Millennials Find Banks Irrelevant

A three-year study from Scratch, an in-house unit of Viacom, found that a third of millennials believed they won't need a bank in the future. These millennials, defined as those between ages 18 to 33, also ranked the top four banks in the "ten least loved brands" and would rather go to the dentist than to their bank.

Is this surprising? This segment of the population has grown up in an era that saw trust in banking erode due to the financial crisis and a near stagnant economy. This is also a period when new technology has enabled firms like Simple, Moven, Square and PayPal to be more relevant with a generation that would rather handle finances on their phone than in a branch.

Here are some of the findings from the Millennial Disruption Index:

• 53% don't think their bank offers anything different than other banks
• 1 in 3 say they are switching banks in the next 90 days
• 71% would rather go to the dentist than listen to what their banks are saying
• 33% believe they won't need a bank at all in the future
• Nearly half are looking for tech start-ups to overhaul banking
• 73% would be more excited about a new offering from Google, Amazon, Apple, Paypal or Square than from their own bank

These beliefs are coming from the largest generation in the U.S. (84 millions) with a new found purchasing power of over $1.3 trillion that represent the vast majority of new home buyers. They are far more tech savvy than previous generations, use their mobile devices continuously, look for deals in every buying category and are connected through multiple social networks.

According to the TD Bank Financial Education Survey, many millennials look to their parents and friends for advice on financial services and many still rely on their banks. Ninety percent use online or mobile tools for everyday banking activities, with 57 percent saying they used mobile banking more frequently than last year.

It is clear, however, that banks are having a difficult time keeping up with the needs of this segment. While banks spent time improving the online banking experience, millennials had already moved to mobile devices for communication, transacting, entertainment and information. The industry's response, for the most part, has been to provide mobile access to online banking platforms. Only banks built for the mobile device like Simple, Moven, GoBank, Fidor, mBank, Soon and Hello seem to see the future.

As Online Banking Acceptance Grows Is Mobile Banking Reaching the Tipping Point With Millenials?

A new survey by the American Bankers Association (ABA) found that for the fourth year in a row, consumers named the Internet as their favorite way of conducting banking business, with 39 percent of respondents saying it is the method they 'use most often to manage (their) bank account(s).'  The second most popular way to bank – visiting a branch – continued its downward trend to 18 percent from 30 percent in 2008.

In addition, this year’s survey showed a sharp increase in the popularity of mobile banking, driven mainly by customers in the 18 to 34-year-old age group. Use of the mobile channel by millennials escalated from 4 percent in 2010 to 15 percent this year. Conversely, the use of branches by this age group during the four-year period dropped from 20 percent to 11 percent, with ATM use also dropping from 32 percent to 14 percent. Overall, mobile banking is now preferred by six percent of customers, a 100 percent increase from 2010.

The distribution of primary channel use this year was as follows:

• Internet Banking (laptop or PC) – 39% (36% in 2010)
• Branches – 18% (25% in 2010)
• ATMs – 12% (15% in 2010)
• Mail – 8% (8% in 2010)
• Telephone - 9% (6% in 2010)
• Mobile (cell phone, Blackberry, PDA, I-Pad, etc.) – 6% (3% in 2010)

Mobile Banking Popular Among Smart Phone Users

According to the "Mobile Money Study" published last month by Data Innovation Network almost 70% of US smartphone users had used at least one mobile banking and/or payment service on their phone in the previous three months.

As has been found in previous studies and reinforced by Doug Brown from Bank of America at last year's BAI Retail Delivery Conference in Boston, the Mobile Money Study found that checking account balances was the most popular banking application (82%) followed by looking for posted transactions (62%). Account alert features were also popular (46%), with roughly 40% of those surveyed transferring money between accounts.