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1DIGITAL ENABLEMENT FOR RETAIL BANKING Copyright © 2014 The Nielsen Company
D I G I TA L E N A B L E M E N T F O R R E TA I L B A N K I N G
2 DIGITAL ENABLEMENT FOR RETAIL BANKING
In the traditional analog banking world, huge investments have been
made in physical bank branches, canvassing many geographies, staffed
with cadres of tellers and advisors engaged in high-touch transactions.
Times have changed, and technology and digital channels are top of
mind for retail banks. The focus has shifted to a seamless end-to-end
digitized experiences for banking consumers. In a recent survey of
banking professionals by Temenos, 23 percent of respondents saw the
threat of competition from technology companies like Amazon, Apple
and Google as their top concern within the industry. Perhaps in response
to this threat, 18 percent of respondents indicate investment in digital
channels as a top priority, with 23 percent citing mobile and online
channels as top information technology spending priorities.
When developing strategies to address the digital revolution, the focus
should be on valuable consumers with robust assets and deep pockets.
Nielsen has singled out these valuable consumers, the Mass Affluent,
as those households with $250,000 to $1,000,000 in liquid assets
(IPA), excluding real estate. The Mass Affluent make up about 11 percent
of U.S. households, however they control about 26 percent of total
U.S. wealth, making them an attractive segment of the population for
financial institutions.
MASS AFFLUENT: MILLENNIALS VS. BOOMERS
3DIGITAL ENABLEMENT FOR RETAIL BANKING Copyright © 2014 The Nielsen Company
AFFLUENT MASS AFFLUENT MASS MARKET
PERCENTAGE OF TOTAL U.S. WEALTH
PERCENTAGE OF U.S. HOUSEHOLDS
Source: Nielsen Financial Track 2014
The digital banking needs of the Mass Affluent vary significantly by
generation. The Mass Affluent segment tends to be older, with Boomers
making up 41 percent of the segment and the GI (or Silent) Generation
making up 36 percent. These older consumers have had years to amass
wealth and grow their portfolios. However, the younger generation
within the Mass Affluent cannot be ignored. Millennials (also known
as Gen Y) may represent only 9 percent of the Mass Affluent today,
but this percentage stands to grow. Millennials are coming of age and
establishing their households, all while Boomers are retiring and leaving
the workforce.
61%26%
13%
84%
5%11%
4 DIGITAL ENABLEMENT FOR RETAIL BANKING
19-36‘MILLENNIALS’
(AKA GEN Y)
37-48 ‘GENERATION X’
68+‘GI GENERATION’
(AKA THE SILENT GENERATION)
49-67‘BOOMERS’
16%
24% 1977-1994
1965-1976
1946-1964
PRE-1946
24%
12%
MILLENNIALS
GENERATION X
BOOMERS
GI GENERATION
MASS AFFLUENT BY GENERATION (AGE 18+)
Source: Nielsen Financial Track 2014
41%
36%
14%
U.S. GENERATIONS, TOTAL U.S. POPULATION AGE 18+
9%
5DIGITAL ENABLEMENT FOR RETAIL BANKING Copyright © 2014 The Nielsen Company
Not surprising due to their experience and stage in life, Mass Affluent
Boomers have more diversified financial portfolios than Mass Affluent
Millennials, with retirement and investment accounts. Mass Affluent
Millennials are slightly more likely than Mass Affluent Boomers to have
traditional savings accounts. As the most educated generation, over
one-third (38 percent) of Mass Affluent Millennials are still burdened
by student loans, but these young consumers will likely save and invest
more once their loans are paid off.
The tech-savvy Mass Affluent Millennials frequently search online for
debt consolidation, making these young consumers a prime audience
for creative, new student loan debt management solutions in the digital
space.
FINANCIAL PORTFOLIO OF THE MASS AFFLUENT
U.S. GENERATIONS, TOTAL U.S. POPULATION AGE 18+
99%
46%
25%
46%
12%
26%
33%
43%
61%
80%
73%
96%
22%
22%
19%
9%
7%
20%
23%
30%
85%
62%
MASS AFFLUENT BOOMERS
CHECKING ACCT
401K, 403B OR 457 RETIREMENT PLAN
SAVINGS ACCT
IRA
MONEY MARKET ACCT
MUTUAL FUNDS
SAVINGS BONDS
CD
BROKERAGE OR ASSET MANAGEMENT ACCT
529 COLLEGE SAVINGS PLAN
ANNUITY MASS AFFLUENT MILLENNIALS
Source: The Demand Institute 2013
6 DIGITAL ENABLEMENT FOR RETAIL BANKING
COMPETING OR CONNECTING WITH TECHNOLOGY? No matter how old they are, the Mass Affluent are engaged with
technology. Competition with technology companies is a new reality for
retail banks. Roughly 93 percent of Mass Affluent Millennials and 73
percent of Mass Affluent Boomers own a smartphone, compared with
71 percent of the total mobile population 18+. Roughly 42 percent of
Mass Affluent Millennials and 38 percent of Mass Affluent Boomers
own a tablet, compared with 33 percent of the total mobile population
18+. And, spending on technology and electronics among the Mass
Affluent isn’t slowing down anytime soon. According to recent research
from The Demand Institute, 51 percent of Mass Affluent Millennials
and 37 percent of Mass Affluent Boomers plan to spend more on home
electronics over the next three years.
