In association with Jumio.
No demographic is targeted quite so frequently as millennials. Not since the baby boomers has a generation been subjected to such scrutiny. Academics study them, and businesses want to sell to them.
But instead of talking to them, what about talking with them? What about giving them a voice to speak about what they really want, not what marketers think they want?
This was the driving factor behind digital verification specialist Jumio’s decision to carry out in-depth research into what millennials really thought. Specifically, the company wanted to gain an understanding of the experiences this generation has when attempting to access financial services on mobile devices.
To this end, Jumio carried out a global survey of more than 700 millennials, aimed at investigating their experiences with mobile banking. The findings were at times as you might suspect, while others were much more surprising.
Taken together, they provide a vital guide to how this often misunderstood and misrepresented demographic view the mobile offerings of banks.
Mobile banking in 2017
An online revolution is permeating every aspect of financial services. Driven by a public dissatisfaction with traditional retail banking which rose from the 2008/09 Global Banking Crisis, and impacted by simultaneous rise in e- and m-commerce that opened the door for a host of new online-only challenger banks, banking is in a state of flux.
Mobile banking is already the largest banking channel, by volume of transactions, for the majority of banks worldwide (KPMG, 2015). It has gone from idea, to experiment, to fad, and finally to the norm, all in a few short years.
Challenger banks are beginning to command respect in the banking world and make traditional banks take notice. In the UK, for example, challenger and specialist banks saw a 56 percent growth in gross lending in 2016, increasing their market share by 2.9 percent (Mortgage Strategy, 2016).
Virgin Money, an online-only bank, is now the eighth largest lender in the UK, above both the Yorkshire Building Society and Clydesdale Bank, both long established institutions.
In the US, neo-banks such as Moven and Simple are nipping at the heels of America’s banking giants. Meanwhile, China’s WeBank and MYBank (launched by the Chinese e-commerce giant, Alibaba) are increasingly bringing banking facilities to those who currently lack them in the Asian market.
What sets challenger banks apart is their online offering, and this means that their online strategy and, specifically, their mobile strategy must be on point. With no physical branches to check documentation in when applying for accounts or products, customers have to verify their identities online.
In response to this attempted market grab, traditional banks are fighting fire with fire by trying to maintain their market share through developing mobile offerings of their own.
Mobile and Millennials: The dream match?
Mobile banking and millennials are perfectly matched – 100% of the survey’s 721 global respondents reported that they own a mobile device, while 92.5% use their mobile devices to access financial services such as online bank accounts.
This is an early piece of good news for financial services providers, as it is clear that this demographic is already widely using mobile to manage their financial lives.
Surely, then, with mobile as a clear priority for financial services, this widespread adoption of mobile banking means that millennial users have a positive experience?
The answer is, sadly, no. 85.5% of our respondents indicated that they were dissatisfied with the ability to access financial services from traditional providers on their mobile.
This is a sobering finding for traditional banks, as it is very clear that they are not getting mobile right. And this should be cause for concern because, with challenger and neo banks aggressively targeting their customer base, they cannot afford to get this wrong.
Challenging the challengers
You would expect the picture to be better for online and challenger banks – and it is. But, in one of the most surprising findings of the survey, it is only slightly better.
While only 7% of the survey’s respondents were dissatisfied with the ability to access financial services from challenger banks on mobile, a mere 8.5% were satisfied – leaving 84.5% who were neither satisfied nor dissatisfied. The efforts of challenger banks to get their mobile offerings right are being met with what appears to be a massive shrug of indifference.
These banks will stand and fall by the mobile experience they are offering to customers, and if it isn’t impressive, it will not win new business.
What exactly is the problem?
The single most popular financial service to apply for via mobile is a bank account, and over 80% of respondents reported that they had done so. But are they completing this process?
Has there been an occasion where you have abandoned a financial services transaction on your smart phone/tablet?
Clearly they are not, and this is a serious issue, because account abandonment in mobile commerce results in billions lost each year.
In 2015, Jumio revealed that 25% of all consumers in the UK and 23% in the US had abandoned a financial services transaction on their mobile. But for millennials, this rises to an astonishing 93.5%. The next question to be asked is “why”?
We want to be secure, but secure by our terms
The predominant reason given by respondents (91.5%, an overwhelming percentage) was that they couldn’t remember their password. Getting financial services security right is absolutely critical. But it could be that the security is either too obtrusive, or not optimised for mobile.
This does not mean, though, that, respondents do not take security seriously. Our research shows that data breaches (93.5%) are the number one concern for this demographic and, given the headlines about data breaches, this is to be expected. But what we have seen is a concerning dichotomy where millennials want to be secure but don’t like the security methods being offered.
The desire for digital
The next question is: how are banks managing this disconnect? The starting point is that 94% of survey respondents wanted to see digital ID scanning offered by their banks.
Applying for a new financial product such as a bank account or credit card requires the customer to verify that they are who they say they are. In the pre-digital age, this would mean going to a branch with proof of ID, such as a passport or proof of address such as a utility bill or bank statement.
On mobile, much of this analogue experience still remains, and while customers often start the process on a mobile, it is ultimately completed over the phone or in-branch.
This isn’t a first-class mobile experience by any standard, and this disconnect between what the mobile experience should be and what it actually is, is clearly driving this dissatisfaction.
Lessons to learn
Of all the different services millennials use their mobiles for, financial services is the most popular. But this popularity is overshadowed by significant dissatisfaction with the process.
We would expect reported satisfaction levels to be higher, especially for online only banks. We would expect them to be way ahead of the curve, with traditional banks chasing at their heels, but this is not the case.
What is going wrong? The research seems to show that the pain point is the authentication method. Millennials want to authenticate themselves in a certain way. Banks want them to authenticate themselves in a certain way. And there is a significant disconnect.
Solving this disconnect
Leveraging the next-generation of authentication technology could be critical in solving this disconnect. Instead of offering millennials what banks think they want, the solution is to offer them what we now know they want.
It is a debate which should shape 2017 and, to start the discussion off, we would like to invite you take part in Jumio and PaymentEye’s upcoming webinar: What Do Millennials Really Think About Mobile Banking?
The webinar takes place on Wednesday 1 February 2017 – 14:00 GMT (London) | 09:00 EST (New York) and will focus on solving the problems identified in this research.
We look forward to seeing you there!
Cardtronics UK and and independent research company Populus have teamed up to determine whether cash is still used by UK shoppers.
Daniel Smith, Director of Relationship Management, Basset and Gold interview: “Consumer demand for new and innovative forms of finance is soaring”
Basset and Gold has announced the launch of its new Innovative Finance ISA (IFISA).
Anthony Walton, CEO of Iliad Solutions explores the latest developments and challenges with APIs.
Visa has announced it will be launching a new wearable payment device.