Online Banking Engagement: Data from Digital Insight

Digital Insight has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several categories, such as mobile and online banking. Earlier this year, we examined mobile banking behavior and now we are taking a look at how online banking is an integral engagement tool for financial institutions. Below are key findings from Digital Insight’s online banking study, and you can view a more in-depth analysis here.

As we continue this series of data, we will be publishing blog posts on additional topics on Banking.com. *For information on the on the methodology used for the study you can download the PDF

The Impact of Baby Boomers & Seniors on Online Banking

There is a presumption which exists in the world of online banking that baby boomers and seniors do not use their computer and/or mobile device to interact with their financial institution. We’ve all heard the reasons why – security, lack of internet access, or they prefer to bank the way they’ve always banked. However, as a Gen Xer and someone who works in the banking industry, I’ve seen that boomers and seniors do use online banking, and they could fuel the next growth wave within digital banking.

Over the last three years, I have performed portfolio analytics across dozens of Intuit Financial Services’ clients encompassing 2.8 million checking account holders.* These deep dive studies have provided me with insights into the banking behavior of consumers. While baby boomers and seniors have not quite reached the level of adoption rates of online banking as Gen Y/X, it’s hard to ignore their adoption growth over the last several years. Additionally, once baby boomers and seniors become active users of online banking, their engagement within the channel rivals Gen Y/X. Baby boomers and seniors, ages 49-68 and over 68 respectively, account for 46 percent of all open checking account holders.

* See chart below for breakdown by generation and comparison of bank vs credit union.

Across the 2.8 million checking account holder segment I have analyzed, 55 percent of Gen Y (0-28 in age) consumers actively use online banking. This rate is 57 percent for Gen X (29-48); 46% for baby boomers; 27% for Seniors. Those stats probably don’t surprise anyone, but what if I were to say that both baby boomers and seniors demonstrate a higher active use rate for bill payment than GenX and GenY? Granted, Gen Y includes a portion of consumers who (enjoy it while you can) haven’t reached the point in their financial lifecycle to have payment obligations, but it’s probably safe to say that most Gen Xers have monthly obligations. 35 percent of online banking boomers utilize bill payment, compared to 33 percent for seniors and 32 percent for Gen X. Granted, the variance here is very tight across these 3 generations, but the point I’m making here is that boomers and seniors utilize the services within the online channel once they feel comfortable with using online banking. And it’s not just bill payment – Personal Financial Management tools, internal funds transfer, eStatements – boomers and seniors have shown an appetite for these services, and as we know, the more engaged a consumer is within a channel, the less likely they are to leave the financial institution.

According to a study by Market Insights Professionals, “Boomers…are not far behind in embracing the Internet for their shopping needs–two out of three Boomers have researched a product or service online in the past three months, and more than seven out of 10 have made an online purchase during the same time frame. Boomers are the generations with the highest online spending levels.”[i]

What is also interesting within the data I’ve analyzed is the trend over time related to the active use curve of online banking. The traditional product curve for online banking reveals early adopters are younger demographics who embrace technology, have grown up with a computer and internet access, and value anywhere/anytime convenience. Pew Research found that “While the youngest generations are still significantly more likely to use social network sites, the fastest growth has come from internet users 74 and older: social network site usage for this oldest cohort has quadrupled since 2008, from 4% to 16%”[ii]. Technology services such as email, Skype, eBay have become increasingly popular with boomers and seniors, and as their comfort level with technology grows, so too does their adoption rates of online banking. The table below illustrates the online banking behavior of the same checking account holders over a two year period. The annual growth rate of seniors actively using online banking is outperforming all other generations, followed by Gen Y, Boomers, and Gen X. The additional growth in Gen Y is believed to have been fueled by mobile banking.

I know what you’re thinking – because seniors started at such a low adoption rate there was more room for them to grow. That is true, but their rate of growth still exceeded other generations, in part because technology is becoming more commonplace in their household and financial institutions have vastly publicized the security and convenience of online banking. “Older generations become more active as their experience with a new channel increases. Our research shows that as tenure with a digital channel increases, so, too, does a user’s willingness to conduct more complex interactions through that channel — such as selling a security through a mobile phone.”[iii]

While the saturation point of online banking for Gen Y and X might be near, boomers and seniors not only represent the majority of the US population, but their acceptance of online banking continues to grow at a rapid rate. Financial institutions and providers of online banking services must be aware of consumer demographics and perhaps go so far as to customize online banking for those demographics. Whether it’s the font size on the computer screen, products/services presented to the consumer, or changes to secure login credentials, demographics should not be ignored when considering growth in the online banking channel. Do not grow complacent in pursuing this older market. As you can see, there is much opportunity and benefit to attract the older generation. It is observed, that once the baby boomers and seniors gain confidence in the online channel, they will begin to cultivate additional online services, which presents another chance to cross-sell this generation.

