The word millennials causes many reactions, from excitement because of the opportunities this generation offers to confusion for not knowing how to attract customers from this generation. In the financial sector, the latter can be more frequent.
Millennials are those people born between 1981 and 1995, who grew with the millennium. This generation is important because of its size. As a millennial myself, I’d like to examine this generation and its relationship with financial services.
How millennials are banking today
The bank is often seen by millennials as a place to avoid: According to The Millennial Disruption Index, 71% prefer going to the dentist to going to their bank, and even 33% believe they do not need a bank. Banks are not appreciated by this generation: 53% believe that their banks offer the same as any other. This creates low fidelity so that 33% of these people are open to change banks in the next 3 months. Furthermore, the same percentage believes they will not need a bank in 5 years.
Banks are considered redundant in the life of this generation: 63% do not have a credit card, and over 70% believe that the relationship with their bank is based only on transactions. On the other hand, managing their budget is a service that millennials expect more from their bank.
There is a growing number of millennials who want to communicate with their bank through social media. Among these people, 69% expect to receive a response within one hour; 90% considered it acceptable to receive a response on the same day; only 6% would be satisfied if the answer arrives within 3 days. Two of the three most popular ways in which millennials want to receive alerts from their bank are through mobile devices: 30% of millennials prefer to receive SMS alerts, while 28% prefer push notifications through an app.
5 steps to cater banking to millennials
Here are five steps that I believe are needed to achieve friendlier financial services for millennials, or at least to push your institution in the right direction:
1. Develop friendly digital channels: It is increasingly important for financial institutions to be where their customers are, instead of expecting them to go to your branches. This is key to developing an omnichannel platform to be on every device that accompanies people in their daily lives. This facilitates the inclusion of millennials and it generates better results for the financial institution. If we consider data BBVA shared about mobile banking users, they have grown 17x between 2011 and 2015. Digital customers perform 11x more transactions per year than traditional customers. This is consistent with data produced the study “Banking on Digital Simplicity” by the international consulting firm The Boston Consulting Group, which states that banks with a high level of digitalization achieved +50% revenue customers, +30% of products by customers, +75% accuracy in identifying customer needs, and a decrease of 20% of operating costs by reducing complexity.
2. Development with focus on mobile: Most millennials take their smartphone in the first 15 minutes of the day. That is why 23% cited lack of a mobile app as enough reason for not interacting with a bank. This generation is different from the baby boomers in their relationship with financial institutions, among other things, for the confidence they have in their smartphones to conduct financial operations. 82% of Millennials agree that banks should offer mobile banking for tasks such as depositing checks. Consider that the use of a smartphone to make purchases and transfers is a growing trend, the income generated by mobile payments will double through 2018, according to a study published by TrendForce.
3. Allow users to perform all common operations online: It is useless to generate digital channels and develop an attractive mobile app if the features expected by customers are not provided. Is important to make available through digital channels the most common actions performed by millennials. Recall that 71% rather go to the dentist before the bank, do not force us to go to the branch, we want to do everything from our smartphone.
4. Personalization: In the time when communication is through social networks, those companies and institutions that provide a speech without listening to its customers are obsolete. The speech no longer generates impact, we must talk. To talk is important to know who is on another side. Fortunately, with digital channels we can collect the data needed to know who the financial institution speaks to. If that information is used to customizing each communication, it will generate a better response from the customers and enhance their commitment to the institution. A new concept that is used in marketing is wantedness, which means that customers want to be loved by brands. Those who manage to make their customers feel loved will achieve greater loyalty and profitability. Personalized communication is the first step to achieving this.
5. Simplify: Simpler, simpler, even simpler. Ready? Simplify a bit more. Millennials value our time and we want to spend it living great experiences and doing jobs that generate impact. The last thing we want is to waste it managing our money. So, the last step of the recipe, but no less important is to simplify. Remove as many steps as possible in your institution’s proceedings. It is necessary to find the right balance between simplicity and security. It is worth noting that thanks to the information held in mobile devices, today there are many options that provide security for transactions and allow institutions to verify the identity of individuals, which eliminates steps in performing various procedures.
Bankingly is a financial digital channels provider that enables financial institutions to pay per real use and be future-proof. Our digital channels are powered by Microsoft Azure which assure its security and reliability.