- The latest research shows that “Nomophobia” is helping to drive banking via smartphones.
- Nomophobia is a fear of being without a mobile phone, and strong among millennials.
- A study commissioned by NCR and GlobalData says the shift towards mobile banking has been a stampede among millennials.
Nomophobia, identified by scientists as an irrational fear of being without a mobile phone, is driving the take up of mobile banking in Australia.
The incidence of smartphone separation anxiety, and the associated condition of fear of being offline, is especially prevalent among millennials.
This drive to be connected at all times means millennials, those born between 1981 and 1996, are more likely to be open to switching to neobanks, including new players such as Volt and Xinja, according to research commissioned by NCR and GlobalData.
This suggests that the remaining two thirds of the population are sticking with the convenience of their current bank.
“While there is a broad turn to mobile banking in Australia and New Zealand, the shift towards mobile has been a stampede among millennials,” says the report, Banking in Australia and New Zealand: At a Digital Crossroads.
“Nomophobia, the anxiety that comes from not having access to a mobile phone, may sound strange to most but to its mobile phone-tethered millennials it is entirely understandable.”
Mobile app penetration is near saturation point for millennials.
Almost everyone banks online but the first fully digital generation are doing this on their mobiles, as this chart shows:
Mobile apps are now starting to integrate AI-enabled chatbots as a means for conducting everyday banking.
The Commonwealth Bank, an early leader in mobile apps, launched its Ceba chatbot in January this year.
This chatbot has more than 200 banking tasks it can help with.
“The millennial population is fast rising in importance within the banking market, but they are also one of the demographics that banks have really failed to connect with so far, making them a concern for any big player,” says the report.
“As baby boomers have retired and more young immigrants have arrived, the clout of the millennial cohort has grown.”
Millennials now account for 4.8 million people in Australia.
“Most have now completed their schooling and entered the workforce as full-time workers, making them the core banking client base and one that should be earning banks lots of money,” the report says.
“But the lower penetration of many traditional banking products among millenials, particularly mortgages, means this promise has not been borne out by experience.
“The connection between bank and client is weak. Any bank that can establish this connection will, in theory, be able to not only tap into a client base that can be a prime revenue driver for the next 20 years but one that could be relatively easy to peel off others.
“And that is just what the neobanks and a few of the established players are counting on.”
However, millennials are a critical lot. With a willingness to try a digital-only bank there is a strong inclination to switch providers.
“With the Banking Commission throwing up all sorts of negative publicity, these are the customers most at risk,” the report says.
Millennials also choose to use their debit cards for online transactions more often than their credit cards, which don’t have the same kind of prestige compared to how they are viewed by baby boomers.
“For the deferred payment functionality of the credit card, Millennials are therefore more likely than average to opt for new payment tools such as Afterpay,” the report says.
“Additionally, reward schemes are not as enticing compared to how they once were, reducing the appeal of credit cards that in many cases may still be charging an annual fee.”
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