We’ve heard plenty of talk about targeting the needs of Generation Y, Generation X and Baby Boomers—but are those needs always different? Consider these ways to bridge the generational divide with tools that appeal to all ages...but not always for the same reasons.
Explore mobile banking options. Needham, Mass.-based TowerGroup estimates that every month until the beginning of 2009, between 150 and 300 banks and credit unions in the United States will sign contracts for mobile banking solutions. Mobile banking will reach close to 6 million users by the end of 2008, and TowerGroup forecasts 42 million U.S. active users of mobile banking by 2012.
"We believe the rise of next-generation mobile banking and payment solutions will forever change banks and payments companies,” said Virginia Garcia, TowerGroup research director in the Emerging Technologies practice. “Mobility has the potential to enable timely, relevant, and actionable outreach that will ignite customer engagement unlike any other channel. Ultimately, TowerGroup expects mobile phones will do for financial services what Apple iPods did for music - spur a sea change in the way consumers access services and suppliers deliver them."
Approximately 240 million consumers subscribe to wireless communication services, which translates to about a 90-percent mobile-phone ownership rate among adults over age 19, according to TowerGroup. That’s compared to the 70 percent of U.S. households that the Internet has reached. With immediate, real-time access, mobile banking will enable consumers to check account balances, verify deposits, transfer funds, and pay bills regardless from anywhere.
That convenience will appeal to Baby Boomers and younger customers, although for different reasons. According to a recent Javelin Strategy study, Baby Boomers appreciate payments being made as fast as possible. Until age 65, the desire for increased transaction speed grows as a customer ages. (After 65, the need for speed drops quickly.) As for Gen X and Gen Y customers, the appeal may be more about a reluctance to use cash or checks. Another Javelin Strategy survey found that 23 percent of 18- to 24-year-old respondents are more interested in avoiding cash than transaction speed. Plus Gen Y customers are used to technology pervading every aspect of their lives from socializing to entertainment to work. A 2008 Celent survey of Gen Y consumers found that 50 percent say mobile banking is an important consideration in choosing a financial institution. Text alerts are proving to be a popular entry point for mobile banking. Alerts let customers check account balances, confirm deposits, pay bills, and assess if they’re approaching spending limits.
Consider multiple angles of financial management. A new generation of online management-tools appeals lets each customer craft a personalized financial identity. Gen Y wants to create and track an online budget, plus receive an alert if they overspend. And while they want plenty of data, Gen-Y-ers are likely to need advice on financial planning from bankers and peers. Give them the online tools to educate themselves: mortgage calculators, retirement planners and college tuition planners.
Boomers look to financial management tools to view their entire financial picture. According to an Intuit-sponsored study from the Institute for the Future, the fastest-growing entrepreneur group is 55- to 64-year-olds, followed by 20-somethings and 30-somethings of Gen X. Tools allowing business owners to label their purchases and forecast their revenue are likely to draw customers. Fraud-management tools should be particularly comforting to fraud-sensitive Boomers. Remote deposit service that lets customers deposit business checks electronically appeals both to older and younger entrepreneurs.
And don’t underestimate the importance of usability.
"Successful retailers understand that after nine seconds the consumer abandons the site," said Veronica Funaro, assistant vice president and manager of online banking at Farmers and Merchants Bank in Long Beach, Calif. "If it takes 30 seconds to see if your check has cleared, you’ve already bailed and picked up the phone. If you go online and the site is down, it’s like driving up to a branch and finding the doors are closed. That’s critical in terms of achieving business goals of the customer."
Offer health savings accounts to address healthcare concerns. Small-business owners of all ages will like the idea of HSAs helping with medical expenses. The tax-free savings accounts, which must be combined with a high-deductible health plan, offer the chance for lower premiums—sometimes 30 to 50 percent lower than traditional plans. And there’s an element of control that can appeal to consumers much more than sending a check to an insurance company each month.
The bulk of HSAs will come through mass enrollment of employees at particular corporations. “If a bank is trying to go after individuals one at a time, that’s fine, but it’s not very fruitful,” says Dean Schumann, managing director at technology consultancy RSM McGladrey Inc. "They need to go after accounts in a wholesale manner."
A proper marketing plan—aimed at small business and their workforces—is crucial for banks, since they aren’t widely known for offering the accounts.
The accounts can come with an assortment of accessories to dress them up. Debit cards and checking accounts are only the beginning. Clients could attach a line of credit to their accounts. They can explore investment options. Partners in the insurance industry might be willing to allow for immediate payout from HSA accounts, meaning money can be moved directly from the account to the provider.
Because most HSA prospects won’t set foot in a lobby, using customer newsletters or cash-management areas of Web sites are good ways to promote and explain the accounts.
