At a time when non-cash payments and mobile banking are on the rise, a common question often raised is: does the ATM and the branch still have a place in the banking industry? Research has suggested that the answer to that question is a resounding ‘yes’, particularly among the millennial generation.
As important as new technologies and digital convenience are, the concepts that millennials value most are freedom and choice. This is particularly true when it comes to their financial affairs. I actually recently presented to a group of 14 and 15 year-old schoolchildren as part of an engineering project they were working on. All were actually very impressed by the new design and interaction models of NCR’s SelfServ 80 Series ATM range. There was also a unanimous show of hands when the children were asked: “Who thinks cash will still be around in decades to come?” They all also preferred receiving cash gifts at birthdays, for example, rather than say an electronic bank transfer.
Worldbank reports that there are more than 40 ATMs and nearly 13 branches per 100,000 adults on the planet. It’s clear these trusted retail banking assisted and self-service endpoints will be around for a long time to come.
Free ATMs – a decisive factor?
Research firm Phoenix Synergistics recently conducted a study in the US that looked into the opinions of millennials (18-35 years), gen X (36-51 years) and baby boomers (52-70 years) regarding checking accounts. One of the key findings showed that access to surcharge-free ATMs is the most common motivation for millennials to change their main checking account. The offer of a free account, a life-changing event and better customer service were the next biggest reasons to switch.
The research also showed that one in eight millennials (13 percent) had changed to a new checking account in the past two years, compared to eight percent of gen X and six percent of baby boomers.
This suggests that millennials continue to view the ATM as central to how they manage their money and go about their daily lives. Furthermore, they are more willing than their elders to make a change if they see it as beneficial.
William McCracken, chief executive of Phoenix Synergistics, said: “Millennials also express the widest likelihood of using non-traditional providers, and in many cases these alternative providers can address millennials’ issues or reasons for switching. Traditional providers should take this threat very seriously and begin addressing it in terms of pricing and promoting relationship benefits to their millennial customer base.”
Traditional cornerstones of retail banking, such as the ATM and the branch, remain popular for the simple reason that consumers, no matter what demographic or geographic profile simply want the flexibility to use the channel that is best-suited to their needs.
A recent report from financial services technology firm Fiserv concluded that the growth of digital has improved consumer engagement with finances, but branch access is still expected.
“As digital engagement in financial services intensifies, branches and other traditional channels remain popular, even among millennials,” the authors wrote. “Broadly speaking, consumers choose channels that work best based on transaction type. Rather than demonstrating a bias toward any single way of banking, empowered consumers are choosing all of them.”
The report was based on a survey of over 3,000 US adults. More than four out of ten respondents (44 percent) said visiting a branch was their preferred way of interacting with their bank for standard daily transactions. Online banking through a desktop computer came a close second (39 percent), followed by mobile banking (14 percent).
However, the study also stressed that “stated preference doesn’t tell the entire story”. Four out of five consumers (80 percent) had logged into online banking in the month leading up to the survey, while three out of five (61 percent) had visited a branch.
The findings paint a picture of a complicated, multifaceted relationship between consumers and their banks. In light of this complexity, one overriding principle that financial institutions must remember is the importance of customer choice. It is not the correct approach to force consumers into using certain channels. The consumer experience is becoming an important area of competitive differentiation. Being able to deliver the omnichannel experience offering the freedom to select the banking method that suits individual needs will be just as attractive to young millennials as it is to retired baby boomers.