Crossing the Mobile Divide


How millennials will accelerate innovation and technology change

By Paul Schaus

You recognize one of today’s most prominent technology dilemmas for community banks: It’s the great mobile divide. It’s where older, profitable customers have been slower to adopt new banking technologies that not-yet-profitable millennials pick up quickly and easily.

Millennials, who will make up half the U.S. workforce by the end of this decade and represent community banking’s future best customers, are devoted to easy-access mobile technology. Serving this demographic will require investing in not only mobile channels but also cloud and data analytics to support those channels.

Meanwhile, the rapid pace of technological change will continue to force banks to pursue new ways to meet millennials’ highly accustomed appetite for convenience. And doing so will have to begin with a thorough understanding of their banking needs, activities and pain points. For that reason, community banks will increasingly use tools and methods like customer-journey mapping, ethnographic research, and analysis of behavioral and transactional data to grasp how banking and finance fit into the day-to-day lives of their millennial customers.

Nearly every community bank has rolled out mobile check deposit, but the banking industry remains on the cusp of experiencing how millennials and their smartphones are going to change retail banking and payments. Services like mobile in-store payments, mobile peer-to-peer payments, and real-time financial advice delivered through smartphone apps will similarly disrupt traditional business models. Banks will need to offer these services to appeal to millennials.

One example is Venmo, a mobile-based peer-to-peer payments service of PayPal Inc. that processed $1.3 billion payments in the first quarter of 2015, after processing $2.4 billion in payments throughout 2014. The key to Venmo’s success is the way it simplifies the process of splitting bills at restaurants and bars, making it a natural fit for the highly social lifestyles of millennials.

Community banks will need to offer similarly convenient mobile services that naturally support millennials’ technology-infused lifestyles, and customer research and data will become a common way of doing that.

Another example of future mobile technology shows customers how a new purchase would impact their budget before checkout. The biggest banks and some alternative nonbank companies are already doing this, and community banks are going to have to follow suit. Community banks should work to become the go-to source for such real-time insights and advice.

Yet another example of a mobile service that could generate similar success with millennials—and cement these customer relationships for the long term—is real-time financial advice delivered through the smartphone. Millennials crave financial advice, even though they don’t have the excess cash to make big investments yet. That’s because they are typically burdened with student debt but are looking for ways to save for their future despite that burden.

Despite the threat FinTech companies represent, many of them are outspoken about their ambitions to become tech providers for banks. Those that threaten banks offer a front-end mobile solution that diminishes a customer’s reliance on his or her mobile banking app. In some cases, banks may need to work with these new competitors while developing other technology products and services on their own, as many of the large banks have done with mobile wallets.

That will likely mean community banks will use interstitial Application Program Interface software, or APIs, to more easily share data and delivery channels with partner technology companies. Such technology and partnerships will become a common way community banks design their mobile experiences for their customers and innovate quickly in a changing market.

Paul Schaus ( is president, CEO and founder of CCG Catalyst, a management consulting firm in Phoenix, Ariz.