ZELLE COULD BENEFIT FROM TARGETING BABY BOOMERS: Early Warning, the operator of bank-based peer-to-peer (P2P) payments service Zelle, published its first Digital Payments Adoption study of 9,000 US consumers, highlighting the influencing factors that contribute to digital P2P adoption and the different ways that P2P is used across generations. More than 75% of millennials surveyed have used digital P2P payments, though all generations engage. Younger consumers make digital P2P transactions more frequently but at lower values, while older customers interact with P2P platforms less often but typically spend more, Early Warning’s Head of Digital Strategy and Operations Ravi Loganathan told Business Insider Intelligence. 

Factors that motivate consumers to choose a P2P service differ across generations. This, combined with divergent spending habits, could push firms to take various approaches to target certain demographics. 

  • Younger consumers tend to use the services their friends and families use. Sixty-eight percent of millennials cited referrals from their friends and families as the primary reason for trying a new P2P service. That reaffirms that P2P services tend to succeed via the network effect, in which a user makes a payment with the app, bringing the recipient into the ecosystem and potentially encouraging that person to continue using the app. But high adoption among this population, combined with network effect, could make it harder for emerging players like Zelle to convert these customers.
  • Older consumers are more focused on services their banks support. Of the 51% of baby boomers who’ve used a digital P2P service, over 70% cited that a service being offered through their financial institution was a key motivator. These customers also ranked security as a very important feature within P2P services, which trust in bank brands might underscore.

Older generations represent a significant opportunity for Zelle to capitalize on. Early Warning’s 51% finding is higher than other surveys that looked at baby boomers’ adoption of P2P services, indicating that the opportunity associated with this demographic could be even greater than previously thought. Zelle can leverage its network of bank partners to target this audience because they want services offered through their banks and could be looking for ways to replace wire or account-to-account transfers to younger users, for example, that might be slower or more costly. If the firm can effectively target this generation, Zelle could ultimately boost its user base and transaction value — the Zelle network reached $75 billion in 2017, up 36% annually, and already reached over $25 billion in the first quarter of this year, representing a 15% year-over-year (YoY) increase — especially because these customers tend to send higher-value transfers. And that could help the firm improve its standing in a competitive industry and push toward the forefront.



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