Building Online Banking for Gen Y

Marketing to generation Y or X is continuing to gain imporantance, financial services not being an exception. During the past three months, 69 per cent of generation X/Yers have shopped online and 65 per cent used online banking—more than any other group. And not surprisingly, this generation identifies the online / mobile offering of a bank to be one of the most important factors in selecting a new bank. Todd Lesher, division president of Fiserv Electronic Banking Services and Shelby Hutcherson, vice president of the innovative solutions group at Synovus Financial recently collaborated to provide insight how to build a online banking experience for this generation.

Not Your Father's Bank: Building Online Banking for Gen Y

Growing up in a world immersed in digital technologies, members of Generation Y have the highest of expectations on how they want to interact with their banks online. Born at the dawn of the digital age in the early 1980s, the oldest among Generation Y have never known a world without personal computers and video games. The youngest of these so-called Millennials are still in their early teens, using their cell phones for texting more than talking and counting their "friends" on MySpace.

Millennials may not have the most money or be the most profitable to banks -- not yet, anyway. One day Generation Y, the largest U.S. generation since the Baby Boomers, will outnumber their parents' Boomer generation and control the lion's share of financial assets in this country. In the meantime, financial institutions need to keep a close eye on this consumer group because they represent the future -- and they're the ones for whom we're building the next generation of online banking today.

Still, a common thread among all of Generation Y is technology, especially when it supports a lifestyle need and is embedded into everything they do. No doubt about it, this tech-savvy generation won't be easy to please. In this next generation of online banking, banks will develop innovative online financial services that deliver a rich, innovative experience to attract and retain profitable customers. For example, Synovus Financial, a US$34 billion financial services holding company, headquartered in Columbus, Ga., delivers online and mobile financial services keeping a key principle in mind: Build it not only for today's customers but also for tomorrow's.

User Experience: The Priority Gen Yers won't settle for their father's online banking experience delivered in a bland interface that barely gets the job done and isn't fun to use. To go toe-to-toe with the emerging social networks being created, banks of all sizes with investments in the online channel must deliver a comparable Web 2.0 experience or they risk losing some of their Millennial customers and other consumer segments. Banks must provide an online banking experience in which pages load quickly, transactions post nearly in real-time, and fewer clicks are required to navigate the site. Online banking applications must deliver all relevant financial information at a glance on a single screen for easy access: electronic bills and payments, account balances, transfers and personal money management tools. All these enhancements will help all consumers better manage their finances while providing a rich user experience.

Understand Consumer Behavior: Banks should make an early commitment to delivering a unique and intuitive online banking experience that encourages service adoption and avid use. This effort begins with partnering with solution providers that invest heavily in research and development to help understand consumer behavior through surveys, usability studies and advanced analytics. These findings provide valuable product design direction and can help banks fully understand and market to their customer segments. Given the turmoil in the financial markets, customers are looking for banks to provide them with greater control in managing their accounts and tracking their expenses and cash flow.

Integrated Online Experience: Sometimes it's the simplest improvements that yield the greatest results. For example, Synovus implemented a simple functional user enhancement that gave consumers direct access to online bill payment features from within the online banking user interface. Consumer enrollments in online bill pay in the first month jumped a surprising 50 percent. They also saw an average 9 percent lift in payment volumes during the 90-day program. The next generation of online banking seamlessly integrates all commonly viewed account information -- bill pay, balances, transfers and personal money management -- onto a single screen, for enhanced usability and a better consumer experience. Rich Internet platforms such as Ajax and Silverlight transform yesterday's flat, one-dimensional interface into a dynamic, multi-dimensional online banking and bill payment experience.

Go Where the Users Are: Mobile Creating an optimal user experience also means going where users are. For Millennials, that means the cell phone or smartphone, the device they interact with more than any other.When Synovus was among the first to pilot mobile banking in Georgia at Athens First Bank and Trust Company in 2007, 42 percent of those using the service were members of Generation Y. That's not surprising, given that AFB&T serves Athens, Ga., home of the University of Georgia and a large population of Millennials who stay glued to their iPhones and other smart devices. The mobile pilot demonstrated a strong commitment to meeting consumers on their terms and a forward-looking approach to adoption of new technology. Since the pilot, they have rolled out the downloaded mobile banking application to Synovus' 34 banks and their customers, and the adoption rate has far exceeded expectations.

