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article imageMillennials are seeking non-traditional banking

By Tim Sandle     Mar 7, 2018 in Business
A wake-up message for banks: if you want to remain competitive you need to embrace digital multi-channels and appeal to tech-savvy millennials.
A generational change is happening, and businesses have to accept that 'millennials' are expecting most products and services to be offered digitally. Financial products, including banking, are not immune from this trend. Two separate reports highlight this tendency.
A review by Intelligent Finance has found that the biggest factor that attracts millennials to select one bank over another is an easy-to-use smartphone app, with most wishing to use online banking via a smartphone. In contrast, Baby Boomers stated that face-to-face customer service was the key determinant (with rude service being highlighted as the main reason why this generation might take their money to another bank). In contrast, millennials are most likely to exit from a bank if they did not like the smartphone app or if the bank suffered from a cyber breach.
A further sign that the banking sector is in transition arose with other preferred methods of banking. Notably 19 percent of those surveyed who were aged 35 saying they favor branch visits compared with just 10 per cent of millennials. Even with digital banking there was a difference, with 23 percent of people 35 or older wishing to bank via a desktop compared with just 11 percent of millennials, with the younger generation preferring to use smartphones to access their account.
The second survey comes from Fico, in a report titled "Millennial Banking Insights and Opportunities." This report also highlights the rise of alternative banking services, such as mobile payment and peer-to-peer lending, which banks are moving towards in a bid to win the custom of millennials.
In particular, younger demographics (defined as those aged 18-34) were found to be twice as likely to already be using mobile payments compared wit the aged 35-plus demographics. With peer-to-peer lenders, millennials were found to be twice more likely than other groups to consider these services in the next 12 months.
A further lesson for banks is about communications. The survey found that millennials like to receive consistent communications from their bank and they are more receptive to those communications when they are sent via their preferred channels such as mobile apps, texting, the bank website and telephone.
As digital banking expands, security remains an important issue. This is featured in the Digital Journal article "Banking in the balance: Digital strategies to protect banks."
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