What millennials really want from the ATM
They’re the biggest cohort since the baby boomers, and they couldn’t be more different from that post-war generation. Most obviously, because they’ve grown up behind a screen — computer, game console, smartphone, you get the picture. For the financial services industry, the Big Question is “what are they looking for when they’re face to face with an ATM screen?”
For that and other answers about the expectations of millennials, we turned to Devon Watson, VP of global software research and strategy at Diebold Inc. Watson led the company’s extensive project studying millennials and their banking patterns and habits, and shared some of that knowledge with ATM Marketplace in a recent Q&A session.
Q: We should probably begin by defining the demographic; who are millennials?
A: Generally, millennials are the group born between the years 1980 and 2000; this is the largest cohort in U.S. history — 92 million. They are the first digital native generation and have lived most or all their lives with the Internet and on-demand services being readily available.
Q: What makes them so different from their predecessors, financially speaking?
A: They are starting out with a pretty sobering baseline of financial experience, including high levels of student debt. They’ve witnessed some pretty serious recession periods, and many graduated into tough job markets. They tend to be conservative in their spending habits because of this, and, as a result, are waiting much longer to marry, to make major purchases and to invest in homes. They are the ones driving the sharing economy.
Q: Do the differences extend to ATM use and expectations?
A: Yes, but for different reasons than the last question. Their channel use and expectations have more to do with them being digital natives. They have a high degree of comfort with self-service, value convenience highly and are accustomed to well-orchestrated experiences across channels. Look at mobile in particular — they carry their mobile phone more often than their wallet. Being able to authenticate to their bank or bank’s ATM using the object they are most likely to have with them is absolutely a growing expectation for them.
Q: What do millennials want an ATM to be able to do for them?
A: They are expressing interest in more than just cash transactions. Bill pay is one of those, check cashing is another, but one that is often overlooked that they tend to index high for is selecting multiple denominations. Looking at their financial mindset and the fact that many are just starting out, you can see why they’d want to be able to select specific amounts rather than just twenties, so that they can more tightly manage their finances.
Q: Millennials have financial tools available to them that boomers couldn’t have imagined at that age. How will these new options shape banking and ATM use?
A: They do have a lot of tools available, but they are still interested in relationships with their bank and say (70 percent in one study) they wish they had more knowledge and skill in managing their finances. In order to fulfill those two needs, a bank needs to provide a holistic set of services across channels that points them towards opportunities and alerts them when action needs to be taken — the ATM channel will support these types of interactions as well as a primary outpost for the bank.
Q: Millennials are big cash users now, but how might this be affected by the increasing availability of credit and mobile payments?
A: Every millennial receives a stack of credit card offers, with prequalification, as soon as they’re in college. Credit isn’t something new to them, so I don’t see that making a meaningful impact on their cash use. Looking at mobile payments — that’s very often a proxy for the credit or debit card, so I see more crossover there, rather than as a substitute for cash. One of the largest user bases of mobile payments (m-pesa in Kenya) has actually driven cash use in their economy UP.
Q: What does Diebold make of the inroads that mobile payments finally seem poised to make? Will they push a decline in cash and ATM use?
A: I think the big impact that things like ApplePay will have on banking, in general, is that people will come to expect to use their phone as a means of authenticating themselves in the exact same way they use their bank card today. That’s an area where I see some banks pulling ahead and making their channels interoperate in a way that differentiates their experience from that of their competitors.
Q: What adjustments does the ATM market need to make if it is to keep up with millennials and their successors?
A: We see the ATM channel as a key part of a bank’s omnichannel user experience. Having this physical touch point out in the world is an important outpost for a bank’s brand and experience — and it’s one that millennials use quite a bit. Because of this, we and our clients are working on cross- and omnichannel projects, we’re enhancing user interfaces, updating designs to be more modern, and better leveraging the branding and sales opportunities that the ATM can provide.
Q: Have you started looking at the banking patterns of the next generation yet — “Generation Z”?
A: We have. This is going to be a huge consumer group globally and the most diverse cohort yet. If we thought that millennials had different habits and attention spans — wait until you see how Gen-Z multitasks. They are highly social, move between channels and services very quickly and have taken context switching (aka multitasking) to a new level. Here in the U.S., they’ve grown up mainly in a post-9/11 world with ongoing overseas conflicts, so how their world view translates to their soon to develop financial habits and preferences will be very interesting to see.
photo courtesy diebold inc.