DIGITAL ENABLEMENT FOR RETAIL BANKING - Nielsen · 2019-05-29 · DIGITAL ENABLEMENT FOR RETAIL...

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


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%


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%


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


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.


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


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


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


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%


MASS AFFLUENT BOOMERS

MASS AFFLUENT MILLENNIALS




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


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.


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

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DIGITAL ENABLEMENT FOR RETAIL BANKING - Nielsen · 2019-05-29 · DIGITAL ENABLEMENT FOR RETAIL...

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