It’s easy to understand why banks and other financial service providers should be targeting Millennials. Unlike Generation X and Baby Boomers, these young adults are not yet set in their ways and are yet to apply for many major financial products, such as mortgages and credit cards.
A young person that remains loyal to a single financial institution can be very profitable in the long run. With institutions heavily targeting this demographic our research has revealed that ‘Millennial’ is a meaningless term. The Millennial segment needs to be properly analysed and understood if financial institutions are to win these individuals as customers.
Bundling these people together into a single demographic is to ride roughshod over numerous stark differences as well as subtle nuances within the category that hold the key to turning these individuals from consumers into customers. Let’s take a deeper look at the findings, revealed this week in our report ‘Misunderstood Millennials: Have financial institutions got it wrong?’.
Younger Millennials don’t care about financial services
Millennials are unfairly characterised as a self-absorbed, uncaring cohort - glued to their mobiles and obsessed with selfies. It is true, however, that younger Millennials, largely not financially independent, simply don’t yet care about financial services.
Most in this group are concerned about paying for education more so than anything else - 48 per cent of those aged 18-22 compared to only 19 per cent of 29-34-year-olds were. When it comes to buying a house, on the other hand, the numbers are switched - 43 per cent of older Millennials are concerned about saving to buy a house against only 30 per cent of younger people.
18-22-year-olds are more concerned with paying off student debt and affording a place to live than planning their future. We’ve all heard complaints about young people today who care more about the short term than their long term financial future. These complaints don’t address those people that grow up, achieve better salaries, and gain financial responsibility in their twenties. Older Millennials are, for financial service providers, a very different demographic to younger Millennials – and likely to be more responsive to the right marketing.
Mobile is a more important channel to older millennials
The cliché of Millennials and mobiles has some truth to it, but it is also more complex and counterintuitive than might be supposed – at least when it comes to personal finance and payments. Older Millennials are far more likely to use their phones to apply for services or purchase goods than their younger counterparts. One in five older Millennials make at least one purchase on their mobile per day, compared to just over one in ten of younger Millennials.
So, while it may be true that the youth of today are constantly using their mobiles for Snapchat, Instagram, and Tinder they aren’t using it as a regular tool for personal finances until closer to age 30. This will be partly due to an increased disposable income, but also with mobile increasing in familiarity as a financial channel as well as a communication and flirting device.
Security matters much more than convenience
Millennials have grown up as digital natives, and are used to both the real concerns and moral panics about security and safety online. As such it’s no surprise that online security is a big concern for this generation. What’s perhaps more surprising is that convenience is also a barrier to using mobile banking services, and their uptake.
The emphasis on these barriers also changes as this generation gets older. 87 per cent of younger Millennials cite convenience factors as a barrier to usage, and 73 per cent worry about security and fraud. For older Millennials, 89 per cent say that worries about ID fraud or data security prevent them from transacting via their mobiles, and 73 per cent say that convenience of using mobile banking services is a problem for them.
Millennials are often seen as uncaring about personal security. It turns out repeated warnings have sunk in and security matters to them, and only matters more as they move into later life and start financial planning.
The camera is more important for older Millennials
This is the part of the research that most surprised us.
Fifty-five per cent of younger Millennials see the camera as the most important function of their device, compared to 73 per cent of older Millennials. And if their mobiles could only do one thing 23 per cent of older Millennials would prefer to communicate using the camera compared to 17 per cent of younger Millennials.
This runs counter to perceived wisdom that the camera – and particularly a front-facing camera – is only a young person’s obsession. Older Millennials are much more attuned to using smartphone cameras for authentication and on-boarding purposes than their younger counterparts.
Older Millennials’ comfort with and reliance on the camera function means they see photos as the best way to overcome both security fears and a poor user experience. Using smartphone camera for onboarding means being able to attract and retain these customers more readily.
Focusing on a more specific demographic than simply ‘Millennials’ could be a far more effective approach for financial service providers looking to gain lifetime customers.
Joe Bloemendaal, Vice President, Sales for EU & APAC at Mitek Systems
Image source: Shutterstock/View Apart