Digital banking has grown exponentially during the past few years. And it is not just a fad - young adults or the millennials in Europe have shifted from traditional to digital banking because they find digital channels more convenient, efficient, and less time-consuming. The European millennials are increasingly embracing mobile-only banks as opposed to brick-and-mortar institutions, especially with the rapid growth of mobile channels. These shifts among the younger demographic reflect a change in consumer behaviour that will inevitably impact how banks design their customer interfaces.
Why are young adults in Europe shifting from traditional to digital banking?
The digital generation is used to everything being at their fingertips and as such, they want the same from their banks. They spend a lot of time on social media and they are very passionate about it, making them the perfect target audience for financial institutions looking to grow and modernise their services. That being said, this group of people is also very tech-savvy. They are much more comfortable with online transactions and digital payments, so they prefer to pay via computer or their smartphones rather than going to a bank branch.
What are the benefits of digital banking that appeal to the younger generation?
There are several reasons why Millennials are ditching traditional banking in favour of digital banks. They want technology that is intuitive and futuristic that allows them to access their money with ease and full control. Digital banks offer all of this and more. While traditional brick-and-mortar branches are still the main channel used for banking services, online channels are gaining more popularity with this generation. With some of their modernised features on the mobile apps such as digital authentication, security, and fraud prevention, digital banking channels are typically more secure than traditional banking channels because they usually require additional authentication steps before you can complete a transaction. Many also include fraud detection features that allow banks to monitor your transactions in real-time and block unauthorized transactions, thus gaining increasing trust with this generation.
The future of banking in Europe
The European banking market continues to grow and change and digital banking services have been increasing in popularity since their inception for this very reason. More than 50% of EU individuals use online banking and the number of domestic bank branches continues to decrease to about 163,000 by the end of 2019.
As we move towards a cashless society, we're seeing more and more people turn to online payment methods like Apple Pay, Android Pay, and others like Samsung Pay. In fact, digital payments are expected to grow by 70% in Europe between the years 2020 and 2025.
Some countries in Europe are definitely ahead of others when it comes to paying for things with phones or cards. In Sweden, for example, more people are going cashless as seen in the proportion of paying with cash decreasing from around 40% to less than 10% between 2010 to 2020.
As the European market is changing fast, banks must adapt in order to ensure they can meet the needs of their customers especially the millennials. Millennials have been called the generation with spending power, but also a generation whose loyalty is not easy to win. One thing is clear: banks need to do more than just offer a wide range of services to attract young customers as the biggest challenge for marketing to Millennials is that they're not wooed by the same things as older generations.
A new report from Juniper Research notes that digital banking will continue to be on the rise globally over the coming years, with the expectation of Europe dominating over 75% of Open Banking Payments users globally by 2026. This shift is likely to be contributed by millennials demanding instant, convenient and user-friendly services. If you're interested in learning more about how you can enjoy the benefits of a digital banking app, like NeuXP, click here now.
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