Mobile-first account holders have high profitability, but they're more likely to switch primary financial institutions than online and branch-first account holders and would most likely do so because of fee sensitivity. Only 13 percent of account holders are identified by Javelin Strategy & Research as fitting into this segment but they represent 31 percent of deposits. They trend younger (average age of 39) than online first (50) and branch first (53) customers and are largely concentrated at giant banks.
Javelin detailed these findings in a recent report titled "The Rise Of The Mobile-First Consumer - And What That Means For Banking," with authors Mary Monahan and Daniel Van Dyke discussing how financial institutions can approach this fickle and highly coveted segment during an August 5 webinar. The lack of loyalty — 27 percent are either extremely or somewhat likely to switch primary financial institutions in the next 12 months — from these customers is what has the industry worried.
"There's several reasons for this. The length of the primary bank relationship and likelihood to maintain multiple relationships with different banks," said Mary Monahan, Executive Vice President and Research Director of Mobile for Javelin. "One in three joined their bank in the last three years. Among mobile first it's 55 percent with multiple relationships."
Branch-first account holders tend to be more tied into a single financial institution. Due to a lack of history with their primary financial institution and multiple parties that can pry them away, Javelin advises banks and credit unions to develop a sound strategy around retaining mobile-first users. Among mobile-first consumers the most cited reason for leaving their bank is fees (34%), with unsatisfactory customer service ranking a close second (29%). 20% wanted easier access to branches and 16% wanted easier access to ATMs. Monahan notes that mobile-first consumers make use of multiple channels and also happen to be PFM enthusiasts. "They have higher use of ATMs and online banking, they're true omnivores," said Monahan. "They desire alerts and notifications and prefer digital PFM to pen and paper."
What motivates mobile-first account holders to stay? Surprisingly, online banking capabilities first and mobile banking capabilities second — but that may be just because many tasks are still not possible via mobile at their institutions, be it mobile deposit or mobile imaging for bill pay. Across all consumers, convenient location of branches is still the #1 motivating factor in staying with a financial institution.
Javelin noted that banks should be motivated to incorporate mobile imaging and mobile check deposit to create savings and cut down on unnecessary use of the branch. Daniel Van Dyke, an analyst in Javelin's Mobile practice area, estimated that the average cost of in-branch check deposit was $1.25 versus pennies for mobile deposit.
Javelin advised banks to "treat mobile as the first screen" and heavily focus on iOS devices, given that 52% of mobile first bankers use iOS devices versus 42% on Android devices. Banks were also advised that they offer an end-to-end mobile experience, starting with mobile authentication and enrollment of customers, extending to mobile deposit, credit card balance switch and even setting up bill payments through bill scanning with their mobile device's camera.
For more information on various demographic groups, including the mobile-first account holders discussed above, see our digital banking white paper. This paper outlines how the wants and needs of these groups are shifting, and what financial institutions can do to stay competitive in the digital age of banking.