Millennials are rewriting the rule book for modern banking

To survive, banks will need to do more to cater for the digital demands of increasingly tech-savvy consumers.

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. Indeed, not a week goes by that they aren’t accused of killing one industry or another – it seems from 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 our latest research 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.

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Common Ground

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.

And, 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 per cent) selecting their bank based on its trusted reputation. In fact, a mere 5 per cent named a 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’ coming well and truly up for debate.

Shades of Innovation

Of the millennial generation, for example, 32 per cent 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 per cent. Clearly, what older generation see as new and futuristic, millennials consider as a hygiene factor.

The 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 per cent of older consumers noted that rude staff would make them leave a bank, while only 16 per cent 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 per cent would leave a bank if its smartphone app didn’t meet expectations. Similarly, over a quarter (27 per cent) 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 per cent of those aged 55+ feeling the same way.

Different Demands

The contrasts became even more pronounced when we looked 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 per cent naming it as their preferred method of banking, an enormous number that dwarfed the paltry 13 per cent of older consumers who preferred to interact with their bank in this way.

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