Gerard du Toit
Gerard du Toit

Changing millennial banking habits come with caveats: Bain & Co. report

For all the talk about mobile migration in banking, banks have plenty of work ahead if they wish to see the maximum potential cost savings offered by digital banking, a new report from Bain and Company suggests.

Among the interesting facts in Bank Branch/Call Center Traffic Jam: Why do customers keep visiting tellers and calling the contact center? is that millennials call their bank an average of 1.4 times in a three-month period, almost triple the 0.5 frequency of older customers. Sixty percent of millennials report calling a bank contact center in the last three months, compared with 42 percent of older customers.

Older customers are a relatively untapped mobile banking opportunity. Close to half like the mobile banking experience, a few ticks higher than millennials. That suggests banks would benefit from providing more educational opportunities for people of all ages. Failing to do so puts $70-$80 million at risk for a typical U.S. bank with 1,000 branches.

Gerard du Toit
Gerard du Toit

“It’s well known by now that digital self-service is much more cost-effective for banks, about one-tenth the cost of a teller visit or live phone call,” Bain’s head of banking practice and the report’s lead author Gerard du Toit said.

“Even with that knowledge, and despite the increasing power and presence of mobile, U.S. banks have a long way to go to realize the promise of digital self-service.”

The report, which surveyed 5,300 American banking customers, revealed that millennials are still mastering common mobile transactions including bill paying check deposits, money transfers and issue resolution and often need help. Forty-two percent of younger users tried another method before visiting a bank teller.

bainBaby boomers tend to be more experienced bankers but need additional supports to become adept at self-banking.

Half of older customers use tellers through habit, and seventy-five percent of the time they are doing so for simple actions which can quickly be completed on their own.

Yet only one out of six have received mobile app training, compared to 26 percent of younger customers.

“Banks are missing a major opportunity to teach young consumers to bank and older consumers to self-bank,” Mr. du Toit continued. “Boomers in particular are ripe for mobile conversion. They just lack support and help from banks to make the leap.

“Perhaps banks assume seniors are not interested or have decided that providing guidance is too much trouble, but they need to overcome their ‘unconscious ageism’ if they want to survive the mobile disruption.”

A proper and thorough customer digital migration is financially well worth the effort. Close to three out of four reported branch transactions and more than half of phone interactions are deposits, withdrawals, account monitoring and other routine matters easily and more cheaply addressed by self-banking.

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