While both generations are engaged with technology, the ways in which
they use technology vary. Mass Affluent Millennials are more likely than
Mass Affluent Boomers to use alternative payment methods like Amazon
Flexible Payments, Checkout by Amazon, Google Checkout and PayPal.
Mass Affluent Boomers are more likely to be found online over mobile,
purchasing stocks and home insurance, monitoring their investments
and shopping online. Among Mass Affluent Boomers, those still in the
workforce tend to be more technologically adept than those who have
already retired, making this segment of the older generation more open
to digitization. These working Boomers are simultaneously more adept
with technology, yet pressed for time.
7DIGITAL ENABLEMENT FOR RETAIL BANKING Copyright © 2014 The Nielsen Company
ALTERNATIVE PAYMENT USAGE
The launch of new online and mobile wallet services like Apple Pay
will likely drive increased use of technology for banking and retail
transactions among Mass Affluent Millennials. Mass Affluent Boomers
may not be the earliest adopters of these types of services, but their
high smartphone ownership could drive future use. Again, Mass
Affluent Boomers still in the workforce will likely lead the pack. Many
retail banks and credit card companies have partnered with Apple for
the Apple Pay service, creating synergies between technology, banking
and retail.
Technology companies may have the upper-hand when it comes to quick
transactions, but banks have the upper-hand when the Mass Affluent
are making substantial financial decisions and investments. The vast
majority (84 percent) of Mass Affluent Boomers and 81 percent of Mass
Affluent Millennials feel it’s very important to use a highly reputable and
well-known financial institution when choosing financial products like
mortgages. And, 84 percent of Mass Affluent Boomers and 79 percent
of Mass Affluent Millennials value a knowledgeable financial broker or
adviser who they trust to help them make financial decisions.
180
160
140
120
100
80
60
40
157
7177
119129
80
126
53
110
93
AMAZON FLEXIBLE
PAYMENTS
BILL ME LATER
IND
EX
CHECKOUT BY AMAZON
GOOGLE CHECKOUT
PAYPAL
MASS AFFLUENT MILLENNIALS MASS AFFLUENT BOOMERS
CONSUMER DIGITAL ENABLEMENT STRATEGY: RATHER THAN COMPETING, PARTNER WITH TECHNOLOGY COMPANIES AND LEVERAGE NEW, INNOVATIVE TECHNOLOGIES TO MAKE BANKING TRANSACTIONS SIMPLER AND MORE CONVENIENT FOR CONSUMERS.
Source: Nielsen @Plan Q2 2014
8 DIGITAL ENABLEMENT FOR RETAIL BANKING
MAKING SMART INVESTMENTS IN DIGITAL CHANNELS The Mass Affluent are already engaged with digital banking channels.
These upscale consumers expect a seamless transition and user
experience from one channel to another— whether they are in the
branch, online or at the ATM. Millennials within the segment are more
likely to use mobile banking, while Boomers are more likely to use online
banking. When Mass Affluent Millennials use mobile banking, 27 percent
prefer to use mobile banking to check their balances and 18 percent
prefer to use mobile banking to transfer funds. Most of Mass Affluent
Boomers do not indicate mobile banking as their preferred channel for
banking activities—only 5 percent indicate a preference for checking
balances on their mobile devices. Among those who use mobile banking,
Mass Affluent Boomers are more likely to use tablets over smartphones–
while Mass Affluent Millennials are more likely to use smartphones.
Mobile banking engagement may be limited for Mass Affluent Boomers,
but these older consumers are active online bankers. The vast majority
(92 percent) of Mass Affluent Boomers indicate online banking is their
preferred channel for paying bills, with 88 percent obtaining information
about their bank and 87 percent checking their balances online. About
two-thirds (65 percent) of Mass Affluent Millennials pay bills online,
with 56 percent obtaining information about their bank and 55 percent
transferring funds online. The younger portion of Mass Affluent
Millennials may be skipping the computer all together and moving
directly to mobile devices.
