Banks need to step up their use of new technology like instant messaging and SMS if they are to capture the 'millennial' generation of 18 to 30 year olds, according to research commissioned by Microsoft.
A poll of around 600 millennials in the US, 200 in Canada, 400 in the UK and 400 in Australia from Javelin Strategy and Research for Microsoft found most prefer to conduct basic banking transactions online.
Nearly three quarters of those surveyed predominantly use the Internet to view account balances, whilst 70% pay bills online. However, despite their tech savvy, most revert to in-person contact to conduct more complex transactions such as opening a new account (57%) and applying for a loan (52%).
When choosing a new financial services provider, 37% of millennials rank online service capabilities highest, behind competitive rates and fees (53%) but ahead of access to ATMs (35%), customer service (32%), superior security against identity fraud (30%) and access to branches (26%).
The Web is also an important tool for millennials researching banks when they are looking to open an account. Over half - 58% - visit the provider's Web site whilst 26% read customer reviews online. However the most popular method of checking providers is still asking friends, family members or co-workers - chosen by 65%.
The survey also suggests instant messaging will become an increasingly important tool for these bank customers. Of those questioned who mainly bank online, only 15% say they prefer talking to customer service representatives via IM but 75% of respondents use the technology in everyday life, suggesting its popularity for banking will continue to grow.
The survey reveals difference between countries, with Canadians preferring IM service reps at more than twice the rate of the overall sample, whereas Australian millennials prefer account alerts via text.
"Millennials have embraced digital technology early in their lives, and thus their technological expectations in interacting with service providers are high," says James Van Dyke, president, Javelin Strategy & Research. "Banks need to be very conscious of this when attracting or retaining millennials as customers, as they require more tech-forward, easy-to-use and interactive interfaces across channels."
Rich Feldmann, US banking industry solutions director, Microsoft, adds: "This survey shows banks need to consider a wide variety of channels to reach these tech-savvy millennial consumers, and ultimately drive seamless integration across the Web, branches and phone."