Traditional banks are on the way out. As consumers increasingly go mobile, the traditional brick-and-mortar bank has lost its appeal. Instead, online banks are the new belle of the ball. And it's not hard to see why. Millennials are incredibly demanding and aren't loyal to traditional banks. Moreover, they expect digital and online banking.
Millennials are more demanding
According to a recent Scratch/Viacom Media Networks study, Millennials are increasingly dissatisfied with traditional banks, which they perceive as outdated. Instead, they prefer tech companies for their financial needs. The findings have implications for traditional banks, which must understand how to engage Millennials and remain competitive.
Millennials were born during the financial crisis and recession of 2008-2009, so they have different attitudes about money management and the volatility of the stock market. Moreover, they are more risk-averse and save-oriented than previous generations. This makes traditional banks more vulnerable to competition from digital-first banks. While this trend isn't expected to last forever, millennials are already demanding more from their financial institutions than their predecessors.
Millennials represent a huge opportunity for banks, as they are highly digitally-savvy and have grown up in a digital world. With smartphones, social media and broadband, millennials are used to instant information and little patience.
Millennials are less loyal
According to the Zafin Group, millennials are less loyal to traditional banks. This is because of their different expectations than older generations. In addition, they grew up during the financial crisis, which has tainted their opinion of banks. Millennials see banks as a partner or intermediary, not as a traditional bank.
This is because Millennials are more hesitant to make a commitment and are afraid of uncertainty. In addition, they are less knowledgeable about the long-term consequences of financial decisions. Therefore, they may not return to the same bank for their big financial decisions. This also makes them more likely to switch to a bank that is more innovative.
Although the generations differ in their perceptions of the value of traditional banking, Millennials rate traditional banks as less trustworthy than GenXers or Boomers. These results indicate that bank loyalty isn't just generation-specific, but based on customer experience as well. Traditionals and Boomers have stronger relationships with PFI.
Millennials expect digital banking
The millennial generation is changing the way we do business and bank. These highly educated, tech-savvy individuals are less likely to walk into a bank branch and use traditional banking methods. They place high value on convenience and do not have the patience for gimmicks. Many have no use for checkbooks, and they want to move money on their own terms.
This group of consumers represents an estimated $3 trillion in potential spending and investing and has a large say in the direction of digital banking. They also demand a secure, seamless onboarding experience. As a result, banks are scrambling to meet their demands. These Millennials expect digital banking to be secure and easy.
Millennials are disillusioned with traditional banks and big box companies. That's why they expect new and improved technology and services from outside the industry. According to the Viacom Millenial Disruption Study, three-quarters of millennial respondents would rather use a new service from a tech company than a bank. This trend is evident in the way millennials use social media. For instance, a casual comment on a Facebook post about a bad experience with a bank can be shared with hundreds of people. Likewise, a news story or scandal about a bank can damage its image. As a result, millennials who are considering a new bank will search for information on Google.
Millennials expect online banking
Millennials expect digital banking to be more personal, convenient, and secure. They're used to using the latest innovative technology and they want easy access to the services they need every day. Traditional banks must think outside of the box to meet their customers' expectations. By embracing digital technologies, banks can differentiate themselves from the competition and attract more millennials.
Millennials also want better financial tools to guide them through the process. They often feel under-informed about financial matters and want personalized tools to help them make financial decisions. While they're used to banking online, bricks and mortar banks are still important to this generation. Millennials often complain about the lack of physical branches and complain that they can't easily find the services they need at a bank. The lack of a personal touch and commitment can be intimidating for them. If they don't feel confident in their financial decisions, they won't return to a traditional bank in the future.
Millennials also expect mobile banking. In fact, 94 percent of them said they expect their financial institution to offer online banking. That number is higher than the percentage of consumers aged 35-44 years who said the same. Millennials also value cash-back options more than other generations. Eighty percent of millennials said they would be swayed by cash-back offers, while only 71 percent of older consumers said they would make a decision based on this feature. In addition, millennials are more likely to choose a bank if it offers a recognizable brand name.