How to Build Online Banking for Generation Y

Born at the dawn of the digital age in the early 1980s, the oldest among Generation Y have never known a world without personal computers and video games. The youngest of these so-called Millennials are still in their early teens, using their cell phones for texting more than talking, counting their "friends" on MySpace and going head-to-head against Ninjas on their Xbox.

The Millennials may not have the most money or be the most profitable to banks—not yet anyway. But one day, Generation Y—the largest American generation since the Baby Boomers—will outnumber their parents' Boomer generation. They'll control the lion's share of financial assets in this country as well. In the meantime, financial institutions need to keep a close eye on this consumer group anyway. After all, they represent the future—and they're the ones for whom we're building the next generation of online banking now.

No doubt about it, this tech-savvy generation won't be easy to please. So banks should develop innovative online financial services to attract and retain their toughest new customers. To do so, the following are five key steps they should take.

Step No. 1: Make user experience a priority

Generation Y won't settle for their parents' online banking experience, delivered in a bland interface that barely gets the job done and isn't fun to use. To go toe-to-toe with larger banks with multimillion-dollar investments in the online channel, smaller regional and community banks will need to deliver a comparable Web experience or they may risk losing some of their Millennial customers (as well as other consumer segments). This means banks need to offer Web pages that load quickly, transactions that post almost in real time, fewer clicks to navigate the site and online banking applications that incorporate the latest functionality to help all consumers better manage their finances.

Step No. 2: Understand consumer behavior

Banks should make an early commitment to delivering an optimized user experience. They can partner with solution providers that invest heavily in research and development to help understand consumer behavior through surveys, usability studies and advanced analytics. These findings provide valuable product design direction and can be used to shape the approaches banks take to fully understand their customer segments.

Step No. 3: Integrated online experience

Sometimes it's the simplest improvements that yield the greatest results. Banks can implement a simple functional user enhancement that gives consumers direct access to online bill payment features from within the online banking user interface.

For example, the next generation of online banking seamlessly integrates all commonly viewed account information: bill pay, balances, transfers and personal money management. It's all integrated onto a single screen for enhanced usability and a better consumer experience. Rich Internet applications (RIAs) such as Asynchronous JavaScript and  XML (AJAX) and Microsoft Silverlight transform yesterday's flat, one-dimensional interface into a dynamic, multidimensional online banking and bill payment user experience.