One of the main factors financial institutions should consider in planning their mix of channels, such as the branch network, online banking and mobile banking, should be the age group of their customer base.
The latest consumer study conducted by MRI clearly shows a link between age group and a choice for banking channels; younger consumers gravitate towards digital banking, while older ones prefer traditional branch banking.
The study found that only 24% of Gen Y consumers, identified as those between the ages of 18 and 35, indicated a branch as their preferred banking method. Gen X consumers, who are between 36 and 46 years old, follow that pattern closely, with only 25% using a branch for their banking services. Conversely, 38% of consumers aged 67 or over, and 31% of baby boomers, who are between the ages of 47 and 66, do so, generating a variance of nearly 14% between Gen Y and the oldest group.
The inverse can be found when it comes to online banking. The majority of Gen Y, 69%, and Gen X, 68%, use online banking as their preferred banking channel, while only 61% of mature age and 65% of baby boomers do so.
When it comes to mobile banking, which is still a relatively a new banking channel, the picture is very similar. The youngest group of consumers, Gen Y, has embraced mobile banking as their preferred banking channel to the tune of 6%, followed by Gen X at 4% and baby boomers at 2%. Not surprisingly, none of the mature age participants in the study indicated a preference for mobile banking.
It’s important to note that consumers indicated these preferences as their primary banking channel and not necessarily the only banking channel. In other words, it is plausible that some consumers use a mix of these channels.
Our study, which will be released next month, also found variances in banking-channel preference among the income range of consumers, the size of the financial institution, such as national, regional or local, as well between consumers of banks vs. credit unions. For example, mid-size regional institutions have the highest branch preference and the lowest online use among consumers, whereas credit unions experience lower branch use and higher online preference than banks.
These findings are instrumental to proper planning of channel distribution, especially in the current environment of heated debate over the future of branches. When it comes to channel mix, there is no “one-size-fits-all” solution, and each financial institution will have to design and develop the right mix of channels based on the demographic and preferences of their consumer base.
Mr. Geller is the executive vice president of San Anselmo, Calif.-based Market Rates Insight, which provides competitive research and analytics to financial institutions. He can be reached at [email protected].