The Bankwatch

Tracking the consumer evolution of financial services

Millennials see banks as irrelevant | Scratch

I think its time to revisit the relevance of demographic shift in terms of technology adoption.  What got me thinking about this was this report from Scratch/ Viacom on the Millennial generation, and their thoughts on banks.  The report is not talking about the usual shift to electronic channels.

The report indicates millennials see banks as irrelevant. 

The Millennial Disruption index

The three-year study from Scratch, an in-house unit of Viacom that consults with brands, found that a third of millennials believed they’ll be able to live a bank-free existence in the future. In the age of Simple, Square, and Bitcoin, these millennials, defined as those born between 1981 and 2000, overwhelmingly believed that the way they access money and pay for things will be completely different in five years.

This makes perfect sense.  Traditional bankers saw electronic channels, once they accepted them, as cheaper delivery models.  A bank benefit.  Meantime a broader shift was taking place which I often spoke of here, as online then mobile became an experience choice.  You will (7 years ago) be defined by your online banking and it should come first in driving technology change in the bank, was my firm belief.  Trust was shifting to brands that old people were just encountering, but millennials only knew having grown up with only them.


Suddenly these powerhouses are the basis of the stockmarkets.

There is a new factor in generational shifts.  There is no more gradual change.  We have several changes within generations brought on by internet and technology that brings big change in periods of 5 to 7 years or less.

Ever since the 50’s failure of the Jetsons and the like to see an actual future, most don’t trust predictions and remain entrenched in what they understand: which is the present.  This doubt about future predictions alongside the significantly more rapid change brings skepticism.  So its our job to stay ahead of the curve. 

At SXSW this week its all about the Internet of Things.  There is major focus on the smart house with heating, art, music all adapting to the person that is there.  (We can already see eyes glazing over.)  But banking will be involved in the internet of things.  Not banks, banking.

Where am I going with this.  Online banking adoption.  It’s a complicated topic.  On the one hand I do not know anyone who doesn’t bank online with exception of a couple of relatives in the age 80+ range who don’t have computers.  On the other hand I know many households where one person does the online banking and the other does not.  These data anomalies make national online banking adoption survey percentages hard to read and understand.  Could we have 100% online banking adoption, yet survey might show it as 50%?

We are currently at about 61% in Canada and yet I know of no-one who doesn’t bank online.  The US is at a similar percentage.  My walking around assumption is that a very high percentage of households are online.

It is hard to read my own words from 2007 without cringing, yet it reflects the then mindset.  Banking online had an 35% – 40% adoption rate, and Cathy predicted it would get to 76% and I supported that.  Others were uncharacteristically doubtful.  That was still a period of internet adoption.  Thankfully we are over that now, and virtually everyone is online is some fashion.

But, hats off to Jim for correctly reading that online banking growth is not a straight linear pattern but does in fact move in steps that reflect the underlying demographics.  Another factor behind that is that rapid change is not always so rapid with years of work in places like silicon valley or NCR in Dundee.

However we are fast reaching a new tipping point that goes beyond the most recent fad of last few years, social internet, (which I still believe to be an aberration, but later for that).  Machine to machine (M2M) internet takes social to a whole new level that means you can interact with not just people but other internet devices such as your house, your fridge or your art on the wall.  This is the internet of things that they highlight at SXSW.

This is not a shift for millennials.  This is expected by them.  So of course banks look archaic to them.  They get annoyed at a bank when the person behind the counter, no matter how friendly they are, has to type an interminable number of key strokes to look up a balance or perform a transaction.  That same experience talking to their telco who types and waits as the technology takes forever.  At a minimum if they must walk into a bank they would expect the bank to know they have arrived.  If Yelp and FaceBook know why can’t the bank? 

They look at their own experience with cloud storage, social media, web mail and expect better, faster and different.

Back to the survey.  Its obvious millennials have experience with banks in order to form the conclusion that they see no difference amongst banks.  The subtlety of bank marketing differentiation matters not.  They only care about the experience and that is driven by online experience through mobile, tablet and laptop, in that order.

Most interesting is that they do not believe banks can reinvent themselves. 

“They believe innovation will come from outside the industry.”

Relevance to Bankwatch:

This turned out to be a longer post than I expected.  The catalyst was the millennial belief in irrelevance of banks.  This is not to be ignored or ignored at your banks peril. 

Outfits such as Moven and Simple are having difficulty getting off the ground.  There are others in Europe that are in fact doing particularly well.  The common ground they share is in producing a dramatically better experience for the client.  This is the future that millennials expect.

Written by Colin Henderson

March 8, 2014 at 23:10

Posted in Uncategorized

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  1. […] Millennials see banks as irrelevant | Scratch – “This turned out to be a longer post than I expected. The catalyst was the millennial belief in irrelevance of banks. This is not to be ignored or ignored at your banks peril.” […]

  2. […] consultora Scratch acaba de publicar una encuesta que realizó a personas nacidas entre 1981 y el 2001 (lo que se […]

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