Gen Y: Leading the Technology Revolution

Gen Y consumers are quick adopters of new technologies, so it came as no surprise that Intuit Financial Services’ Fourth Annual Financial Management Survey found nearly half (48 percent) of Gen Y consumers currently use their mobile device to conduct banking activities, compared to only 15 percent of Gen X, Baby Boomers and Seniors.

While disparate in actual usage, all consumers share the same viewpoint toward the main barrier to adoption – 41 percent do not own a Smartphone. The survey also found:

  • Nearly one-third (30 percent) of Gen Y would switch financial institutions if theirs stopped offering mobile banking. Only 15 percent of Gen X, Baby Boomers and Seniors would switch.
  • Gen Y uses mobile banking the same way they use online banking – viewing account balances and transferring funds is ranked as most important (70 percent utilization), followed by bill pay.
  • Gen Y is three times as likely to use remote deposit capture for checks compared to Gen X, Baby Boomers and Seniors (12 percent versus 4 percent )They are also three times as likely to use a tablet to access and conduct banking (18 percent versus 6 percent).

Furthermore, Gen Y is more likely to voice their opinion and dissatisfaction with their financial institution – in fact, 42 percent have already or plan to switch where they bank due to increased fees.  As referenced in our recent post, How to Attract Gen Y Customers and Members, it is now more important than ever for financial institutions to provide solutions to satisfy all demographics.

How is your FI adopting to the ever changing needs of Gen Y? Do you have specific marketing campaigns targeting the Gen Y audience? Let us know by tweeting @Bankingdotcom or leaving a comment in the section below.

 

How to Attract Gen Y Customers and Members

Many financial institutions are vying for the coveted attention of that elusive generation, Gen Y.  With pressure on the banking giants from younger generations to reduce hidden fees and increase transparency through movements like Occupy Wall Street and Bank Transfer Day, credit unions and smaller community banks are reaping the rewards.

However, some institutions are still unsure how to market their offerings to the younger, tech-savvy generations. Young and Free Indiana recently released a video that addresses concerns of some Gen Y-ers that credit unions may be too local. As Currency Marketing’s president and Creative Director notes in a blog post, “technology, shared branching and ATM networks go a long way to solving this problem, but the biggest hurdle is perception and understanding.”

See how Young and Free Indiana navigates attracting younger members in the video below.

How are you marketing your offerings to a younger audience? Are you helping to educate your community on the national reach of your financial institution? Let us know by tweeting @Bankingdotcom or responding in the comments section below.

What We’re Reading: Thanksgiving Edition

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

  • Consumer Groups Urge CFPB to Impose Greater Protections for Prepaid Cards

American Banker

Consumer advocates are calling on the Consumer Financial Protection Bureau to provide greater protections for prepaid debit card accounts. A letter released Friday signed by seven consumer advocacy groups asked the bureau to clarify that the definition of “account” under Regulation E includes the pooled accounts into which funds accessed by prepaid cards are placed. The groups, including Consumers Union, Center for Public Policy Priorities, Center for Responsible Lending, Coalition of Religious Communities, National Consumer Law Center, SC Appleseed Legal Justice Center and U.S. PIRG, said the clarification is essential to ensure prepaid card users have full consumer protections under the Electronic Fund Transfer Act.

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  • Google Folding Checkout Service to Fuel Mobile Wallet

American Banker

Like a pop star who sells more records posthumously, the Google Checkout payment service may prove most beneficial to Google after it is phased out. Google’s mobile wallet is about to absorb the user base of Checkout, the search giant’s underwhelming answer to PayPal. Both the online and mobile payment services will be called Google Wallet. By folding Checkout — which is used by 9% of consumers, according to Javelin Strategy and Research — into Google Wallet, Google could catapult the latter well ahead of many competitors in mobile payments.

