Is it any surprise that eBanking – from mobile to web – has created a consumer education gap? Is it more surprising that young consumers as well as old get tripped up by eBanking? Or that ignorance at both ends of the age spectrum creates opportunity for bankers?
Let’s examine the youth end of the education gap first. Banking pundits and consultants have gushed about youth and all things digital, but we hear far less about youth’s ignorance of banking basics.
Case in point: my Millennial son, who believed that checks were an unnecessary component of a checking account. Much as the banking industry would love to believe that checks have vanished altogether, they haven’t. Many businesses, charities, government agencies refuse to accept plastic cards.
My son had a great answer for all that – he bought money orders over the counter from his bank! I explained that fees for 10 money orders would more than pay for a standard package of checks. Plus, ye olde check technology could save him from standing in line during business hours every time he wanted to send his cousin $40 for his birthday.
Someone at my son’s bank could have earned his loyalty by pointing that out. Instead, he has drifted to three banks since graduating college. He has also been the target of fraud as a result of using his debit card to make online purchases. A little security training billed as ‘Smart Banking Education’ might go a long way toward keeping this Millennial as his salary and banking needs increase.
At the opposite end of the age spectrum is my friend Pat, a worldly grandmother who recently explained to me that she would never, ever bank online. “Too risky,” she said. “I’m sticking with paper.”
I explained to Pat that online banking would give her instant access to her banking activity, enabling her to spot unauthorized transactions and report them far more quickly than her paper statement. She thanked me for the education, and I’m sure she made the change to eBanking and eStatements soon after.
But a recent party whose attendees closely matched Pat’s demographics (World War II) and the next cohort (Baby Boomers) revealed similar attitudes about the new and still ‘risky’ proposition of eBanking. Few of them banked online, which put online bill pay and eStatements off limits. Debit cards were ok, but only as glorified ATM cards to be used in supermarkets and to withdraw cash.
Bankers can wait for their Baby Boomer and World War II cohorts to see the light, or proactively approach them with sound reasons for making the switch to eBanking.
There are ample reasons to pay attention to these groups: their numbers and financial needs are great. They are also inclined to stick with bankers who can meet them in person and help them understand their service options.
Letting this age group know that their assets and personal information are safe is critical. Like everyone else in our fast-paced world, they need to hear it often, understand that updates and upgrades are necessary, and that their financial institution is on top of the security situation. It’s a great formula for ongoing market success.
My son, a true Millennial, still doesn’t believe he needs a ‘personal banker.’ But as his income grows and he thinks about starting a family, he’s going to reach out. His first foray will be his current financial institution. If he doesn’t get the answers he expects, he will jump to the first institution that feels right to him.
For Millennials, it’s best to frame their expectations before they make their decision. If my son’s financial institution can talk to him about cost-effective banking services that increase his savings and reduce his risk of fraud, they may keep him from jumping elsewhere.
The incredibly large Millennial cohort wants to understand how to make financial decisions just as the World War II and Baby Boomer cohorts want to be safe. The institution that guides these groups out of their ignorance will win and keep their long term business.
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