Banks need to develop effective ways to engage millennials, a growing segment of the population, and the best way to do this is through mobile devices, according to Fair Isaac.
FICO released a survey this week that found millennials are less loyal to their primary banks than other consumers. The survey revealed that millennials are five times more likely than Baby Boomers to close all accounts with their primary bank.
Out of the 911 bank customers surveyed by the vendor known as FICO, one-third of millennials cited excessive service fees as the single reason for switching to a new bank. Meanwhile, bad experiences with online and mobile devices made a much worse impression on millennials than on other age groups.
This is because millennials are significantly more likely to transact with their banks through mobile applications. For example, FICO said that 63% of millennials surveyed used their bank's mobile application, while this figure dropped to 54% for Generation X consumers and 36% for baby boomers.
Furthermore, 83% of the survey respondents who use a bank's mobile application at least once a week expressed satisfaction with their financial institution. By comparison, 71% who do not utilize mobile devices to do banking were satisfied with their bank.
"Banks that have made the mobile investment need to encourage their customers to actually use their mobile app, especially millennials who use smartphones and tablets to manage all aspects of their lives," said David Vonk, who leads the North American banking practice at Fair Isaac, in a press release. "Mobile apps present a tremendous opportunity for banks to grow customer loyalty and add value."
However, many millennials do not know if their primary bank offers a mobile app, as 21% cited this reason for the lack of engagement with a bank. Additionally, millennials want to be notified via text messages if their bank account has any suspicious charges or is nearing a credit limit.
"With pressure growing from mobile and web-based financial service providers, traditional banks are finding it extremely important to keep existing customers engaged and satisfied," Vonk said. "Mobile apps give banks the opportunity for frequent, positive interactions with customers, especially millennials, an even larger generation than the baby boomers. It's an opportunity banks can't afford to miss."