Gen Y to shape the future of online banking

As more Generation Y customers enter the marketplace online banking gains in popularity. Recent research, in the U.S. and Europe, demonstrates the need for continued investment in technology and strategies that support the kinds of banking experience Generation Y demands.

by Helen Leggatt

Last year's survey by the American Bankers Association found online banking to be the preferred banking method for 25% of bank customers under the age of 55. The same survey this year found that number has risen to over a third (36%).

While consumers over 55 still prefer to visit their local branch (33%), online banking for this age group was still the second favorite banking method (20%).

But it's the tech-savvy Generation Y demographic that will shape banking in the years to come. They will demand on-the-go, personalized, communications and seek to use a variety of channels, including mobile and social.

"Online banking is the future of banking as more Generation Y-ers enter the marketplace," said Nessa Feddis, ABA vice president, senior counsel and retail banking expert. "This means the industry will need to continue investing in technology that supports online banking because consumers see it as quick, convenient, accurate and safe."

Another study, by Oracle Financial Services and the European Financial Marketing Association, delved into the Generation Y preparedness of some of Europe's largest banks. It found the industry to be forward-looking with regards to recognizing the needs of Generation Y. While 31% already have a dedicated strategy in place, a further 38% have plans in the pipeline.

According to the study (.pdf), "Banks who have adopted a dedicated Gen-Y strategy are engaging them using social media, customized products and services and modernized banking applications. These banks are proactively embarking on strategies which will provide them an unbeatable early-mover advantage in realizing the lifetime value of this customer segment."