By Maria Allen
Millennials: with smart devices in hand, they live online like no generation that has come before. But that does not mean, by any stretch of the imagination, that they are either gullible or trusting when it comes to managing their finances in the virtual sphere. Rather, millennials display significant concerns about security when banking, purchasing and moving money online. Banks and financial institutions must take aggressive steps to respond to these concerns in order to engage effectively with this crucial market.
Security Concerns among Millennials
According to the Unisys Security Index, the only recurring snapshot of security concerns conducted globally, security concerns regarding identity theft and bankcard fraud top the list worldwide – with 65 and 64 percent of those surveyed saying they are seriously concerned about identity theft and bankcard fraud, respectively. Like all other age groups, millennials are concerned about the safety of their personal data in a virtual world. But notably, the Security Index demonstrated that millennials are actually more concerned about security threats than older generations.
This heightened level of concern among millennials is understandable. Regarding identity theft and bankcard fraud, they know the risks associated with cyberspace. They understand how accounts can be hacked. They have absorbed such knowledge since birth. Plus, they don’t tend to place a lot of reliance on big business or big government to keep data secure.
These security concerns do not stop millennials from using technology and relying on it for their financial transactions. A full 75 percent of millennials turn to mobile banking for a variety of transactions, and 27 percent indicate that they are completely reliant on their mobile banking app. That being said, if there is a fraud incident, one out of three of millennials will close their accounts with that bank.
Combining Services and Security in One Place
First and foremost, banks need to provide millennials with the services they want, and support those services with the security they need. The Security Index addressed this point with a telling set of questions.
Consumers worldwide were asked to respond to the query: “Would you support an app on your smartwatch from your bank or credit card company to make payments from your watch?” Overall, millennials favored such an app more than older generations. Smartwatches are leading-edge technology, which is attractive to millennials. They like the convenience of making online payments. Couple the two together, and banks have a compelling offer.
But there is a caveat. Of consumers who did not support a smartwatch payment app, 45 percent of people globally replied that they were concerned about the security of the data being collected. Security concerns can – and often do – trump the attraction of both innovation and convenience.
However, there was a related question asked in the Asia-Pacific region: “Do you support fingerprint scanners on smartwatches to authorize payments made by the smartwatch?” The numbers of respondents in favor of such a security measure ranged from 47 percent in New Zealand to a high of 71 percent in the Philippines.
These responses indicate that the concerns people have about making payments via a smartwatch can be mitigated by the institution of biometric security authentication and protection. Banks can therefore implement security protections to allay consumer concerns in this – and likely in other – transaction venues. Therefore, for both existing and new products and services, banks need to assure millennials that appropriate security is present and active.
Unfortunately, security isn’t leveraged as a primary marketing message by most banks. In fact, it often isn’t used as a key message at all. Banks may put a security logo on their website, or offer obscure language about security and protection in a plain flyer printed with unreadable 8-point font. This lack of clarity around security measures may be one of the reasons that 40 percent of banking customers say their bank does not protect them from identity theft at all times. That is the perception – but is it the reality?
Banks should be trumpeting security messages today, educating consumers about what they are doing to protect personal and financial data. For current bank customers, security messages are reassuring, building confidence and loyalty. For prospective customers, demonstrable security is a powerful lure. As shown in the previous section, an app for making payments on a smartwatch may be attractive to a millennial, but they might not adopt the payment method for fear of being hacked. However, marketing the app and showcasing the biometric authentication that protects the consumer alleviates the barrier to acceptance and use.
Making the security message enticing is part of the marketing challenge. But, the fact is, some forms of security can actually be fun – such as taking a selfie and using it as verification to open an account online. Below is one example of how marketing may bring to life a campaign to increase account acquisition.
Another key way for a bank or financial institution to mitigate millennial security concerns is to show that proactive and preventive measures are being taken to combat cyber threats. It is not enough in this day and age to simply react to threats or breaches after the fact. Risk must be anticipated, identified, and countered in real time.
To do so, banks need to employ advanced analytics tools with built-in artificial intelligence and machine learning technologies. Such analytics allow banks and financial institutions to:
- Improve real-time detection of fraud, such as by sending an alert to a millennial within seconds of a credit card being compromised
- Stay ahead of ever-more-sophisticated cyberattacks, protecting millennials against fraud and identity theft
- Prevent losses so that millennials don’t have to suffer the difficulties associated with stolen funds
- Avoid unnecessarily inconveniencing millennials by accurately authenticating users as they open accounts, apply for loans, or perform transactions
When millennials know that their bank is proactively protecting their data and accounts, they will be loyal to their bank and even recommend it to others. In fact, millennials are more likely to recommend their bank to family, friends and co-workers than older generations, with 41 percent of millennials recommending their financial institution compared to 25 percent of 35-49 year-olds.
Millennials are now the largest living generation, having surpassed baby boomers. Attracting and retaining millennials is essential to bank growth and expansion. Too often, however, banks have focused on millennials’ love of technology without realizing their equal need for security. As banks build security into their products and services, market that security as a key message, and leverage advanced analytics to underscore security on a daily basis, millennials will respond with their business, their loyalty, and their referrals.
Maria Allen is senior director and global head of financial services portfolio solutions for Blue Bell-based Unisys Corporation. She can be reached at email@example.com.