Digital financial services are within everyone´s reach, but each generation has its own peculiarities when using them. Mobile banking apps have won over the centennials, while social networks influence Generation Y when it comes to changing banks, and Generation X confides in online banking. The baby boomers, meanwhile, prefer to take a stroll to the branch office.
The Instagram and Snapchat Generation —that´s another way to characterize Generation Z— comprised of people who currently haven´t reached adulthood. With an attention span of eight seconds and a profound interest in visuals, the centennials have abandoned social networks such as Facebook or Twitter and are moving away from certain forms of communication. Instead of emails, they prefer to communicate “instantly, through messages and emoticons and they don´t remember that the world was once disconnected,” says the U.S. bank Merrill Lynch.
The mobile is the bank
In spite of their tender age, they don´t pass unnoticed. It´s estimated that the buying power of the centennials will reach $200 billion by 2018, which makes them an important target of banks. What´s more, minors are concerned about their personal finances. According to a survey by the U.S. broker Ameritrade, 46% of the “Z”’s are concerned about college loans, 39% about not being able to count on the Social Security System and 31% about saving for retirement.
They go through life with a smartphone in hand and for this reason, the cell phone is the means they use to communicate with banks. The State of Gen Z, a study published by The Center for Generational Kinetics, says that today, 48% of the “Z”’s have a mobile banking app and 54% have not stepped inside a bank in the last month, compared to 30% of millenials.
Almost half of the centennials today have a mobile banking app”
However, offering digital solutions to traditional banking products isn´t enough. The fact that the youngest people don´t go to the bank to carry out certain transactions doesn´t mean they don´t value face to face communication and personal advice. So says Jim Miller, director of the banking department at J.D. Power. “The centennials like the websites and the apps of the large banks, but they also value personal contact. Medium-sized and regional banks risk losing “Z” customers if they aren´t able to attend to their needs, which range from digital to face-to-face communication. They should enjoy a seamless experience in all channels.”
The force of word-of-mouth
The millennials (Generation Y) are a bit older and are also enthusiasts of digital banking, but it´s a mistake to lump them together with the centennials. Although people between 18 and 35 years of age grew up with the philosophy of pursuing their dreams now and worrying about the economy later, the “Z”’s, as American Banker notes in one of its articles, have grown up with economic agitation. In fact, those born at the start of the mortgage crisis are now about to become adolescents.
One of the principal characteristics of the millennials is that they cannot stand it when banks are incapable of adequately resolving their problems, Nor can they abide long lines or technological errors, says a study entitled The Unbanked Generation, by FirstData. Also, when something doesn´t meet their expectations, the millennials are quick to tell others about tithe FirstData study, published in January 2016, says that 26% of the millennials write criticisms on independent websites when they have a very bad experience with their bank, while 54% tell their acquaintances and 25% air their complaints on social media.
Although the members of Generation X, who are now between 35 and 55 years of age, pass more time on their mobile phones, the millennials are addicted to apps and use social networks to interact with one another. That’s why, when they want to change banks, word of mouth is an important indicator for the “Y”s, compared to other generations. Some 25% pay attention to positive remarks by friends and acquaintances, while 21% make decisions based on the digital experience the bank has offered them.
And what are their favorite financial channels? Research undertaken by the financial consulting firm BAI shows that the millennials use the cell phone for 26% of their banking transactions, while their second preferred option is online banking (23%), followed by ATMs (22%) and bank branches (17%).
The parents of the millennials (Generation X) adapted to the technological change from analog to digital. They know financial products well and at the center of their concerns is the mortgage. In fact, having a high level of debt is what motivates 46% of Generation X to be more careful about spending, as reported by Mexico´s National Commission for the Protection and Defense of the Users of Financial Services.
While the millennials have less debt and family responsibilities (only 35.4% have relatives who are financially dependent on them according to the report entitled ‘Spaniards’ attitudes towards savings, retirement and risk’, the “X”’s tend to be heads of families, with debts, and are the generation that feels the least protected. For this reason, the children of the baby boomers have usually taken out a life insurance policy as a way of providing economic resources for their families in the event of a serious incident. Specifically, based upon the previously mentioned report published by the Aviva Institute of Savings and Pensions, “57.5% of the “X’s” believe that their family is economically unprotected against adverse circumstances that could affect one of the heads of the family.”
For Generation X, online banking is the preferred channel (27%), slightly ahead of the mobile phone (26%). A survey carried out by BAI indicates that ATM’s account for 20% of their visits to the bank branch.
True to the branch office
People born during the “baby boom” that followed World War II, who are today between 55 and 70 years old, don´t reject digitization; however, they have their customs. While the BAI survey confirms that 60% of the boomers have a smartphone, the majority “are reticent to use mobile banking for fear of making a mistake during a transaction.” And 26.5% of people older than 55 continue to prefer going to bank branches to make transactions.
26.5% of the boomers prefer to continue going to bank branches to make their transactions.”
They also feel more comfortable using teller windows, where they can see the face of the employees that attend them and establish direct visual contact. Baby boomers go to teller windows for 10.2% of their bank transactions, compared to 9.2% for Generation X and 8.6% for the millennials.
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