Exploring what’s essential to consumers is a primary step to gaining, retaining, and cross-selling in the banking industry. However, millennial stereotypes regularly fool financial institutions, botching their marketing strategies with incorrect beliefs. Case in point: it turns out millennials enjoy physical branch visits just as much as Gen Xers and Baby Boomers.
Nonetheless, most financial institutions can agree on one thing: all generations expect more from their banks. In particular, customers seek a better digital banking experience. However, the probability of all customers wanting digital-only banking moving forward, seems a bit rushed.
Supporting data from eMarketer forecasts that approximately 55 million millennials ages 23 to 38 will use digital banking, but, they’re not all fans of digital-only banking. Why?
“While lots of millennials use digital banking in various forms, nearly half wouldn’t even consider switching to a digital-only bank,” said eMarketer principal analyst Mark Dolliver. “That’s likely because, though they may use branches less than older consumers, they don’t want to forgo the option of going to a physical location. And why should they? The step from ‘digital’ to ‘digital-only’ is a big one, and many millennials will be in no hurry to take it.”
Recently, the Bank Administration Institute (BAI) asked three different generations — millennials, Gen Xers, and Baby Boomers — what their top priorities are when searching for banking services. The answers from all three groups overlapped, and that’s no surprise. All three groups want a great point system with rewards and a financial institution with a positive brand reputation.
But that’s not all. More and more individuals are engaging with companies that offer complementary digital financial applications (e.g., money management, financial advice).
Digital transformation challenges in banking have been well understood and the strategies to address them simple and clear. However, it is becoming increasingly apparent that the industry is reaching a tipping point in the digital transformation journey.
In fact, U.S. Bank recently conducted a survey revealing that U.S. adults use their smartphones primarily for financial advice, including money management tips. The report indicates that 34% of people actively seek financial assistance through the convenience of digital applications. This support can come from chatbots or artificial intelligence-based advising programs.
Why should banks close extra attention right now?
According to a study by Gartner, “By 2030, 80% of financial firms will either go out of business or be rendered irrelevant by new competition, changing customer behavior and advancements in technology.” How do financial firms prevent that grim statistic from becoming true?
As online and mobile banking continue to be a critical engagement channel for a large portion of consumers, banks must work hard to keep up with the latest digital trends. They also need to ensure they remain relevant in their physical locations. Are employees equipped with the right software and tablets to provide personalized and efficient service? Focus on reinventing the branch.
Look, nobody knows exactly how the financial services industry will look, but that’s no reason to sit still. Adapt. Try different things. See what sticks.
If you are interested in hearing another perspective on this topic, download my colleague David Willner’s piece titled “Why Financial Services Firms Must Focus on Digital Transformation to Compete.”
You can also download his new piece titled “The Rise and Stagnation of Digital-Only Banking.”