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Put the X factor back into generation Y banking

In my previous blog, I discussed the current hype surrounding mobile banking and how a fundamental step change in consumer behaviour means that mobile financial services is undoubtedly  more than just a fad. At the same time, there are also those consumers who have grown up with all things digital and don’t know any other way to behave. I’m referring to the growing breed of generation Y consumers and ‘digital natives’ such as those two year olds you see on the train navigating an iPad better than they can put pen to paper!

These digital natives are the next generation of banking customers and so financial service providers cannot underestimate just how relevant the mobile channel is, or will become, to them. According to Ofcom, nearly half of all teens now own a smartphone compared to over a quarter of adults. Of these teens, 60% are ‘highly addicted’ to their smartphones. Overall, smartphone penetration has now reached 40% of the population.

Furthermore, a recent study by Efma has found that mobile banking and social media are both key to financial institutions engaging effectively with generation Y banking customers. Taking social media as an example, Ofcom has reported that half of 12-15 year olds with a smartphone visit social networking sites weekly compared with 33% in 2010. Just as instantaneous social interactions are more in-demand from consumers, especially digital natives, the same is expected from all other walks of life, including financial services. 1 in 4 of generation Y consumers (those aged between 18 and 24) said their opinion of their bank would improve if it offered mobile financial services, according to YouGov research from earlier this year. .

As the next generation of banking customers come through the ranks and look to choose their financial services providers, the business case to offer services via the mobile channel cannot be disputed. The provision of mobile banking services will be the differentiator between those banks that win over generation Y consumers and those that are sidelined by the digital natives for more innovative providers.

James Richards (Director, Mobile - IE)


Comments: (2)

A Finextra member
A Finextra member 23 November, 2011, 03:27Be the first to give this comment the thumbs up 0 likes

Top insights James into Gen Y. Absolutely on the money.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 24 November, 2011, 18:22Be the first to give this comment the thumbs up 0 likes

During the course of community testing a QR code product, we found that almost one in three people below the age of 30 has a smartphone, whereas the corresponding figure among 30+ is less than 10%. While these numbers are different in the absolute, they're directionally similar to the ones quotes in your article. 

At the same time, we hardly found any mobile banking apps on these smartphones despite all leading banks offering them for over a year. To me, this suggests that GenY and digital natives don't feel compelled to behave equally digitally with everyone. Maybe it's because banks enjoy some sort of "father figure" stature with the common man, at least in India, but if a bank says "you must visit the branch to submit your identity and proof documents", everyone including GenY tends to obey those instructions without kicking up a major fuss.

Which is why I'm not so sure that banks can get so easily sidelined by innovative providers - assuming regulators permit them to enter the financial services market - just on the basis of mobile banking services.

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