The Importance of Mobile and Digital Banking with Millennials: An Untapped Market Segment for Community Institutions
Like the generations before them, millennials, or those born between the early 1980s and mid-1990s, rely on checking and savings accounts at their local bank or credit union to manage their finances. Contrary to popular belief that only the youngest generations favor electronic devices in lieu of human interaction, millennials have adopted mobile technologies, providing 24/7 access to friends, information, and commerce at the push of a button. Banking is no exception to their expectations for on-demand capabilities.
Research by Nielsen found consumers between the ages of 21 and 34 report greater participation in mobile banking activities than any other age group. This rise in popularity is highly attributed to the generation’s rapid adoption of evolving technology and the elimination of unnecessary trips to brick-and-mortar branches.
So, just how often are millennials banking on-the-go, and how can community institutions capitalize on the largest generation?
Commonly known for a more personalized banking experience and often considered more innovative than large multi-national banks, a recent survey revealed credit unions and community institutions are not top-of-mind with millennials. In fact, more than half of adult children revealed they do not bank with their parents’ institution, uncovering a significant opportunity for these FIs to grow their account holder bases.
Salesforce reveals 27% of millennials are completely reliant on mobile banking, with convenience and perks as two of the driving forces behind their dependence. Tasked with winning-over millennials and younger generations, credit unions and community banks can do so with the proper digital tools. A Kanasa survey found that 83% of millennials would switch banks for better rewards, such as higher interest rates on deposit accounts and no-fee banking. It’s been shown that millennials also rely on apps for everyday tasks like person-to-person (P2P) money transfers, transfers between accounts, and to review transaction history. In fact, nearly one-fifth have never written a paper check to pay a bill.
With the desire for 24/7 access and on-demand services, the personal link is still critical, particularly when leveraged through the appropriate channels. Valuing financial education from their bank or credit union, millennials are open to this human-digital touch point that in-turn, drives institutional loyalty. It is here that banks and credit unions can differentiate themselves with chatbots and other personalized services based on various levels and services of engagement.
Despite millennials’ devotion to mobile and online platforms, FIs must ensure a quality user experience, as a survey from Javelin Strategy & Research found that 38% will abandon mobile banking activities that take too long. In fact, when compared to baby boomers and Generation X, millennials are more likely to forego mobile banking when it proved inconvenient.
In addition to convenience and user-friendliness, millennials favor financial service providers who go above and beyond the norm. This, linked with the generation’s focus on streamlined processes and innovative technology, means banks and credit unions must ensure their digital services are powerful, customizable and UX-focused to reduce the risk of account holder attrition – with more than 40% reporting considering a branchless institution.
As new technology is regularly introduced to the market, it is important for banks and credit unions to keep pace with millennial banking needs to capitalize on the largest generation today. With such a small percentage banking within the community space, rife opportunity exists to win over the millennial generation with easy-to-use, powerful, digital capabilities.
By combining high-tech with high-touch digital offerings, and fulfilling the desire for personalized interactions, community institutions will appeal to younger generations, while benefiting internally from complementary capabilities like predictive analytics and reporting – totaling a premium, unified, and future-proofed digital banking experience for employees and account holders alike.