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  • Mobile Love: The Smart Phone Becomes the Apple of Members’ Eyes

Credit Union Journal

People love their smart phones — almost literally — which is helping to make mobile banking a big hit at Apple Federal and Eastman credit unions. Eastman got marketing help from Intuit Financial Services (IFS), the financial management solutions company that provides Eastman and Apple Federal with text, mobile web and application banking. The “Tap, Snap, Deposit” campaign from IFS demonstrated “how easy mobile deposit is,” Lounds said. Credit unions need to make sure to provide members with an appropriate mobile banking solution, suggested John Flora, group product manager at IFS.

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  • Insights From Four Banks In Using Social Media

Credit Union Journal

There is one universal truth when it comes to social media, and conveniently, it can be expressed in fewer than 140 characters: Everyone thinks everyone else has it figured out. Credit unions tend to believe other credit unions do a better job leveraging social media than they do, and all fear that banks have deeper resources and dedicated personnel and are leaving them in the techno-dust. Banks fear every other bank (just as a matter of principal and habit, more than anything else), and believe it’s credit unions that are the more effective social media strategists, given a closer relationship to their members.

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  • Mobile Banking: Just Another Channel Or Fundamental Strategic Shift?

Forrester Blog

In the past week Benjamin Ensor had the privilege of talking to (or listening to) executives responsible for mobile banking at some of Europe’s biggest banks, including Bankinter, Barclays Bank, La Caixa, Lloyds TSB, Nordea and RBS, at Forrester’s Marketing & Strategy Forum and at a conference on Next Generation Mobile Banking hosted by The Banker. I have also spoken privately to many other executives over the past few months, including at Forrester’s eBusiness Council meeting this week. Simplistically, their view of mobile banking falls into two camps: Mobile is just another channel. These executives see mobile banking as a way of letting customers do old things, like checking their account balance, in new ways. Mobile will revolutionize retail banking.

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  • Convergence of Carrier and Payment Company for the Un- and Underbanked

Javelin Strategy & Research Blog

Last year, in Javelin’s underbanked report, we wrote that the carrier’s mobile transfer infrastructure will eventually converge with the existing mobile banking and payments infrastructure. Visa’s announcement today with MTN, building on their acquisition of Fundamo, is a sign of that convergence.  Visa has introduced a prepaid account that will be offered through the MTN Group to its customers in Nigeria and Uganda. MTN services are currently available in 21 countries, centered in Africa and the Middle East.

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  • Visa to Offer Mobile Payments in Developing Nations

New York Times Blog

Visa has been hard at work on a mobile digital wallet that it hopes to roll out early next year. But that’s not the only mobile market the credit card company has its eye on. On Wednesday, the company announced plans for a product aimed at letting cellphone users in less developed nations buy goods and pay bills using their phones. “It won’t require a physical card attached to the account,” said John Partridge, president of Visa. “It’s a virtual prepaid account designed specifically for the mobile market in the developing world.”

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What We’re Reading: Online Banking, Bank Branches and Techonomy

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

  • Cardholders Strongly Prefer Online Over Mobile Account Access: Study

American Banker

More consumers are accessing their credit card accounts online, but only a small percentage are using mobile applications to do so, new research suggests. For its research, Auriemma Consulting Group polled 509 U.S. adult credit card users online in September. “We found that for online servicing, a good percentage of consumers are comfortable with online account access but only for things like responding to a card application or going online to check a balance or make a payment,” says Bob Taglin, Auriemma director. Nearly half of the survey respondents said they would apply for a credit card online, while 26% said they would mail in an application, 13% would call a toll-free number and 12% would apply at a bank branch.

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  • Winning the Battle for Mobile at the Retail Point of Sale

Celent Banking Blog

Over recent months, there has been a considerable increase in the buzz around mobile and electronic wallets in the developed markets. New wallets have been launched (e.g., Google Wallet, Amex Serve), with many more companies announcing intent to compete in this space (e.g., Visa, PayPal, Isis, and others). A number of industry leaders proclaimed (again) the end of physical wallets. Are all these new wallets fundamentally the same? If not, how do they differ? What challenges do they face?

