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Generation Y is the first wave of the so-called digital natives — people who are proficient in new technologies. This is the first generation in which the differences between the individual EU member states regarding the share of online banking users are decreasing. The only exceptions are Romania and Bulgaria.
Work or work-life balance?
Generation Y, that is, people born between 1980 and 1995, started entering adulthood already in the new millennium, which is why they are called the Millennials. In the United States they are sometimes referred to as the “Amazon generation”. What distinguish them the most from the previous generation, i.e. Generation X, is their attitude towards work and the use of new technologies.
In Poland, Generation X was the first cohort to experience the negative effects of the political transformation after 1989, and especially the double-digit unemployment rate. As a result, people from this age group treat work as the paramount value in life.
The Millennials, who have also faced a difficult situation on the labor market, strongly reject such an approach. In accordance with the principle that people should “work to live and not live to work”, for the Millennials professional activity has become a path of personal development, which translates into relatively short periods of employment in the each companies and the ability to maintain a work-life-balance.
Generation Y is the first wave of the so-called digital natives, who are skillfully utilizing the opportunities provided by the internet, both in their professional activity and outside of the workplace.
As indicated by Neal E. Cutler from the American Institute of Financial Gerontology, the Millennials are an extremely resourceful generation, and they acquire financial knowledge online instead of using the services of processional advisors.
The Millennials’ constant use of the internet also translates into much more active use of online banking compared with the older customers. In this generation there is, for the first time, a clear decrease in the disparities between the individual EU countries regarding the share of online banking users.
Scandinavians in the lead
According to Eurostat data, at the end of 2018 there were 99.3 million people aged 25-39 in the European Union, which accounts for 19 per cent of the EU’s total population. On average 71 per cent of people from this age group used online banking. In 16 countries the share of online banking users exceeded 70 per cent, and in 23 countries it was higher than 60 per cent.
Just like in the older generations, the highest percentage of Millennials using online banking services is recorded in the Nordic countries — Denmark and Finland, as well as Estonia, the Netherlands and the United Kingdom (92-97 per cent).
In Sweden, Latvia and Lithuania — close neighbors of the Nordic countries — the share of online banking users reaches 85-87 per cent.
The share of Millennials using online banking is higher than the EU average in Austria and the Czech Republic, as well as in Croatia, Ireland, Luxembourg, and also in the two largest EU member states, Germany and France.
The lowest share of Millennial online banking users in the EU is found in Romania (13 per cent) and Bulgaria (11 per cent). Even if we were to limit such comparisons solely to the other Balkan states, these two countries are clearly lagging behind their neighbors. For example, in Greece 40 per cent of Millennials use online banking and in Croatia this share reaches 74 per cent.
The poor utilization of the online channel by bank customers from Bulgaria and Romania is mainly due to cultural factors, as well as the lower affluence of the residents, as measured by GDP per capita.
In Bulgaria, the weak development of online banking could also be explained by the low level of public trust in the banking system. Bulgarian Millennials still remember the huge banking crisis of the late 1990s that resulted in the bankruptcy of over a dozen banks. The entire generation also experienced the events of June 2014, when two large banks, Coprbank and First Investment Bank, lost their liquidity and suspended their business operations.
Generation Y will remain professionally active for many years to come, so it’s no wonder that they are a particularly important group of customers in the retail banking segment. At the same time, we should keep in mind that the Millennial generation consists of individuals who are at different stages of their family lives. They include single people, families who have no children, as well as families with children of various ages — from infants to teenagers.
This determines the differences in the demand for banking services. Nevertheless, dividing the entire generation into two sub-groups — the younger Millennials (people under 30 years old) and older Millennials (people aged 30 and more) — shows that the difference between the percentage of online banking users in both groups is minimal — it does not exceed two percentage points in 19 countries.
There are no significant differences in the use of online banking between the two sexes, even though there are several countries in which the share of women using banking services is a couple percentage points higher than the share of men. These include large countries, such as Spain and France, and small nations, such as Ireland and Lithuania.
Higher shares of online banking users among Millennials
In more than half of the EU member states the difference between the percentage of online banking users among people from Generation Y and Generation X exceeds 10 percentage points, which confirms the domination of Millennials in the digital world.
The state that recorded the largest increase in the share of online banking users is Croatia, where 70 per cent of people from Generation Y use online banking compared with 44 per cent in Generation X. The difference between the percentage of online banking users from both generations is also greater than the average in Austria (22 percentage points), as well as Lithuania, Portugal and Poland (19-20 percentage points).
The situation is different in Romania and Bulgaria, where Generation Y does not exhibit significantly higher shares of online banking use than the older generation. While analyzing these two countries, we can truly appreciate the other EU member states’ success in the implementation of the online channel for the distribution of banking services.
The representatives of Generation Y in Poland have absolutely no reason to feel inferior to their peers in other European countries — 67 per cent of them use online banking services, which is only 4 percentage points less than the EU average.
Within the group of large EU member states, the share of online banking users in Poland is higher than in Spain (63 per cent) and in Italy (47 per cent). It’s worth noting that in Poland only 21 per cent of Baby Boomers use online banking, while in Generation X this share reaches 47 per cent.
This means that Millennials are the first Polish generation which has caught up with the EU in terms of online banking. As in most EU countries, online banking is used by a similar share of younger and older Millennials (the difference between the two cohorts does not exceed 2 percentage points). Broken down by sex, the share of women using online banking is slightly higher than that of men, but the difference is not significant (four percentage points).
Life in front of a computer screen
Because Millennials are the first generation of digital natives, it’s worth taking a look at how they are functioning online. According to Eurostat data from the “Individuals – internet activities” database, an average of 83 per cent of people from Generation Y search for information on goods and services online. Even in countries such as Romania, Bulgaria and Italy, where this share is the lowest, it still exceeds 50 per cent. In the case of Millennials, the primary source of information about the services offered by banks are their websites and not physical bank branches.
Eurostat data show that e-mails are a widely used form of communication in the Millennial generation. In this respect, the average share in the EU is 86 per cent, which means that a higher percentage of Millennials use e-mails than search for information about products and services. Using this form of communication by banks should therefore be an obvious choice.
Unlike people from Generation X, Millennials mainly access the internet using mobile devices. In 2018, the EU average in this regard was 87 per cent (compared to 71 per cent for Generation X).
The Eurostat does not conduct separate studies on the share of people using mobile banking, but the growing popularity of mobile access to the internet is changing the way in which banking services are used and leads to seamless “switching” from online banking to mobile banking.
This new trend is confirmed by data from the banking services market in Poland — reports prepared by the PRNews.pl website indicate that at the end of 2012 the number of active users of mobile banking was 1.12 million, and six years later it reached 11.21 million. This means an increase of 850 per cent, and the Millennial generation was the driving force of this rapid growth.