Dec 08, 2018
Over the last few years, the financial services industry has seen a sharp rise in app-based and alternative methods of financial interaction. A third of the participants in the Millennial Disruption Index survey believe that they would not need a bank at all in the future – at least not in its present format.
So, what has changed? And how should traditional financial institutions change themselves to partner this young cohort?
To begin with, traditional financial institutions should understand the mindset of the generation and the ways in which they differ from their predecessors:
- Millennials want banks to serve them differently than they did to their parents’ generation. They don’t want their bankers to be mere custodians of their savings – they want help them to help solve problems, reach life goals and enable them to earn more.
- Millennials are a research-driven, tech-savvy, constantly-connected and therefore, a highly informed group. While they are serious about their financial health, their financial habits are different from the earlier generations on several counts. However, they don’t seem to be getting the requisite support from traditional institutions – only 39% rely on financial advice provided by a professional.
- Millennials want their financial services partners to be responsive and engaging. At the same time, they should not be too intrusive and imposing. Research indicates that only 23% of millennials are fully engaged with the primary financial institution.
- Although millennials have identified their life-goals, a majority of them admit that they do not have the requisite knowledge to get where they want to go. However, research indicates that many newly employed millennials don’t have confidence in traditional financial institutions. In their opinion, these organizations don’t have the bandwidth to understand their needs, perspectives and motivations.
In order to partner with millennials from their first jobs to their first homes and beyond, financial institutions should plan their offerings keeping in mind the priorities and usage preferences of the target group. To successfully do so, traditional financial institutions will need to disrupt their approach to business – overhauling operational practices, IT policies and the employee mindset. In order to partner with the millennial generation more effectively, their services should be moulded to address the following objectives:
- Seamless, omnichannel convenience
- Financial service providers should ensure that they provide millennials with an omni-channel experience. The customer could be transacting online from a desktop or mobile device, or by telephone, or in a physical branch and the experience should be seamless.
- Balance between human touch and technology
- Financial institutions should have a balanced mix of technology and human touch to appeal to this segment of audience. Being digital natives, millennials have a penchant for online tools. However, they seek human interaction in more complex transactions such as expert advisory for financial goals.
- Hyper personalization
- Financial advisors should recognize that we live in the age of hyper personalization. Their audience will trust those who understand their specific situation and not offer generic solutions based on broad demographics. A focus on customer intelligence and sensitivity to their approaching life goals will go a long way in winning the trust of the millennial consumer.
- Millennials prefer straightforward, genuine conservations over flashy, gimmicky marketing campaigns. Financial institutions should integrate this understanding in their communication narrative. They should be more transparent in their efforts and generate content that resonates with their audience’s mindset.
- Value for money
- Millennials are cost-sensitive, particularly with the choice of many low-cost financial services platforms available online. Financial institutions should ensure that they maintain transparency in their pricing.
- Constant innovation for building loyalty
- Loyalty is fleeting in the millennial generation and they want to experiment with new products and services. The fear of missing out (FOMO) prohibits them from committing to any single brand for all their financial requirements. In fact, research indicates that millennials switch their primary bank at a rate that is 2.5 times than that of earlier generations. Financial institutions should innovate, try new ideas, and move fast to ensure they implement new and emerging technologies to address customer needs through automation.
Overall, millennial customers seek to better understand the long-term impact of their financial decisions and feel the need for more personalized tools to guide them through the process. Using technology to their advantage, financial services providers should build customer-intelligence led operating models. By employing tools such as next-generation data architecture and advanced analytics, banks can meet their customer expectations at the right moment and on a customer preferred endpoint.