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  • Leadership Thoughts From Colin Powell

Customer Experience Matters Blog

A couple of weeks ago, Bruce Temkin attended The Premier Business Leadership Series in Orlando which was hosted by SAS. It was a pretty interesting agenda. The first speaker was General Colin Powell, USA (Ret.). Powell shared his take on leadership: “Give followers missions and goals and make sure their individual missions are consistent with the overall mission.” He highlighted a number of attributes of good leaders: Passion, Selflessness, Ethics, Character, Moral courage, Take care of troops, give them what they need to succeed.

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  • Techonomy: Forget The Internet; Welcome To The Hypernet

Forbes

Despite what you might think, the Web is not a synonym for the Internet. Elevation Partners partner Roger McNamee made that observation Sunday afternoon: that people use the terms Web and Internet interchangeably, but that in fact they do not describe the same things. Increasingly, he notes, people are interacting online via apps on mobile devices, and not browsers on PCs. The Internet, he says, has gone far beyond what we typical thing of as the Web.

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  • Adobe Flash Hits the Mobile Dust

Javelin Strategy & Research Blog

Steve Jobs is finally having the last laugh, as Adobe follows his directive and decides to stop development on Flash for mobile browsers as reported here by ZDNet. Starting with a layoff of 750 employees, the company will instead develop around HTML5 open standards. Jobs had claimed that Adobe was a battery hog that caused more than its share of user system crashes. In his open letter Thoughts on Flash in April 2010, Job decried the proprietary nature of Adobe’s products (pot calling kettle black notwithstanding).

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  • Will bank branches wither away? ; More customers chose online banking, ATMs

USA Today

In the past year, the number of bank customers who prefer to bank online has jumped sharply, according to a survey conducted in August by the American Bankers Association. Sixty-two percent of bank customers said they prefer banking online to all other methods, up from 36% in 2010. Only 20% of customers said they preferred using a branch, down from 25% last year. The trend isn’t limited to younger consumers. Fifty-seven percent of bank customers age 55 and older said they prefer banking online to all other methods, up from 20% last year.

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  • Need to Bank? Try Phoning It In

Wall Street Journal

A growing number of entrepreneurs are tapping into smartphone apps from lenders that let them do a range of jobs, from checking their balances and paying bills to depositing checks. According to a recent survey of nearly 300 small companies by Aite Group LLC, 33% of respondents check balances, 26% transfer funds and 13% take and send pictures of checks for remote deposit. Those figures have shown tremendous growth since a survey published last year, rising from just 13%, 6% and 2%, respectively. Other mobile tasks — such as approving wires and credit-card transactions — also saw huge increases in this year’s report. Christine Barry, research director at Aite, predicts strong growth to come as banks continue to roll out offerings and enhance their capabilities, as well as tap into the rising interest in tablet computers.

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Hefty ATM Fees Add to Consumers’ Dissatisfaction

Bank Transfer Day may have passed, but consumers are still feeling the sting from a variety of bank fees. Most consumers are accustomed to paying ATM fees when withdrawing money at a bank other than their own, but in recent years withdrawal fees have gone up leaving consumers with hefty ATM fees.

Ally Bank recently conducted a survey to see if consumers are aware of how much they pay in ATM fees yearly, and only nine percent of respondents chose the correct answer. To benchmark these numbers, Ally Bank cited research from consulting firm Oliver Wyman. The firm found that Americans spent $7.1 billion in ATM fees in 2010. Ally Bank survey respondents chose answers ranging from $100 million to $2 billion.

Survey respondents were also asked to identify what type of banking fees they feel are acceptable. Here are the top line results:

  • 84 percent of respondents do not believe it is acceptable to charge a fee for checking accounts
  • 79 percent do not believe it is fair to charge a monthly maintenance fee
  • 77 percent do not think it is appropriate to charge an ATM fee

Does your financial institution charge ATM fees, and if so, how do you communicate with customers or members about the fees? Let us know in the comments section below, or Tweet @bankingdotcom.

