Canadian Underwriter

Millennials interact with their banks more than Boomers; banks need to provide digital focus for all generations

December 1, 2016   by Canadian Underwriter

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Mobile adoption is high among U.S. Millennials when it comes to retail banking, but so too is the likelihood of visiting a teller or calling a contact centre, reveals new research released Thursday by New York-based Bain & Company Inc.

In fact, 86% of Millennials taking part in the survey of 5,300 banking consumers south of the border report visiting a teller in the last three months and 60% report calling the contact centre.

Close-up Of Businessman Hands Giving Cheque To Other Person In OfficeMillennials were twice as likely to interact with their banks as Boomers, Bain & Company states in releasing Bank Branch/Call Center Traffic Jam: Why do customers keep visiting tellers and calling the contact center?

Related: Making things fast, simple and transparent important for Millennials: speaker

Although Millennials are typically much more familiar with digital and mobile technology, they are still on the banking learning curve with regard to, among other things, paying bills, depositing cheques and transferring money, notes the management consulting firm that advises clients on strategy, operations, technology, organization, private equity and mergers and acquisition.

“As a result, they report that digital channels are confusing or inadequate for their banking, and they often need help,” states Bain & Company. “Among the heaviest teller users, for instance, 42% of the younger ones tried using another channel before visiting the branch,” the company points out.

“Among those 55 and older, only 42% contacted their bank via phone,” the research shows. However, half of older customers still use tellers through force of habit, and 75% of their visits are for routine interactions that can be done more quickly and efficiently by self-service, the company adds.

Overall, almost three-quarters of reported branch transactions and more than half of phone interactions deal with deposits, withdrawals, checking accounts and “other routine matters that could be better handled through self-banking at less expense to banks,” the statement notes.

Related: Insurers who fail to “adapt to what millennials are looking for” will let go of “majority” of customers: Intact president

Although Boomers may have deep banking experience, research findings indicate “they are often less familiar with digital technology and need additional support grow comfortable with self-banking.”

A mere 17% of older respondents say they have received any guidance or training on how to use their bank’s mobile app compared to 26% of young respondents, Bain & Company reports. “Consequently, this group is less than half as likely as younger consumers to use mobile apps or mobile browsers to do their banking.”

Younger customers also call more frequently than their older counterparts, the research indicates. “On average, they called their bank 1.4 times over a three-month period while older customers called only 0.5 times,” it found.

Among Millennials, mobile adoption is high at 82%. But Millennials may not be the only age group looking for some digital love from retail banking.

Banking operations that fail to respond may be doing so at their own peril. The research “finds that seniors are eager to use digital, but receive little guidance from banks to get comfortable with the technology,” Bains & Company notes.

Almost half of older consumers who use mobile banking report liking the experience compared to 40% of respondents between the ages of 18 and 34.

That said, few older respondents “receive much-needed guidance and information about using their bank’s mobile apps. This situation creates an untapped opportunity for banks that understand how to reach both ends of the generation spectrum — and everyone in between,” Bain & Company emphasizes.

The research even puts a number on the risky oversight. “Some banks are still missing the mark, putting US$70 million to US$80 million of potential savings at risk for a typical U.S. bank with 1,000 branches,” the statement notes.

Digital self-service is “about one-tenth the cost of a teller visit or live phone call,” says Gerard du Toit, the report’s lead author and head of Bain & Company’s banking practice.

“Even with that knowledge, and despite the increasing power and presence of mobile, U.S. banks have a long way to go to realize the promise of digital self-service,” du Toit suggests.

He contends that banks are missing a major opportunity to teach young consumers to bank and older consumers to self-bank, and must overcome their “unconscious ageism if they want to survive mobile disruption.

“Boomers, in particular, are ripe for mobile conversion. They just lack support and help from their banks to make the leap,” du Toit suggests.

“Migrating customers — regardless of age — to digital as well as better serving them through online and mobile tools could reduce the routine transactions that add costly volume in branches and call centres,” Bain & Company adds.

The following actions are recommended:

  • devise interventions by front-line branch and service centre representatives that blend education and encouragement;
  • invite customers to try digital banking with the guidance of a trusted employee they know or with whom they have worked; and
  • use agile techniques to tackle the root causes of routine branch visits and phone calls.

Related: Global banking, financial services and insurance security market to grow to US$48.95 billion by 2021: report

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