Millennials – the generation with the largest share of the global population at 26% and expected to comprise 75% of the global workforce by 2025 – have become a force to be reckoned with.
As the largest population since the baby boomers, the behaviors and preferences of this generation are not only shaping the future of mobile communications, but also of business as well. Nowhere is this quite so visible as in the banking sector. As millennials move increasingly towards digital banking channels to perform the majority of banking activities, visits to bank branches have seen a rapid decline.
To have a clearer understanding of what banking will look like in the future, BI Intelligence surveyed 1,500 millennials on their banking behaviors and preferences concerning preferred banking devices, banking actions performed on devices and the frequency of banking activity. The report makes for compelling reading and echoes the changes we’ve seen in recent years across the digital landscape, and in all industry sectors. Statistics reveal that as many as 38% of millennials have never even visited a bank branch, with only 10% visiting a bank once per month and a staggering 60% preferring to conduct their banking activities via an app.
Here are some key observations from the report:
The smartphone will become the foundation of the bank-customer relationship
As the primary computing device, the smartphone goes everywhere its user goes, has the ability to collect user data, and is already used for making purchases. For banks to endure, they’ll need to offer services optimised for customer’s smartphones.
Banks need to commoditise products and services and optimise for smartphones
As consumers opt for digital banking services provided by third-party tech firms, the relationship between banks and customers is increasingly jeopardised as the banking sector continues to lose out on branding and cross-selling opportunities. Banks will need to further commoditise their products and services and optimise for smartphones to combat third party firms.
Physical bank branches will become obsolete
The rise in online banking, combined with the increasing costs of transactions at branches and the decline in branch visits are leading to branch closures and impending obsolescence.
The ATM will become obsolete
As cash and check transactions continue to decline and mobile payments and mobile point-of-sale adoption by small retailers increase, the ATM will no longer be essential and is ultimately destined to the fate of the physical branch.
One thing is clear, the relationship between the bank and the customer is changing. From mobile payments via apps or text message commands for payments via mobile, banks need to optimise their services for smartphones or lose relationships with their customers.
Sources: Business Insider Intelligence, UYD Media