Millennial, Mobile, Money Index™ signals local financial institutions not sufficiently engaging always-on millennials

During Prime Minister Lee Hsien Loong’s National Day Message, he cited how other countries are using electronic payments to go cashless. The growing demand for mobile banking, driven by the millennial generation, is one of the reasons why Singapore needs to do more to truly enable cashless payments.

On that note, Telstra announced a new global report, titled “Exponential Performance – in a Millennial, Mobile, Programmatic World,” which reveals that Singapore is ranked sixth out of eight markets in mobile banking usage by millennials, signalling that local financial institutions need to increase efforts to digitise their business models to capture a generation that is mobile-first and set to become the main source of industry profit.

The report includes the “Millennial, Mobile, Money Index (Telstra 3MITM)”, which observes how well financial institutions across eight markets are transforming their businesses through factors like their capacity to attract millennials, their ability to engage them through mobile, and how much millennials are investing with them. Despite Singapore having one of the highest mobile penetrations (88 per cent) of the eight markets studied, only 67 per cent of the millennial population indicated regular mobile banking use. This contrasts with market leaders US (78 per cent) and China (75 per cent).

The report also addresses technology gaps between traditional institutions and FinTechs and the fact that Singaporean financial institutions need to transform the usability of their digital services.

SINGAPORE, Thursday, 10 August 2017 – Telstra’s new
global report, titled “Exponential Performance
– in a Millennial, Mobile, Programmatic World,” reveals that Singapore is
ranked sixth out of eight markets in mobile banking usage by millennials, signalling
that local financial institutions need to increase efforts to digitise their
business models to capture a generation that is mobile-first and set to become
the main source of industry profit.

The report
includes the “Millennial, Mobile, Money
Index (Telstra 3MITM)”, which observes how well financial
institutions across eight markets are transforming their businesses through
factors like their capacity to attract millennials, their ability to engage
them through mobile, and how much millennials are investing with them.

The report
revealed that millennials will become the most valuable demographic for banks
globally by 2028. In the United Kingdom (UK), United States (US), Indonesia and
China, the average wallet size[1]
for millennials has
already exceeded all other demographics to become the most valuable group for
financial institutions. In Singapore, however, wallet share[2]
(22 per cent) is significantly lower than their representation in the
population (31 per cent), indicating that Singapore is lagging in terms of riding
the millennial value growth curve.

Telstra 3MITM
also revealed that despite Singapore having one of the highest mobile
penetrations (88 per cent) of the eight markets studied, only 67 per cent of
the millennial population indicated regular mobile banking use. This contrasts
with market leaders US (78 per cent) and China (75 per cent).

“Based on
wallet size and mobile banking use, Telstra 3MITM suggests that local
financial institutions have yet to fully engage with local millennials.
Financial institutions in Singapore must do more to maximise this opportunity,
especially considering the high mobile penetration among millennials and the profitability
trajectory of this demographic. They must digitally transform their business
and operating models to increase the penetration of services among millennials,”
said Rocky Scopelliti, Telstra’s Global Industry Executive
for Financial Services.

As part of the
report, Telstra also surveyed 164 financial services executives across eleven
countries using the Exponential Quotient Methodology developed by the
Singularity University. The global survey found that 8 in 10 executives
perceive the most significant gaps between traditional institutions and FinTechs
to be in artificial intelligence, cloud, APIs and robotic process automation.
These accelerating technologies are part of the operating DNA of the new
breeds, with digital challengers enjoying cost savings of 67 per cent in
operating expenses and 98 per cent on customer acquisition compared to
traditional organisations.

“Major
financial institutions in Singapore are currently behind the likes of Chinese
and Australian banks in cost-to-income ratios. To shore up efficiency, they
should carefully invest in the right programmable technology to radically
reduce either the cost of customer acquisition or the marginal cost of service.
This will give rise to a modern financial services institution that is
digitally-led and can provide services that react to the needs of a demanding,
mobile millennial in real-time,” said Mr Scopelliti.

In addition to addressing
these technology gaps, the report also cited insights from Forrester on mobile
banking functionality, which suggested that Singaporean financial institutions
need to digitally transform the usability of their digital services. Out of 46
retail banks studied worldwide by Forrester, none of Singapore’s major banks
ranked above the average functionality score[3]
of 65 (out of 100).