Consumer buying behavior has been changed by mobile devices, and banks are watching

By Jonathan Crowl

| Banking

Like any other industry, banks face growing pressure to give each customer a personalized experience. This often includes recommending products and services that specifically suit the individual, such as refinancing products for mortgage owners and budgeting tools for frequent overspenders.

In many cases, these changes are also a response to evolving consumer buying behavior. Some of this new spending activity may be the result of generational differences, but in other cases, changing behaviors are being molded by mobile technology and expanded financial services. This increased mobile activity also gives banks valuable new data acquisition channels to glean insights about their consumer bases, which in turn makes it easier to target these consumers on a personalized basis.

Increased automated spending

Consumers love the subscription economy, and so do the companies adopting this pay structure. One reason why businesses love it is that many consumers forget what they’ve signed up for, allowing recurring charges to take place without realizing they’ve spent money.


However, this hasn’t deterred consumers from taking advantage of automated spending opportunities, according to Entrepreneur. Whether it’s website hosting costs, utilities payments, streaming video and music services or even monthly purchases of household goods, automated spending continues to gain steam among consumers. Mobile services have only increased the frequency of this type of spending, since so many apps depend on subscriptions as the foundation for their revenue.

Meanwhile, many shoppers are willing to blindly plunk down money as long as they don’t have to worry about paying their bills by their due date. Automated spending also helps them avoid situations where they’ve run out of soap in their home or don’t have the time to go out and buy the latest Adele album. For consumers with poor financial hygiene, this can quickly lead down a troubling spending path, but most consumers are happy to let automation simplify their financial lives.

Millennials break from tradition

From a demographics point of view, millennials demonstrate the most divergent spending behavior, which is prompting banks to market to them differently. According to research from TD Bank, millennials have broken from older generations by putting more money into retail goods and restaurant spending.

Those millennials are spending less money overall, opting instead for lifestyle-based purchases, especially on-the-go food and drinks. This isn’t necessarily a bad thing, but as banks note, they’re missing out on rewards opportunities. Restaurant spending is one of the most common spending categories for credit card rewards programs, yet 39 percent of millennial consumers either don’t own a credit card or don’t use one that offers a rewards program.

This amounts to huge financial losses every year, and it’s a form of consumer buying behavior that banks want to target. By better educating millennials, banks could convince those consumers to make better use of rewards-based banking products. For millennials who don’t want to clutter their wallets with credit cards, mobile wallets could be a compromise that offers rewards without the unwanted plastic.

Free financial monitoring services

There are a range of app-based investment and financial monitoring services, many of which are free. This is a great opportunity for consumers who don’t like balancing their checkbooks or combing through their credit card statements. Instead, an online service can link to their bank accounts and monitor each purchase made to every bank and credit card account, monitoring for excessive spending, unwanted fees, duplicate charges and even credit card fraud. These services make it easier for the average consumer to stay informed about their spending habits, checking in on a daily basis to make sure they are on the right track.

Banks offering similar in-house services can strike it rich with consumer data, too. In exchange for better monitoring, consumers are more likely to provide additional information regarding their purchases, including how to categorize those purchases and what their monthly spending goals are. Based on this information, banks can offer even more personalized products and services, seamlessly serving each consumer’s needs — no matter what they are.

Improvements to mobile banking have largely been consumer-driven, and future innovations will be similarly directed. Banks understand that consumers need and want better products to help them make smarter decisions, and an increased exchange of data is making this easier to offer.