MASSAFFLUENTBOOMERS
MASSAFFLUENT
MILLENNIALSVS.92% 65%
PAY BILLS ONLINE
9DIGITAL ENABLEMENT FOR RETAIL BANKING Copyright © 2014 The Nielsen Company
PREFERRED CHANNEL BY BANKING ACTIVITYFOR MASS AFFLUENT MILLENNIALS
PREFERRED CHANNEL BY BANKING ACTIVITYFOR MASS AFFLUENT BOOMERS
PAY BILLS
PAY BILLS
OBTAIN INFORMATION ABOUT BANK
OBTAIN INFORMATION ABOUT BANK
SEEK INVESTMENT ADVICE
SEEK INVESTMENT ADVICE
TRANSFER FUNDS
TRANSFER FUNDS
CHECK BALANCES
CHECK BALANCES
APPLY FOR CREDIT
APPLY FOR CREADIT
RESOLVE PROBLEMS
RESOLVE PROBLEMS
OPEN NEW ACCOUNTS
OPEN NEW ACCOUNTS
65%
57%
55%
50%
50%
10%
13%
18%
27%
6%
29%29%
28%
18%
8%
6%
ONLINE
ONLINE
MOBILE APPLICATION
MOBILE APPLICATION
92%
88%
87%
86%
73%
29%
25%
13%0%
0%
0%
0%
0%
4%
4%
5%
Source: Nielsen Multi-Channel Banking Study Q4 2013
PAY BILLS ONLINE
10 DIGITAL ENABLEMENT FOR RETAIL BANKING
There are still barriers that hinder increased use of digital channels
among the Mass Affluent despite their strong engagement. Breaking
down these barriers will encourage increased use of digital channels.
Concerns about the security of mobile banking are top of mind for
both Mass Affluent Millennials and Mass Affluent Boomers. About 21
percent of Mass Affluent Millennials have experienced problems using
mobile banking in the past, while 20 percent of Mass Affluent Boomers
indicate not knowing how to use the app. Improving security and user
experience will reduce mobile banking barriers for both Millennials and
Boomers within the Mass Affluent.
50% is exactly half of Mass Affluent Millennials indicate online banking
takes too long, however the majority of Mass Affluent Boomers do not
share this sentiment. Roughly 40 percent of Mass Affluent Boomers
do not find online banking to be a convenient option. Creating a more
streamlined user experience for online banking will drive increased
use by addressing Mass Affluent Millennials’ need for speed and Mass
Affluent Boomers’ need for ease.
BARRIERS TO MOBILE BANKING USAGE
I DON’T TRUST THE TRANSACTION IS SECURE VIA THIS CHANNEL
I DON’T KNOW HOW TO DO IT THROUGH THE APP
IT TAKES TOO LONG TO USE THIS CHANNEL
IT’S NOT A CONVENIENT OPTION FOR ME
I DON’T OWN A MOBILE DEVICE (SMARTPHONE OR TABLET)
I CAN’T DO EVERYTHING I NEED TO DO USING THIS CHANNEL
I’VE HAD A PROBLEM USING THIS CHANNEL IN THE PAST FOR THIS TYPE OF ACTIVITY
67%
20%
16%
16%
11%
71%
0%
0%
7%
7%
14%9%
4% 18%21%
Source: Nielsen Multi-Channel Banking Study Q4 2013
MASS AFFLUENT BOOMERS
MASS AFFLUENT MILLENNIALS
11DIGITAL ENABLEMENT FOR RETAIL BANKING Copyright © 2014 The Nielsen Company
BARRIERS TO MOBILE BANKING USAGE
BARRIERS TO MOBILE BANKING USAGE
IT’S NOT A CONVENIENT OPTION FOR ME
I DON’T TRUST THE TRANSACTION IS SECURE VIA THIS CHANNEL
I DON’T KNOW HOW TO DO IT OR WHERE TO GO ON THE WEBSITE
IT TAKES TOO LONG TO USE THIS CHANNEL
I’VE HAD PROBLEMS USING THIS CHANNEL IN THE PAST FOR THIS TYPE OF ACTIVITY
40%
20%
20%
12%
4%
25%
19%
50%
0%
6% MASS AFFLUENT BOOMERS
MASS AFFLUENT MILLENNIALS
Source: Nielsen Multi-Channel Banking Study Q4 2013
CONSUMER DIGITAL ENABLEMENT STRATEGY: DESIGN AND ENABLE DIGITAL CHANNELS AROUND CONSUMERS’ PREFERRED BANKING ACTIVITIES. PREFERRED BANKING ACTIVITIES DEPEND ON WEALTH AND GENERATION. BREAK DOWN BARRIERS BY SOLVING FOR THE KEY CHALLENGES THESE SIMILAR, YET DIFFERENT CONSUMERS FACE WHEN ENGAGING AND TRANSACTING IN AN INCREASINGLY DIGITIZED WORLD.
12 DIGITAL ENABLEMENT FOR RETAIL BANKING
ABOUT NIELSEN Nielsen N.V. (NYSE: NLSN) is a global information and measurement
company with leading market positions in marketing and consumer
information, television and other media measurement, online
intelligence and mobile measurement. Nielsen has a presence in
approximately 100 countries, with headquarters in New York, USA
and Diemen, the Netherlands.
For more information, visit www.nielsen.com.
Copyright © 2014 The Nielsen Company. All rights reserved. Nielsen and
the Nielsen logo are trademarks or registered trademarks of CZT/ACN
Trademarks, L.L.C. Other product and service names are trademarks or
registered trademarks of their respective companies. 14/8253