Though generational differences greatly influence consumers' banking behavior and young consumers have a clear preference for online banking, traditional channels still are important for servicing all generations, two recent surveys suggest. As a result, banks may need to rethink their channel strategies.
According to a survey of 1,000 consumers by the American Bankers Association (Washington, D.C.), Branch, ATM OR Online?, 30 percent of respondents between the ages of 18 and 34 predominantly use online banking. However, branch banking ranked a close second (25 percent) with the same age group. "While our younger consumers feel comfortable banking from their laptops, traditional services are still preferred by many," said Edward L. Yingling, ABA president and CEO, in a release.
The branch remained the most popular channel overall and was the overwhelming favorite among consumers 55 and older (47 percent). Thirty-six percent of all consumers said they use the branch most often, 23 percent prefer Web banking and 21 percent favor the ATM. Traditional mail (8 percent) and telephone banking (5 percent) lagged further behind.
"Today's bank products give consumers several choices so that they can find a way to do their banking that is most comfortable and convenient to them," says Margot Mohsberg, an ABA spokeswoman. "And consumers are taking advantage of these choices."
Gen Y Wants Options
In a related survey of 2,800 consumers, Javelin Strategy & Research found that common beliefs about the banking attitudes of Gen Y are off base. According to Javelin, Gen Y -- those between the ages of 18 and 29 -- value multiple banking options, not just the online channel. The Pleasanton, Calif.-based research firm says access to ATMs and branches were more important to Gen Y bankers than online service capabilities when selecting a financial institution (see chart, below).
"For years we've come to expect that younger adults always have the highest interest in new banking and payments technologies, yet new rigorous research proves this to be no longer universally true," said James Van Dyke, president and founder of Javelin, in a release announcing the results of the study. "Young adults may not see online capabilities as a differentiator simply because they are the best at navigating even a sub-par online site. Surprisingly, people born in the 1980s are more likely to choose a new financial provider based on a 1970s technology -- ATMs."
Further, Javelin reports that Gen Y's overall population will exceed the population of any other generation by 2017, with approximately 91 million Gen Y consumers compared to 88 million Gen Xers and 77 million baby boomers.
"This study uncovers vital and misunderstood aspects of a generation of [banking customers] whose earning potential is set to double over the next 10 years," said Jean Garascia, coauthor of the Javelin study, in the release. "Acquisition and cross-sell strategies must be realigned now" to ensure that banks properly target this market segment, she added.
Blog: Surprise! Kids Are Going to Bank in New Ways
According to a new Celent report, the "Millennial" generation will represent the next mass affluent group and financial institutions will need new marketing approaches to reach them. ...Wait, now banks have to worry about marketing out to seven year olds?
Blog: Celent and Millennial Banking Behavior: A Second Look
On a family vacation, my step mother mentioned that because her bank is going to start opening later in the morning, she is going to be forced to use the ATM, which she had never done before. She doesn't even have an ATM card!