this key demographic, and it means one thing: there is enormous opportunity to win – or lose – Millennial business with mobile functionality.
The potential for serious disruption: will you stay ahead, or be left behind?
According to survey results published in the 2017 Fiserv Expectations and Experiences, use of virtual or online-only financial institutions has increased to 8% among late Millennials and 15% among high net worth households. While those numbers aren’t shaking our foundations yet, these market segments are well-known bellwethers for the rest of the population. Growing interest in mobile-only among these demographic segments is ignored at our own peril.
The good news is though Millennials aren’t very happy with the mobile services they’re getting through their traditional bank, they also aren’t thrilled with the virtual-bank service – 85% of Millennials are neither satisfied nor dissatisfied with their mobile-only institution online banking experience. The game is not over – unless you’ve decided not to play.
How are Millennials a fit for your value proposition?
When I’ve talked to banking and credit union clients about Millennials I’ve heard a common concern: how do these mobile-oriented consumers really fit with their value proposition? They’ve built an institution on exceptional personal service, how can they serve a client base who wants a mobile device to be synonymous with a full-service personal bank?
A key part of the answer is in actually understanding this cohort. Widespread stereotypes of Millennials have stood in the way of many businesses developing meaningful relationships to them and a great place to kick-start any journey to engage with Millennials is with a little light reading: I suggest the Boston Consulting Group’s excellent 2012 report, The Millennial Consumer: Debunking Stereotypes, and the Brookings Institute’s paper, Millennials and the Future of Corporate America. Both explore Millennials’ attitudes and attributes and examine how to engage with them and forge lasting relationships.
To oversimplify, Millennials want to have long-term, meaningful relationships with institutions that support their values and exist for more than just generating profits. At the same time, this population has a deep-seated distrust of financial institutions. In fact, all four of the leading banks are among the 10 least loved brands by Millennials. As quoted in the Brookings paper, one Boston-based Millennial summarized a common sentiment revealed in their study, “The personal connection is important to me, especially with money stuff… When I see these commercials with big companies, I’d rather go to somebody I trust.” Millennials are looking for the relationship that smaller banks and credit unions excel at – as long as you can deliver it with the mobile features that define how they live.
What’s more, Millennials don’t just engage through mobile devices they also actively engage across other channels with equal or greater frequency than older generations. The notable channel they use less? Your website.
Millennials are now the largest generation in the United States, at more than 80 million people, representing about a quarter of the population and about $200 billion in buying power. They are technology natives, and their values are going to redefine the U.S. in the coming decade – in ways that are exciting to consider. Finding a way to forge meaningful connections to this group is key to your future, and there’s more natural symbiosis than you might expect – but mobile convenience is the price to play.
For more on what consumers want in mobile banking, check out our article.
— posted by Stephanie
Market Street Research, based in Northampton, Massachusetts, is a marketing research company with over 35 years of experience in conducting customized marketing research for hundreds of businesses and organizations throughout the United States. We specialize in understanding our clients’ needs and delivering high-quality, custom market information geared towards helping our clients make effective business and organizational decisions. For more information, contact us today!
Our updated infographic demonstrates the continuing growth in use of mobile apps for banking transactions. Not surprisingly, the youngest respondent group – most of whom fall into the Millennial cohort – use mobile technology significantly more often than the population as a whole.
Spring 2017 Update
The Millennial Disruption Index (2013)
Millennials Speak Out on Mobile Banking (2016)
Expectations and Experiences
The Millennial Consumer: Debunking Stereotypes
Millennials and the Future of Corporate America