A unique global report prepared by telecoms giants Telstra - involving 27,000 consumers across eight countries - has revealed that the millennial generation is now the most critical demographic grouping of people across the UK in terms of their “wallet size”. They have overtaken other generations in terms of their economic influence and attraction to the financial sector and they also have a passionate desire to conduct most of their interactions via their mobile apps.
Telstra’s report - now in its 12th year - is titled ‘Exponential Performance in a Millennial, Mobile, Programmatic World’ and is eagerly anticipated each year by the financial world. This year’s landmark findings show that the millennials’ average wallet size - the total balance value of deposits and lending held by an individual - is 40% greater for this generation than for the overall UK adult demographic. This is good news for banks and disruptive fintechs as this statistic will only increase with time.
However, as millennials drive interactions and demand mobile engagement in a manner never before seen in financial services, traditional institutions need to adopt a mobile-first digital strategy or risk losing market share to innovative new players. The survey found that around 70% of this generation - broadly aged between 18-34 years - already prefer to handle their finances through their mobiles.
“Millennials, their consumption of mobile apps and their wallet size have undoubtedly become lead indicators of performance for financial institutions and the ones that will come out on top are those that create personalised frictionless digital mobile experiences valued by this digitally-driven demographic,” said report author Rocky Scopelliti, Telstra’s Global Industry Executive for Financial Services.
“In the UK we are talking about 20 million people. That’s 31% of the population and that’s a market size that needs paying attention to.”
The report compared the performance of the main banks in the UK and found that Barclays Bank currently has the largest proportion of millennials among its customer base (42 per cent), the largest main bank market share (16 per cent) and Barclays Bank millennial customers are most likely to engage with the bank via mobile banking - over 70 per cent do so each month.
Ashok Vaswani, CEO of Barclays UK, said: “It’s encouraging to see the digital transformation of our business making a real impact with customers. People in the UK are living increasingly connected lives and the rapid adoption of our mobile services is a great strength for Barclays in the UK.
“I believe that a mobile first approach is making banking easier, more convenient and more intuitive for customers as we connect them to new services and value. I believe this can be a winning strategy not just with millennial customers, but for all the customers we serve.”
Telstra’s additional research of 164 global financial services executives from 104 institutions across 11 countries found that most traditional organisations still need to transform legacy business models to compete effectively against digital challengers. Digital challengers that leverage accelerating technologies such as artificial intelligence, cloud, APIs and robotic process automation, can expect to see cost savings of 67 per cent in operating expenses and 98 per cent on customer acquisition, according to the report.
“Investing in the right programmable technology to radically reduce either the cost of customer acquisition or the marginal cost of service will give rise to a modern financial services institution that is digitally-led and can provide intricate and meaningful services to these vital customers,” said Mr Scopelliti.