 

What We’re Reading: Bank Transfer Day, Tech Adaptation and Debit Card Programs

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

  • B of A Debit Fee Was ‘Transparent,’ Poorly Planned: Exec

American Banker

A senior Bank of America Corp. executive defended the bank’s failed attempt to charge customers for using their debit cards on Thursday, saying that the planned fees were meant to be transparent. “When we rolled out the announcement for debit at the end of September, it was a very intentional effort around transparency,” B of A executive Laurie Readhead said at an industry conference on Thursday. The plan backfired, badly. Readhead spoke two days after waves of public criticism forced her bank to withdraw its plans to charge customers $5 per month to use their debit cards. She said on Thursday that Bank of America ultimately caved to peer pressure, after other top banks also cancelled efforts to test or charge similar debit fees.

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  • Debit Still Drives Overall Profits, Big-Bank Execs Say

American Banker

Debit card programs will continue to play a vital role in most large banks’ profit strategies for the foreseeable future, despite new government-mandated price controls that have cut deeply into interchange revenues, executives at several megabanks said. A series of whiplash-like market developments this month reminded the large banks of the crucial role debit plays in courting and keeping customers. “I don’t think the value proposition [for debit] has changed for the client,” Whitney Stewart, senior vice president of SunTrust Banks Inc., said during a roundtable discussion on debit-issuer strategies at the ATM, Debit & Prepaid Forum this week. “We have clients that are fanatical debit users and will continue to be.”

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  • The Bigger Question: How Many ‘Switched’ Away?

Credit Union Journal

If you’re a credit union with a similar online design for member sign-ups-and you’re not a CEO or you don’t work for one who wishes to provide step-by-step tech support-you’ve got a problem, the core of which is an inside-out view of the site that is too often dictated by the IT department. Prospective members don’t care how many internal meetings you’ve had or how much new coding is needed to redesign the site to make it easier to join; they only know what they see and what they experience (which is your “brand”). Thinking as a consumer rather than a credit union exec, can you think of a website at which you regularly do any browsing or purchasing even though it’s confusing and requires a master’s in computer engineering? And that’s precisely how you must view your own site, from the outside in.

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  • Bank Transfer Day: Aite Analyst Says Credit Unions Haven’t ‘Earned’ New Business

Credit Union Times

If credit unions see a temporary surge in deposits after Bank Transfer Day on Saturday, they have two options to calculate the changes to their net worth ratio, the NCUA has reminded its examiners. Credit unions can calculate their net worth by using “point-in-time” assets or using a rolling average of assets. In its memorandum, the agency’s Office of Examination & Insurance noted that for credit unions that choose the averaging method, the agency should “take into consideration the potentially transient nature of some of these deposits.” “However, depending on how ‘sticky’ the deposits are, the credit union may only get temporary relief from the net worth effects of a successful Bank Transfer Day,” the memo said.

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  • More consumers leaving big banks for credit unions

Mercury News

Credit unions and community banks in the Bay Area are seeing a spike in new members, sparked in part by general anger with big banks and in part by their now-abandoned plans to charge for using debit cards. “We had been talking about it anyway and it just kind of gave us a little nudge to go ahead and do it,” said Miller, who works as a program assistant for the Hayward Unified School District. “I’m kind of hoping everybody still does it, because with all the bailouts with the banks and all the profits they are making, someone has to stick it to them.” Some 36 percent of longtime banking customers surveyed by Intuit (INTU) Financial Services in October said they already have or plan to move their accounts to another financial institution in response to earlier announcements about checking account and debit card fees.

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  • Amid Wall Street Protests, Smaller Banks Gain Favor

New York Times

Vince Siciliano – a Birkenstock-wearing, organic food-eating, public transportation-riding sympathizer of Occupy Wall Street who earns $240,000 a year – is far from a banking baron. But as the chief executive of New Resource Bank in San Francisco, Mr. Siciliano has managed to pull off what his bigger rivals have not: turn a profit and stay out of the line of fire. ”Our business has tripled this month,” said Mr. Siciliano, 61, referring to October. ”We have had nonstop, all day long, people moving their money.” New Resource, a small community bank that focuses on sustainable and ”planet-smart” small businesses and nonprofits, is one of the many community-based lenders benefiting from the criticism of Wall Street.