Mobile is an emerging channel, currently used mainly for balance refreshes and transfers. In the near future, banks will need to provide secure mobile banking solutions that address consumers' wide-ranging needs and preferences through multiple modes, including text and browser, and downloaded applications. For financial institutions, it's essential to aggressively move into the mobile channel where the next generation of users will be, because today's wireless devices are evolving into tomorrow's wireless wallets.

Personalize, Personalize, Personalize: Younger consumers don't just expect their bank to serve up personalized content based on their online behavior and account transactions. They expect some measure of control over preferences such as frequency and timing of alerts, as well as how their financial information is organized and presented on the online banking site.

Event-triggered campaign management tools suggest on-the-spot loyalty rewards to consumers as incentives tied to certain online behaviors like paying bills or using bank-issued credit cards. Additionally, you can supply interactive calculators and widgets that serve as virtual financial mentors to help consumers save and invest and guide them through major financial decisions.

Members of Generation Y, like most consumers who bank online, want their online bank to do more than recognize and serve their basic needs. Increasingly, consumers expect their bank to engage, educate and relate to them as individuals, not just as generic customers. For financial institutions, realizing the promise of next-generation online banking requires gaining a greater understanding of their customers. Then they must apply that deep insight to delivering online financial services that anticipate and satisfy customers' personalized needs. Organizations that do all of these things well stand the best chance of surviving and even thriving through today's challenging economic times.

Originally published in CRM Buyer 2/20/2009

More people pay bills online than with paper checks

A recent survey sponsored by CheckFree, now part of Fiserv, Inc. found that more Americans than ever, an estimated 63.1 million households or three-fourth of those online, are paying their bills online rather than writing paper checks.

A little slower than email taking over U.S. Mail but, it finally happened. Actually for the second year in a row, American consumers who go online each month paid more of their household bills online at bank and billing organization websites than by any other method.

Some interesting facts from the survey:

• Internet-using households pay an average of 11 bills per month. Consumers use an average of three different ways to pay bills, with online, check, automatic debit and in-person topping the list of popular bill payment methods. Online bill payments at bank and biller websites comprised 42 percent of total monthly payments, followed by 31 percent of bills paid by check. See chart below.

• Fifty-one percent of survey respondents cited the environment as a reason why they chose to view and pay bills online. Of these, 72 percent identified paper and clutter reduction as chief benefits, followed by tree conservation (19 percent) and reduction in gas consumption (16 percent).

• Major credit cards (48 percent) were the most frequently cited e-bills received and paid at online banking sites, followed by cable or satellite television (42 percent), cellular phone (41 percent), electricity (38 percent) and local telephone (34 percent).

Data and segmentation about those paying bills online:

• Among younger respondents under age 45, 57 percent considered the environment as an important reason why they use online billing and payment, compared to 44 percent among those in the 45-and-older age group.


• Fifty-five percent of those living in the Western United States cited environmental concerns as a key motivation for online bill payment adoption versus 49 percent for other regions.


• Fifty-four percent of respondents who were aware their online banking site offers e-bills said they receive at least one e-bill, while 46 percent do not. The most appealing features of e-bills were due-date reminders, convenience and assurance that bills are never paid late.


• E-bill recipients were 45 percent more likely to report being extremely satisfied with their bank or credit union than non-e-bill users. Fully half of e-bill recipients said their experiences with e-bill had made them less likely to switch financial institutions in the future. E-bills are electronic representations of paper bills that are securely delivered directly to a business or financial institution Web site. With e-Bills, consumers can review balances, transactions and all other details available in paper bills, and schedule payments with just a few clicks of the mouse.


• Overall, 67.9 million households, or 80 percent of the estimated 85.1 million U.S. online households, use online banking services, up from 63.4 million in the 2007 survey.

• Those living in Western (83 percent penetration) and Southern (81 percent penetration) states were more likely to adopt online banking than those in the Northeast (78 percent) and Midwest (78 percent).

Additional Information:

You can watch a recast of the webinar where researchers from CheckFree and David Baron, vice president of Financial Research Services for Harris Interactive, provides insights into what made the survey successful.

In conjunction with the press announcement, CheckFree announced the launch of the new-and-improved eBILLPLACE.com website, which aims to inform consumers and the media about the environmental, time and cash-saving benefits of receiving and paying bills online.