Banking Bits & Bytes: Digital Engagement Across the Generations

Banking Bits & Bytes: Digital Engagement Across the Generations

The days of traditional analog banking are gone. The need for large physical branches, long teller counters and paper deposit slips are fading as technology and digital channels are now topline considerations for retail bank operators. But while many are focused on ushering in seamless end-to-end digitized experiences for their customers, there’s a risk in assuming everyone is boarding the digital train at the same pace.

In truth, most U.S. consumers are digitally aware, but the degree of digital adoption varies, especially when money is concerned. And money should be top of mind for retail banks, since consumers with the most wealth represent the greenest areas of opportunity. But given the diversity across the consumer groups with the deepest pockets, banking marketers need to avoid one-size-fits-all approaches when it comes to digital engagement.

Who Are the Mass Affluent?

When it comes to customer worth, the mass affluent should be top of mind for marketers. Nielsen defines this group as households with $250,000 to $1,000,000 in liquid assets, excluding real estate. These consumers make up about 11% of U.S. households but they control about 26% of total U.S. wealth.

As most would expect, the mass affluent segment tends to be older, with Baby Boomers making up 41% and consumers in the Silent Generation making up 36%. The younger mass affluent consumers shouldn’t be ignored, however, as their wealth and influence are rising. Mass affluent consumers from Generation X account for 16% of the group, and Millennials, now coming of age and establishing their households, make up 9%.

When we look at how different age groups are handling their finances, it’s no surprise that life stage plays a significant role in money management and willingness to use technology as a tool. Given their age and stage in life, Boomers are more likely to have retirement and investment accounts than younger generations, while Millennials frequently search online for debt consolidation solutions, making them a prime audience for creative ways to manage their debts in the digital space.

For retail banks looking to have the greatest impact with the largest group, thinking digitally in terms of checking accounts, savings accounts and retirement plans will cast the largest net. These are areas that a majority of mass affluents have the most exposure to. Other, more traditional portfolio options shouldn’t be overlooked, however, particularly when you consider that 17% of upscale Millennials say they save more than 50% of their monthly paychecks to meet their long-term financial goals.

Regardless of age, the mass affluent are up on their tech. About 93% of mass affluent Millennials and 73% of mass affluent Boomers own a smartphone, compared with 71% of the total mobile population (18 years and older). But this group isn’t just using one device: Roughly 42% of mass affluent Millennials and 38% of mass affluent Boomers own a tablet, compared with the 33% of the total mobile population. Tech, however, is relatively new territory for retail banks, which means the time to act is yesterday.

While Millennials and Boomers are engaged with technology, they’re using it differently. For example, Mass affluent Millennials are more likely to use an array of alternative digital payment methods—those that go beyond simply uploading a credit card number to facilitate a purchase. Mass affluent Boomers are more likely to use their mobile devices than their home computers and tablets to buy stocks and home insurance, as well as to monitor their investments. Working Boomers are more adept with technology than retired Boomers, making the working group within this generation more open to digitization.

For additional insights into how the different groups among the mass affluent are using technology with respect to their finances, download the Digital Enablement for Retail Banking report.