Talks around payments have a tendency to focus on the new and exciting, from mobile applications to generation Y and the rise of the millennials. As customer behaviours change, financial institutions must be prepared to adapt their products and services to reflect these changes. However, not all behavioural changes are created equal and as such, different age groups have different requirements that need to be met to truly drive loyalty in the payments space.
A recent survey was carried out by Compass Plus, a global payments software provider, who took to the streets to question over 650 members of the public of all ages from London, Wellingborough, Nottingham and Sheffield. All respondents were randomly approached on the street and asked about their payment and banking behaviours. The aim of the survey was to get a clear cross-section of opinions from all ages, from different sized cities inside and outside of the London commuter belt.
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Whilst the results provided plenty of food for thought and confirmed a lot of what we already know (cash is still very popular; there is an element of distrust around mobile payments, etc.), it was the difference of opinion by age group that illustrated the most variation. The results showed that with the proliferation of digital payments, the gap between those who are willing to use new payment technology and those who aren’t, is fundamentally linked to age.
Surprisingly, the high street was the most popular place to shop overall (61.5%), and this trend carried across all age groups from the over 60s (94%) scaling more or less proportionally downwards to the under 21s (56%). The only exception to this rule was the 22-29 age bracket where Internet shopping just pipped the high street to the post (49% and 47% respectively). The mobile device was the least popular way to pay across the board at 0% for the over 60s up to its highest result of 7% with the under 21s. It would be reasonable to expect to see these figures maintain a sliding scale throughout the age groups in the under 21s favour, as mobile continues to gain more momentum in the marketplace.
When it comes to banking behaviours things begin to shift. Despite the high street coming top for shopping, Internet banking was the clear overall winner for banking (54%), although the branch remained popular coming in second (26%), with mobile banking beating telephone banking by six percent (15% and 9% respectively).
When these results are broken down by age, patterns begin to emerge. Internet banking was the most popular method of banking for those 45 years old and under (73.1%), however, for respondents over 45 the branch was still the most popular place to carry out their banking activities at 44% for the 46-59s and 66% for the over 60s. For the 46-59s, this was very closely followed by Internet banking at 43%, however the over 60s second choice was telephone banking at 20%. The mobile came in second for the under 29s at 26%, however for respondents in the 30-45 category the branch just won over the mobile device by 1.4%.
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By GlobalDataIt is clear from the results that these changing patterns of behaviour are driven by habit as the respondents in each age group had a distinct tendency to favour the banking channels that had been most dominant during their banking career to date. As such the over 60s were much less inclined to use mobile banking (1.4%), whilst the under 21s were the least interested in telephone banking (0.8%).
The idea of consumers sticking to what they know was only cemented further by the predominance of cash usage across all age groups (95.8% had withdrawn cash in the last month) and the use of bank cards on the high street (84% in the last month).
Regardless of industry predictions of a future cashless, mobile paying society, for the moment the majority of Britons would be loathe to leave home without their wallet: and in this wallet you would find some cash and at least one card.
When we delve into newer technologies like contactless cards and mobile payments things start to change significantly. Of the 128 people that had used a contactless card in the last month 68% were 29 years old or younger and only 13% were over 46. Of the 59 people that had paid using their mobile phone over the last month, only 2% were aged 46 plus, whilst the majority of mobile payments had been made by the collective 45 and under age group at 80%. This boils down to trust. Overall mobile was the least trusted payment method (71%) followed by contactless cards (47%). However, this is where use and trust differ though the age groups. The older respondents were less likely to use a payment method they didn’t trust with 67% of the over 46 year olds saying they would never make a mobile payment and 55% saying they won’t use mobile banking. However, although mobile was cited as the least secure way to pay across all age groups, of those under 45 interviewed, 83% thought that mobile payments would be mainstream in 1-2 years and a whopping 90% would use mobile banking.
Drilling down further and looking just at the under 21s, 55% thought mobile was the least secure however, 56% had used their mobile to pay for something over the last month. Whereas 90% of the over 60s thought mobile was the least secure payment method and only 1% of them had paid using this method. This discrepancy offers hope to all emerging innovative players in the payments industry; trust is hard to come by but the younger age groups are willing to use new payment methods regardless.
The takeaways from the survey are clear, FIs need to cater for all age groups and install a multichannel plan in their long term strategy; favouring one channel over all others will only cause frustration amongst certain age groups. Banking customers are starting to distribute their assets across multiple institutions more often and are quick to close their account and move on if their experience has been less than satisfactory. In this increasingly customer-centric industry FIs need to maintain inclusivity for all age groups.
Whilst still a significant barrier, trust in new payment types can be overcome and the future for mobile technology looks bright. 76% of respondents predicted that payments with these devices will be mainstream in the next four years with the younger generations leading the way.
Bethan Cowper, Head of Marketing & PR at Compass Plus
