Millennials and phone banking

Why are millennials always broke?

They aren’t! They are just struggling like the rest of the population. A recent Australian Millennial Finance Survey for 2019 found that young Australians are careful with what they have and their biggest worry is the cost of living. But forty-five percent put any disposable income into a high yield savings account, which is a decent number.

Millennials are not the new kids on the block anymore and for the last ten years, they have seemed like the litmus test for marketing digital products and services. It’s hard to determine the exact age range, as a Google search brings up a range from 1976 to 1996 or 1980 to 1996/2000. But we know they can be homeowners or students, business owners or apprentices, parents, investors, employers or employees and that just like every other generation – so their needs and wants are not one size fits all.

Do millennials trust banks?

The Royal Commission did impact overall trust, with millennials ranking banks after energy and internet providers, but a little above insurance. Forty-seven percent of Millennials said they would re-evaluate their approach to banking after the Royal Commission (with NAB and ANZ faring the worst) but history tells us that forty percent of people in Australia still use the childhood bank inherited from their parents, because they “can’t be bothered changing it” or “hadn’t thought about it”. Therefore it doesn’t look like we have hit critical mass yet despite the overall opinion being pretty low.  The rise of Neobanks, mobile banking apps and the launch of Open Banking in Australia might change that in the next few years.

The changing landscape; from online banking to mobile

Online banking changed everything for Gen Xers and Baby Boomers, and mobile banking changed it for the Millennials and Gen Z. Online banking gave us the joy of moving money around quickly and avoiding bank queues, but it’s only really in the last five years that online banking became a good experience for the user, and even now the legacy tech struggles. Mobile banking is improving but there is a cost to getting it wrong. According to a study by Jumio and Javelin Strategy & Research in the USA, Millennials are the most likely to change banks if the user experience is not up to scratch, due to slow loading or long set up. The most common use of Millennial mobile banking is P2P transactions, checking transaction history and transferring money between accounts.

How many Australians use mobile banking?

Whilst the younger generations might be quicker to adapt, mobile banking is growing fast across the board and won’t slow down. Smartphones are improving the customer journey via customer data which is impacting the business models of financial institutions, so for millennials and banking, the digital transformation can only make things better.

Roy Morgan stats:

  • Age 14-24: 49 per cent
  • Age 25-35: 64 per cent
  • Age 35-49: 58 per cent
  • Age 50-64: 36 per cent
  • Age 65+: 13 per cent

Do millennials feel financially secure?

The Millennial report showed that this generation feels less financially secure than previous generations and for good reason. Full-time employment is more scarce, the cost of living is much higher and buying a home is no longer a sure unless the ‘bank of mum and dad’ provides a loan.

One of the issues with banking structures, but also the culture, is that change is slow when systems have been in place for fifty plus years.  Millennials are facing uncertainty, but the research shows they are looking for answers. But is the information out there relevant? There is still a disconnect between the messaging that goes out around financial services, often it does not seem inclusive or sometimes even relevant.

What is the future of banking for millennials?

We know that mobile phones have changed our daily lives and influenced behaviour. We carry our customised world everywhere, in the apps that we choose and the settings they have. With the number of personal finance apps growing and democratizing financial offerings like investments, borrowing or insurance, there is the opportunity for banks to not only be competitive but also empower people by using the customer data in a smarter way. If the Millennials are getting used to anything, it’s customisation, so banking needs to be fast, simple and speak to the user.

Futurist and author of Breaking Banks, Brett King, talks about banks needing to remove friction and that if they don’t’, it’s to their own detriment. He sees the future of banking as being contextual and predictive and based on behaviour. Banking will become an ‘embedded experience’ that fits into your life and makes recommendations based on your actual spending habits and bank balance.

At Navag8, this is what we are excited about. We initially fell into the trap of thinking millennials were our primary market, but quickly found that Gen Z, Gen Xers and Baby Boomers all want a more painless and personal savings experience. The solution for banks is already here, so the question is, who will the market leader be in the next five years?

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