Millennials are rewriting the rule book for modern banking

Millennials have it tough. Frequently derided as entitled, lazy, disloyal and self-obsessed, there seems to be little sympathy for consumers under the age of 35. Not a week goes by that they aren’t accused of killing one industry or another. It seems nothing is safe, with everything from democracy to napkins at risk from the murderous millennials!

As we know, the banking industry is no different, with latest research from ieDigital finding vastly different attitudes between generations, suggesting that banks will need to do more to cater for the digital demands of increasingly tech-savvy consumers in order to survive.

Security of our financial data

More surprisingly, despite clear differences, most consumers (regardless of age) still have much in common. Crucially, security continues to be a top priority for consumers when it comes to their financial data, alongside their bank’s reputation for being secure.

As you might expect when it comes to dealing with money, the UK public is very much in favour of playing it safe, with over half (51%) selecting their bank based on its trusted reputation. In fact, a mere 5% named “reputation for using innovative technology” as a key factor in choosing who to bank with. And this is where things become a little murkier, with the definition of ‘innovation’ well and truly up for debate.

Generational differences

Of the millennial generation, for example, 32% named an “easy-to-use smartphone app” as a primary factor in where they chose to bank, whereas for other generations this fell to just 13%. Clearly, what older generations see as new and futuristic, millennials consider as a hygiene factor.

Generational differences were once again made clear when we asked consumers what would prompt them to switch banks. While bad customer service, for example, was a common no-no across all generations, there were clear differences in how this problem would manifest. 30% of older consumers noted that rude staff would make them leave a bank, while only 16% of millennials felt this would be a relationship-ending problem. In this case, it seems that bad service for younger consumers refers primarily to a bank’s online presence – 15% would leave a bank if its smartphone app didn’t meet expectations. Similarly, over a quarter (27%) of 18-to-24-year-olds believed they would switch banks if their current provider suffered from a cyber breach. This opinion steadily diminished as respondents got older, with only 16% of those aged 55+ feeling the same way.

Smartphone banking

The contrasts are even more pronounced when looking at the issue of money management, with millennial demands standing in direct opposition to those of previous generations. Unsurprisingly, the ‘digitally native’ generation showed overwhelming support for online banking via a smartphone, with 39% naming it as their preferred method of banking – an enormous number that dwarfed the paltry 13% of older consumers who prefer to interact with their bank in this way.

There were similar gaps when it came to other preferred methods of banking, with 19% of those aged 35 and over favouring branch visits compared to just 10% of millennials. Correspondingly, while 23% of this age range wanted to bank on a desktop, only 11% of millennials shared the same desire. 

What this study shows is that the banking industry is entering a period of transition. With such divergent demands across its customer base, appealing to all sides of the market means providing a traditional and a digital customer journey. For the established banks, this means a move towards the multi-channel banking model, offering convenient and secure services for all customers, regardless of their level of digital literacy. 

However, as more generations follow the millennials, the calls for online banking platforms will only increase. Banks must be agile enough to meet this challenge. If not, they could become the generation’s latest victim.

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