About Jason Weinick: Jason is a Senior Analyst with Intuit Financial Services and leads the initiative on client profitability analyses, providing banks and credit unions a valuable in-depth look into the value of the online channel. Jason’s background includes 15 years experience within the financial services sector, focusing on consumer behavior, risk modeling, reporting, and financial analysis. Jason holds a Bachelor of Science degree in Finance from Clemson University.


[i] November 2, 2011: The State Of Consumers And Technology: Benchmark 2011, US, by Gina Sverdlov, for Market Insights Professionals

[iii] June 8, 2011: Mobile And Social Technologies Come Late To Wealth Management: Younger Generations Are Just The First Wave Of Mobile and Social Adopters- by Bill Doyle with Benjamin Ensor, Amelia Martland, and Beth Hoffman

Women Boomers Rise to Become Market Superpower

There’s no denying women are the next financial superpower. As demonstrated in the findings of the Intuit 2020 Report: The Future of Financial Services, women will be in the spotlight over the next decade as key financial decision makers. With Gen Y women projected to dominate higher education graduation rates and professional workforce entry, women are poised to take control of financial responsibility both as household CEOs, consumers and business decision makers fueling the She-conomy.

The Intuit 2020 Report also projects 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. Credit Union Magazine recently highlighted similar findings 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. Mary Brown and Carol Orsborn’ s book, Boom: Marketing to the Ultimate Power Consumer—the Baby Boomer Woman, supports this claim and outlines six important insights financial institutions might not know about their female boomer customers. We’ve included a few below.

  • Many boomer women are at the peak of their earning potential. Eight of 10 say they don’t plan to retire.
  • Many boomer women will manage inheritances from parents and husbands, as most will outlive their husbands by six to nine years.
  • Women ages 35 to 54 years old made up the highest proportion of web surfers. Direct catalog marketers estimate that women constitute 70% of online purchasers, the majority of whom are boomers.
  • Boomer women aren’t set in their ways. According to the Center for Women’s Business Research, 68% of women over age 35 old say that the older they get, the more they enjoy trying new things.

You can read the full list here.

How are you helping your female boomer customers? Do you have any advice on how to market your services to this female population?

Let us know by posting in the comments section below or tweeting @Bankingdotcom.

Millennials vs. Boomers: A Banking Divide

It’s no secret that the millennial generation is adopting technology at rate that surpasses the Baby Boomers, leaving a technology gap in our society. Whether it’s the difference between texting and calling or Facebook messaging and e-mailing, millennials are among the first to try new technologies. The banking industry is no different. In order for financial institutions to reach the millennial generation, they need to embrace new technologies to retain clients who are just starting out on their financial journey.

James Van Dyke of Javelin Research has long been an advocate of banks recognizing the difference in behaviors between the younger and older generations. In a recent blog post, he wrote:

“We all know the examples of how millenials are different in terms of everyday communication with other people, but are we grasping how this translates to payments, online financial services, security or mobile? I see an unmet need, and future potential changes such as reduced interchange for debit the implications could portend even greater significance.”

Additionally, Van Dyke referenced a November survey where more than 5,000 US consumer’s payment preferences that asked respondents what value they found in alerts (e-mail or text/SMS). After honing in on this question, he wrote:

“What the data told me is that younger people are significantly more likely to value particular electronic updates from their bank that fall within the ‘everyday’ category ‘b’, while older Americans place significantly higher value in just the opposite “a” or security updates.”

Are you catering to the needs of millennials? Let us know in the comments section below.

Baby Boomers turn 65: What’s Ahead?

On January 1, 2011, the first baby boomers will turn 65.  January 1, 1946 kicked off an unanticipated and unprecedented population explosion in the U.S., one that lasted for 19 years.  This date marked the beginning of the Baby Boom, a generation that is 77 million strong.  What’s ahead?  Expect more legible mobile phone displays, premium coffee in nursing homes, bigger and brighter road signs, hearing aids that look like Bluetooth ear pieces.  And a lot of denial.  Even terminology will change. The period from 65 to 85 will become known as “late adulthood”.  And the term “senior citizen” will likely become extinct.  The biggest question raised is how this shift will affect the politics of Social Security and Medicare, and the nature of retirement in general.

For more insights on the “Senior Boom,” visit USA Today.

How are you helping your Boomer customers better prepare for their future?  What offerings and services do you currently provide for this largest segment of the population?