Helping millennials chart today’s financial waters
Written by Banking Tech
Bassem Bouzid is SVP and managing director, EMEA, at Diebold
Millennials – those highly sophisticated, tech-savvy men and women born between 1980 and 2000 – present enormous opportunities for banks and other financial institutions.
Yet to be successful, these businesses must understand and meet the needs of a generation that grew up having it all, seeing it all, and being exposed to it all since early childhood – and that is no easy task, writes Bassem Bouzid.
First, some numbers to put the Gen-Y crowd, as they’re also known, into perspective:
- There are more than 160 million millennials in Europe, according to Skydox statistics
- Technology is central to their lives: 92% of Europe’s millennials are connected on a daily basis to technology. 80% of them sleep with their smart phones next to them, and they constantly report their daily activities on social media, be it Facebook, Twitter, Instagram or several other Internet sites.
- 41% of those surveyed said they would rather communicate electronically than face-to-face or over the telephone. It’s hardly surprising then that millennials have specific expectations about how technology is used in every day’s life
Financially, millennials have experienced sobering realities in their short lives. These include graduating from leading universities and colleges with high levels of student debt. Moreover, they’ve witnessed serious recessions worldwide and faced very tough job markets. In Europe and North America even advanced degrees can’t guarantee employment at suitable levels, and sometimes at any level.
It’s no wonder, then, that these frustrated 20- and 30-somethings tend to be conservative in their spending habits, wait much longer to marry, delay major purchases and are reluctant to invest in homes. In fact, they’re the ones driving today’s “sharing economy” (think Uber and Airbnb). At the same time, Millennials have lived most or all of their lives with the Internet and on-demand services being readily available. They eagerly absorb new designs and technologies, hence they require products and services that provide a value-added experience, offer mobile-friendly content and present themselves in an honest and transparent manner.
Technology is central to their lives, yet millennials still value relationships, especially with banks. They have access to many financial tools that previous generations did not get, but they say (70% in one study) they wish they had more knowledge and skill in managing their finances. They are, as a result, still very much interested in a relationship with their bank.
Also, as the Apple generation, one could imagine that they would abandon cash to use Apple Pay and other digital means of payment. Another wrong assumption as millennials are actually big cash users.
That said, financial institutions must grasp the banking habits of millennials and rethink their customer experience to better engage with these digital natives who use their smartphones for just about everything. What, therefore, constitutes a millennial-friendly banking experience?
First, millennials have notoriously short attention spans. That means they want speed and simplicity throughout the transaction process. They have a high degree of comfort with self-service, value convenience highly and are accustomed to well-orchestrated experiences across channels. Being able to authenticate their bank’s ATM using their mobile device, which they often carry more than their wallet, is an absolute expectation.
Second, they want tech innovation that keeps up with the dramatic rate of change taking place all around us, yet they are still interested in a relationship with banks. New features and better-functioning networks are delivering better apps in every industry, banking included. Of course, these apps have to be current and in line with constantly evolving phones and phone apps. