Despite the stereotype that Millennials—those tech-savvy, notoriously nimble text-messagers—prefer online rather than personal interaction, when it comes to banking, they like things done the old-fashioned way.
A new study reveals that members of Millennials (aged 18 to 29) prefer traditional means of banking, rather than so-called “alternative” methods, such as online or handset banking. Sticking to the brick-and-mortar model, most Millennials choose a bank based on how easily accessible branches and ATM machines are, not on online banking services. These findings, based on a nationally-representative study of 2,800 consumers from Javelin Strategy & Research, surprised some in the industry.
“For years we’ve come to expect that younger adults always have the highest interest in new banking and payments technologies, yet new rigorous research proves this to be no longer universally true. Young adults may not see online capabilities as a differentiator simply because they are the best at navigating even a sub-par online site. Surprisingly, people born in the 1980s are more likely to choose a new financial provider based on a 1970s technology: ATMs!” James Van Dyke, President and Founder of Javelin said in a public statement.
Millennials are set to become the largest demographic by the year 2017, outnumbering both Generation X and the Baby Boomers. In a mere decade, Millennials will register at approximately 91 million, compared with 88 million Gen Xers and 77 million Boomers. As a result, Millennial spending power and economical impact will be monumental.
“This study uncovers vital and misunderstood aspects of a generation of bankers whose earning potential is set to double over the next ten years. Acquisition and cross-sell strategies must be realigned now to ensure a piece of the $3.48 trillion in expected income by 2017,” stated study author and Javelin research analyst Jean Garascia in a public statement.
Other key findings of the study reveal that, unlike most other consumers, Millennials are relatively unmotivated by potential security threats, although younger consumers are most likely to fall victim to fraud than any other age group (5.27% vs. 3.74% overall, according to Javelin data). They are also the cohort least likely to practice using basic safety precautions to ensure their information does not become compromised.
Over the past year, the vast majority (80 percent) of older Millennials used an ATM for deposit or withdrawal, more than half (59 percent) used an automated telephone system to carry out a bank transaction, and almost all (90 percent) visited a branch. These findings indicated what researchers call a need for “multi-channel availability.