Mobile banking app. Credit: Standard Chartered
Only 67 percent of the millennial population in Singapore are regularly using mobile banking even though the republic has a mobile penetration rate of 88 percent.
As such, Singapore ranked sixth out of the eight markets studied for Telstra's Exponential Performance - in a Millennial, Mobile, Programmatic World report, in terms of mobile banking usage by millennials. The other seven markets were Australia, New Zealand, UK, U.S., China, Hong Kong, and Indonesia.
According to Telstra, millennials will become the most valuable demographic for banks globally by 2028. However, the proportion of wallet value held by millennials in Singapore (22 percent) is significantly lower than their representation in the population (31 per cent), indicating that the citystate is lagging in terms of riding the millennial value growth curve.
The report also included insights from Forrester on mobile banking functionality. Out of the 46 retail banks studied globally by Forrester, none of Singapore's major banks ranked above the average functionality score of 65 (out of 100). This suggests that financial institutions in Singapore need to digitally transform the usability of their digital services.
"Based on wallet size and mobile banking use, our report suggests that local financial institutions have yet to fully engage with local millennials," said Rocky Scopelliti, Telstra's Global industry executive for Financial Services.
"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," he added.
As part of the report, Telstra also surveyed 164 financial services executives across 11 countries to find out business models gaps between the traditional institutions and fintech startups.
Eight in 10 executives perceive the most significant gaps to be in artificial intelligence, cloud, APIs and robotic process automation. These accelerating technologies are found to enable cost savings of 67 percent in operating expenses and 98 percent on customer acquisition for digitally-led companies.
"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 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 Scopelliti.
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