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  • Study: Youth Lead Tech Adaptation, But Older Adults Post Strong Numbers

Wall Street Journal

The 23 to 32-year-olds responsible for Facebook, Twitter and the whole online social revolution are getting bested by their younger siblings in social network participation, says a new [Forrester] report which looks at generational technology adaptation. Young adults, aged 18 to 22, are more likely to create blogs and upload videos than Generation Y. They also visit social networks such as Facebook more frequently, update their social network status more often and add more comments to someone’s page or profile. Somehow this generation also finds time to Tweet more than any other age group.

Read more

 

Women Call the Shots When It Comes to Banking

As women are taking a larger role in the economy, they require more tailored tools and solutions from their financial institutions. The Future of Financial Services Report indicated Gen Y women are expected to dominate higher education graduation rates and professional workforce entry, taking control of financial responsibility both as household CEOs, consumers and business decision makers fueling the She-conomy. Additionally the report states that by the year 2020, 60 percent of baby boomers will be women, the majority of whom will work beyond the traditional retirement age by starting small businesses and re-entering the workforce.

Women will hold a larger piece of the pie as is substantiated by reports from the CUNA Marketing and Business Development Council, which states that baby boomer women will control two thirds of consumer wealth over the next decade, and the book Women Want More which indicated by 2014 women could earn about $18 trillion a year and control as much as $28 trillion of spending.

With this customer segment growing in importance, financial institutions need to provide tools and solutions to not only balance a checkbook – but balance it all. Intuit Financial Services’ Fourth Annual Financial Management Survey found women have very strong opinions about the ways they like to bank.

Women prioritize online banking for convenient management of their finances:

  • One third of respondents said they would switch financial institutions for one that offers better online banking tools.
  • Women are also smart shoppers; 82 percent would use a service from their bank or credit union that provides discounts on products and services they already use.
  • Women are also high adopters of mobile banking to meet their busy lifestyle with more than one-fifth of women reporting use of their mobile device to access their bank account or use banking tools.
  • Mobile banking also serves as a good retention tool for this customer segment as 16 percent of women surveyed said they would switch financial institutions if theirs stopped offering mobile banking.

Lastly, in a time when consumers are finding their voice to demand the appropriate fees and offerings from their banks, 35 percent of women indicate they have already, or plan to switch where they bank due to increased fees.

Are you seeing women driving adoption of mobile or online banking at your financial institution? How do you see women shaping your financial management offerings? Let us know in the comments section below, or Tweet @bankingdotcom.

Banking Industry Leaders Discuss Findings of Intuit Financial Management Survey

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is a marketing services leader focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

In conjunction with the release of Intuit Financial Services’ 4th Annual Financial Management Survey, Banking.com hosted a Twitter Town Hall yesterday, bringing together financial industry leaders to discuss loyalty and channel migration as well as some of the challenges and opportunities facing the banking industry. The following is a recap of the very robust one hour dialogue. (The complete transcript can be found using #IFSsurvey on Twitter)

The Town Hall discussion began around the issue of customer loyalty and the finding that many consumers thought their financial provider was not ‘in touch’ with their needs. Given the events of the past week, where many large banks reversed decisions around the implementation of fees due to highly vocal negative sentiment amplified by social media and credit union trade group support, most participants believed that banks are not leveraging current insight and technology to make better decisions and provide value added service.

Tobin Lee (@Tobin_Lee), Intuit Financial Services spokesperson stated, “It is time for a banker mindset shift; cultivating deeper relationships, more meaningful engagement and stronger advocacy for growth”. Campbell Edlund from EMI (@EMI_mktg4sales) added, “These findings provide a very strong argument for a communications plan around the customer lifecycle”.


