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The Largest Generation In History Wants To Change Banking Forever

Blog Millenials 1

Millennials will be making the rules across society. Why would banking be any different?

As early as next year, 2019, millennials will surpass baby boomers as the largest demographic on the planet. In America alone, 71 millennials now represent the buying power of $1.3 trillion annually, according to Jeff Fromm, the president of Futurecast.

That’s a huge market, and it’s a market that has the buying power to demand things on its own terms. As they get older and experience more political and economic power, millennials are set to become more and more important. Businesses will simply adapt or die.

There is a tendency to treat millennials as some kind of alien species; to be viewed with hostility and bemusement due to their choices and lifestyle. Of course, they’re just people with the same innate drives and fears as everyone else. But this distrust is as old as time itself. Boomers distrusted hippies, who were skeptical of 80s kids, who looked with horror upon Generation X, and on and on. Those with power are keen to protect it and not keen to transform according to the tastes of the next generation.

Constant and Convenient

The one thing that makes them different is the fact that millennials are the first generation in history to grow up with the internet. It’s the defining fact of their lives. They’ve had smartphones since they were teenagers and they’ve been digitally connected to everyone else in their world for as long as they can remember. For better and for worse. 

Image Credit: Shutterstock.com

“It’s common knowledge Millennials and Gen Y live their lives on smartphones, and it’s easy to see why,’ explains Sankar Krishnan, an executive VP at CapGemini. “Daily comforts, such as Uber, Starbucks, Amazon, Tinder, and Netflix are just a swipe away. As a result, these demographics have become accustomed to a quality digital customer experience where ease of use and inbuilt functionality are front and center. For them, convenience equals loyalty.”

Historically, convenience has not been a watchword or a guiding principle for banks and financial firms. Their focus tended to sway towards reliability, trust, and longevity to give them status and mark them as desirable for consumers. That began to change early in the 21st century, but the internet pushed that focus on ease-of-use into hyperdrive. Now traditional banks are in a race with fintech startups and internet giants to develop financial products that speak to the new generation, while still maintaining what it is that makes them the bedrock of a reliable, western capitalist financial system. 

It’s far too easy to just bash all the banks as being somehow inadequate, or short-sighted for not being prepared for this generational shift. But that take is too simplistic. “It is not surprising that businesses, organized in the pre-digital era by people from the previous generations, encounter adaptation problems in today’s world. Of course, they still have an army of loyal customers from previous generations, but evidently, their growth prospects are limited if they don’t adequately serve the needs and expectations of the next generations,” explains Financial Brand.

So how do they adapt and develop products and service that could mean the difference between success and failure as the demographics of the country and the economy continue to shift towards new ways of doing business? 

3 Core Behaviors To Retain And Grow Your Millennial Base:

1. Honesty and transparency

First and foremost, this generation wants a partner they can trust. The internet has made skeptics of us all, and all of us have a ‘bogus radar’ which is working on high alert at this moment in time. If a bank can speak truthfully about what it is offering, what the costs are, how the process works, and if it can offer transparency in its processes, then it’s on the right track.

Consumers want to be able to engage easily via mobile devices, to know the status of their applications on any accounts, and to know instantly when information is missing or outdated on an application so that they can rectify it.

Millennials are looking for partners to work with, to collaborate with.

2. Invest Heavily In Technology

This generation knows their technology and they are not afraid of it. They want products that understand them and work for them. CapGemini’s Krishnan believes that banks must use “customized research on demographic profiles, alongside data analytics focused on behavior and geography,’ which will give “banks a much more detailed view of customers as individuals, with a view to providing a tailored experience for each.”

Attempt to root the most frequent financial processes in applications that are easy to navigate and match the more tech-savvy companies that they rely on. Use the language of the internet that already works to offer smart financial products.

Simplicity: Most young people don’t want to be spending time worrying about money. They probably don’t have complex stock portfolios, mortgages, loans, and kids to worry about - at least not yet. They want money to facilitate the things they want to do and the experiences they want to have while they still can. Products that match and enhance the sense of freedom that they are striving for will be embraced.

In South Africa, the largest insurance provider, Discovery Health is launching a bank that is building on their massively successfully Vitality Health program. Vitality Health offers you rewards for doing healthy things - like eating well, going to the gym, and having an annual checkup. This model can be used financially too. Moneyweb reports that “The bank believes the dynamic discounts and rewards that will be offered by Vitality Money as part of the chassis’ shared-value model are compelling.”

This kind of thinking appeals to millennials and it meets them on their own terms.

Ultimately, if a bank or mortgage lender can bring the reliability, the ethos and the trustworthiness of their traditions into new products that are more flexible and don’t bring the baggage of it’s more established working models then it has a real shot of success with millennials.

They’re not looking to break the system. Many millennials have been with the bank they used since they were kids with savings accounts; chances are they probably trust the brand and know what is expected of them. If the banks listen to millennials and give them the kind of products that they enjoy using, then they’ll stick with it.

AI FOUNDRY has a wealth of experience working with financial institutions to develop compelling solutions and digital processes that use a bank’s data to inform and better serve their customers.

Get in touch with
AI FOUNDRY today to see how we can help you to improve what you do.

SOURCES:

https://thefinancialbrand.com/69782/digital-banking-millennial-gen-z-experience-design-banking-trends/

https://www.forbes.com/sites/jefffromm/2018/05/17/millennial-money-new-strategies-for-better-banking/

https://www.moneyweb.co.za/news/companies-and-deals/the-science-behind-discovery-bank/