Millennials. They’re the tech-savvy and discerning demographic that every business pursues, but few truly understand.
The baby boomers were the last generation to be analysed in such detail. Sociologists want to understand them. Politicians want to appeal to them. Businesses want to sell to them. And multiple reports are written with advice on how to do this.
But a recent research project by Jumio aimed to give millennials a voice to express their own attitudes and opinions on the issues that affect them.
Specifically, we wanted to understand the experiences this generation has when attempting to access financial services on their mobiles. The findings make for crucial reading for any financial providers looking to make mobile work for millennials.
Today’s mobile banking landscape
Public disillusion with traditional retail banking borne out of the 2008-09 global banking crisis, and a parallel rise in e- and m-commerce has paved the way for a host of new online-only challenger banks.
Today, mobile banking is developing at a rapid rate and is already the largest banking channel, by volume of transactions, for most banks worldwide.
Challenger banks are beginning to command serious authority in the global banking world. In the UK alone, challenger and specialist banks witnessed a 56 per cent growth in gross lending in 2016, increasing their market share by 2.9 per cent.
Crucially, with no physical branches to check documentation in when applying for accounts or products, challengers must ensure that their online and mobile strategies are on point. Meanwhile, traditional banks are aggressively adopting mobile strategies to guard market share.
Mobile banking and millennials: a harmonious relationship?
Mobile banking and millennials go hand-in-hand – 100 per cent of our 721 global respondents reported that they own a mobile device, whilst 92.5 per cent use their mobile devices to access financial services including online bank accounts.
With mobile an ever-increasing priority for providers, these factors have surely combined to create a perfect match between millennials and mobile banking services?
Perhaps not: 85.5 per cent of our respondents indicated that they were dissatisfied with the ability to access financial services from traditional providers on their mobile.
This should be a cause for concern for traditional banks. It is clear they are not getting mobile right. And this should be a sobering realisation because their customer bases are being extensively targeted by online only banks. There is little room for error.
Challenging the challengers
For the online only banks challenging the traditional banks, the picture is slightly better, but only slightly and this is one of the major surprises of the survey.
Seven per cent are dissatisfied and 8.5 per cent are satisfied leaving 84.5 per cent who are neither satisfied nor dissatisfied. Far from being viewed as a modern solution meeting digital natives’ needs, this represents nothing more than a huge shrug of indifference towards online only banks.
This finding is particularly significant because, fundamentally, this should be an area where online only banks are industry leaders. They stand and fall by the mobile experience they are offering to customers and if it isn’t up to scratch then it is not going to secure new customers or, indeed, retain existing ones.
While it is better than the traditional banks, it is only marginally better, meaning that there is plenty of room for improvement.
What’s the problem?
With 80 per cent of our respondents attempting to apply for a bank account with their mobile device, this is the single most popular financial service to apply for on mobile. However, are millennials completing these transactions?
Has there been an occasion where you have abandoned a financial services transaction on your smartphone/tablet?
Clearly, they are not seeing the transactions through, which is a major issue because account abandonment in mobile commerce results in billions lost each year. In 2015, Jumio revealed that 25 per cent of all consumers in the UK and 23 per cent in the US had abandoned a financial services transaction on their mobile. But for millennials, this rises to an astonishing 93.5 per cent. The obvious question is “why?”
The single most popular reason (91.5 per cent) was that our respondents couldn’t remember their password. Banks cannot compromise on security in financial services. Data breaches are regularly in the headlines and payment fraud is escalating year on year. Despite this, it could be that the security financial services providers are employing to protect customers is turning them away.
Data breaches (93.5 per cent) are the primary security concern for our demographic. Given the uncertain landscape of online security today, this is unsurprising. Yet the problem seems to be that millennials want to protect against data breaches but, equally, have problems with remembering passwords.
This creates a dichotomy where our respondents find the security protocols of accessing mobile banking so frustrating that over nine in ten give up before completing their transaction. Yet, equally, they are concerned about data breaches.
The desire for digital
So how do banks marry these demands for security and convenience? Well, 94 per cent of our respondents want to see digital ID scanning offered by their banks. This represents a strong endorsement of the willingness of millennials to adopt and use new technology to solve the problems they face.
Applying for a new financial product such as a bank account or credit card requires the customer to verify themselves. Traditionally this would mean going to a branch with a passport or driving licence and proof of address. However, managing this on mobile is a friction filled process.
Some banks require customers to complete the process over the phone or even in-branch and others require large amounts of information to be manually entered to prove identity.
Neither of these options add up to a winning mobile experience and are clearly driving the dissatisfaction we are seeing from our respondents.
What is the solution?
Despite widespread adoption of mobile amongst millennials, there are still high levels of dissatisfaction about how they can access services from traditional banks on mobile.
Online only banks should have a mobile offering that is ahead of the curve but this does not seem to be the case. Our respondents aren’t dissatisfied but neither are they satisfied.
High levels of abandonment are another key indicator that banks are not getting mobile right.
What’s going wrong? The simple fact is that the way banks want millennials to authenticate themselves to access financial services isn’t working. People forget passwords and have a genuine fear of data breaches. Banks must up their game with security and make sure that they can give assurances to customers that they have done so.
Passwords have been identified as hindrance to a good mobile banking experience so maybe it is time to try something else. Biometrics, for example, or ID scanning could be the solution to making the experience easier and more secure.
Fundamentally, though, getting authentication right is critically important. The millennials we have spoken to have told us this and now we are passing this message on to those who want their business.