The already robust dialogue really took off as the discussion moved to the acceptance and utilization of banking channels (especially mobile and tablet banking). Bradley Leimer (@leimer) from Mechanics Bank in the San Francisco Bay area believed mobile strategy will be the key to future engagement due to the portability and ‘always on’ nature of the device. He also believed that the correlation between mobile banking and smartphone use (41% of respondents owned a smartphone) could indicate a lower engagement with financial technology in general for non-smartphone users.

Edlund added that while there is currently a higher penetration of smartphones than tablets, tablets can not be ignored by banks since Oracle found that tablet ownership is expected to increase significantly in the next year. She also warned that we need to be cautious not to get ahead of the acceptance curve. . . “we always underestimate inertia”. Brett King (@brettking), author of Bank 2.0 and founder of Movenbank went a step further stating that within 3 years all bank websites will need to be built for tablets first. He also believed that branches will continue to diminish in presence and utility (according to the study, 27% of respondents still visit their branch once a month in addition to ATM visits).

Mark Zmarzly (@BankMarketing) did not believe bricks and mortar would completely go away, but definitely felt the relevance of branches will change. “It’s easy to say branches will go away, but is that realistic? They have to evolve, but customers will never let them become 100% irrelevant.” King responded that with the drop in branch transactions, the economics of the branch are not working. I (@jimmarous) illustrated the model of Boeing Employees Credit Union in Seattle, where only 2 of the 40 branch network have tellers, while the installation of multiple ATMs at offices and around the city have an average of 10,000+ transactions each. 94% of the transactions at BECU are done electronically, according to Howie Wu (@howie_wu) from the credit union.

“Relevance is the key to banking for tomorrow,” stated King. “By 2015, mobile will be the #1 day-to-day channel, OLB #2 with the branch network being #5. The challenge for mobile and online will be developing great customer journeys”. King doesn’t believe these journeys exist today and believes the goal should be to have banking so pervasive that it is not tied to a branch, device or website, but is everywhere customers are.

Edlund pointed to the retail industry as a forerunner for what we will see in financial services. “Social and tablets will change the landscape in banking as they have in retailing”, Edlund stated. (During the Twitter Town Hall, there was even a discussion of the integration of TV as a channel for banking). Representatives from EMI in Boston (EMI_mktg4banks) emphasized that we will continue to see a blurring of all channels with social media providing some of the glue for enhanced communication. Gamification and location-based rewards were also seen as a key elements of engagement by Leimer and Edlund.

A conundrum was discussed with regard to the needs of small businesses where checks still prevail and the need for branches. King believed that we will see significant attention paid to mobile payments for businesses in the next couple years, while I added that tablet apps for business are also being developed to respond to the needs of the business community. NFC was also seen as a game changer with regard to the need for branches for small businesses. Bob Williams (@bob_williams) from Harland Clarke believed that, while check usage is definitely dropping, there are much greater efficiencies today than in the past with RDC and other electronic tools.

It was clear from the Intuit research that was just released, the Bank 2020 research released in April, and the discussion during the Twitter Town Hall today that there is significant disruption in the banking industry with regards to channel support and device utilization. The consumer movement to new banking channels is mirroring the movement to more sophisticated devices such as smartphones and tablets. Many consumers are NOT choosing one device or channel over another, but are using multiple devices depending on their personal needs.

Consumer desire for an integrated banking experience without friction will need to be supported by banking organizations in the future. Distribution networks (whether tangible or intangible) will need to support an expanding array of capabilities that may include integration within retail or social sites as opposed to standing alone.

As I stated to the participants of the Twitter Town Hall at the end of today’s discussion, “If banks are not prepared for the channel migration that is already underway, they may experience the impact of ‘Bank Transfer Decade’”.

Note: A summary of the findings of Intuit Financial Services’ 4th Annual Financial Management Survey and recently released related research is available in my previous Bank Marketing Strategy blog post.

If you weren’t able to join us, what are your thoughts around the impact of channel shift away from the branches and towards other media? Will we see the elimination of branches completely? Will another device or technology unseat smartphones and tablets?

