By Jane Winterbottom – email@example.com
Generation Y is a major driver behind a comprehensive transformation of the retail-banking industry, with financial institutions running to keep up with technological developments. Physical bank branches are quickly losing their appeal to customers, says Business Insider author John Beggestuen, and banks are focusing increasingly on mobile apps and online services.
Variety and quality of services are what will be the defining characteristics of the leaders in the banking sector in the future as Gen Yers, or Millennials, age and become more affluent. Banks are aware of this and are doing their best to get onboard loyal customers still in their 20s, who are choosing a bank for the first time. Since banking is a business that derives great benefits from customer loyalty, it’s hardly surprising that the competition is getting pretty heated.
Mobile has been a major disruptor in the sector, providing easy alternative-payment methods, and take-up is still in its nascent stages. A survey by Synergistics Research commissioned by BI Intelligence has revealed that although 68 percent of Americans are aware of the options for mobile-remote-check-deposit services, just 14 percent are using them. Still, mobile devices are the preferred means of checking bank-account balances among already established electronic-banking-services users.
Paying bills online is also a booming trend, saving people time and effort. This, by the way, is true not only for Millennials but for adults of all ages. However, Millennials are at the forefront when it comes to the combination of all digital banking services: paying bills, checking bank-account balances and transferring money. According to research from Nielsen, 77 percent of US households prefer to pay bills online, and 19 percent to check account balances online. At the same time, 75 percent prefer to make cash withdrawals from an ATM, and 60 percent to make a deposit at a physical bank branch.
What these figures suggest is that the mobile-banking-services market is far from mature; there is a lot of room for improvements. Furthermore, banking personnel don’t have to worry about their jobs yet, although banks here and there have started reducing the number of their branches as mobile take-up grows. The figures above, however, are for all adults.
Among Millennials in the US, 84 percent check their account balances and movements online, regardless of the device. Some 57 percent pay their bills online, and 56 percent make digital money transfers. While just nine percent use digital channels for finding banking advice, 11 percent open and close accounts online, another 11 percent make other transactions via digital channels, and 12 percent use the technology to resolve a dispute, figures from a TD Bank study reveal. Fourteen per cent use digital channels to find more banking information.
The trend is very clear – the whole world is going digital, and banks should follow rather than try to hold on to traditional approaches. Millennials are the customers of the future; they will be the bulk of the retail-banker’s customer base, and sector players should adjust their long-term performance strategies accordingly.