Leave us a comment below, or Tweet at the author @JimMarous.

Intuit Financial Services 4th Annual Survey: Key Findings

Thanks to all our Twitter followers who participated in today’s Twitter Town Hall surrounding the Intuit Financial Services’ 4th Annual Financial Management Survey. We will be sharing a re-cap of the Twitter Town Hall later this week, so stay tuned.

If you are interested in reading a copy of the key findings from the survey, it is available for download here: Intuit Financial Services Survey 2011_Background Information. Please DM @bankingdotcom or @FinanceWorks with any questions regarding the content.

Consumers Are Increasingly Using Multiple Devices to Support Banking Needs

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is a marketing services leader focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

Traditional bricks and mortar facilities are being visited less as the use and importance of online and mobile devices continues to increase according to Intuit Financial Services’ 4th Annual Financial Management Survey released yesterday. According to the survey, while a large percentage of consumers still manage their finances offline (45%), the percentage of consumers using online services from their financial institution has continued to increase annually; increasing 11% since 2009 to 38% in 2011.

The main reason consumers said that they don’t visit their bank branch as often as they used to is because they are visiting their FI’s website and use their online banking tools (76%). These online banking tools are so important that one-third (33%) said they would switch their relationship to another institution if there were better online tools offered elsewhere.

The importance of online tools was reinforced by Brett King, author of the bestseller Bank 2.0 and founder of direct mobile banking start-up Movenbank at this year’s BAI Retail Delivery Conference in Chicago. “Banking is quickly changing from a place you go to something you do everyday,” stated King. He provided a chart from the American Bankers Association and Nielsen Research that illustrated the channel migration occurring today and projected in the future.

 

Source: ABA, Nielsen Research

It appears that the growth of mobile banking is only limited by the growth of ownership of a smartphone according to the Intuit study. Forty-one percent of all respondents indicated ownership of a smartphone, 23% said they used a mobile banking solution, and an additional 17% intend to try mobile banking in 2012. The primary reason consumers indicated that they do not use mobile banking was because they do not own a smartphone (25%) followed by the fact that they prefer to bank online (22%).

These findings are similar to the findings last week from comScore that drew a correlation between mobile banking and smartphone adoption. “The investments in mobile made by financial service institutions, along with the continued growth in smartphone adoption, have had a positive effect on the use of mobile financial services,” states Sarah Lenart comScore vice president for marketing solutions.

As expected, the adoption rate of mobile banking is demographically skewed. Young adults (aged 18-32) are three times more likely to carry their bank in their pocket, compared to Gen X, baby boomers or seniors. And while 65% of mobile banking users access their accounts through the internet/Web, 28% use a mobile application. “Regardless of age, each customer expects to connect to their financial institution in their own way,” said CeCe Morken, president and general manager of Intuit Financial Services.

In another Intuit study of more than 50,000 mobile banking customers, it was found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate.

“While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future,” said Intuit spokesperson Tobin Lee in a conversation yesterday. “Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer’s needs. If they don’t, someone else will . . . probably displacing a bank’s relationship.”

The desire for ‘anywhere app access’ is also supported by a just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications – Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This is important to prepare for since the same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months. These findings were also reinforced in last April’s, Intuit 2020 Report: The Future of Financial Services.

As customers continue to use multiple channels to connect with their bank, it will be increasingly important to have a 360-degree view of customer device touch points and to leverage the advantages of each device to provide an optimum customer experience. The current anxiety over online and mobile security needs to be addressed at the same time as innovations such as near field communication (NFC) and location based services get integrated into online and mobile solutions. Bankers will need to get ahead of the payments innovation curve and prepare for major distribution channel disruption. In short, banks will need to do a paradigm shift by becoming nimble at a time of increased regulation and consumer scrutiny.

Are today’s banks prepared for the massive changes ahead? Or will new online organizations such as Ally, BankSimple, Movenbank and others steal the hearts and wallets of Gen Y and device savvy consumers?

Leave us a comment below, or Tweet at the author @JimMarous.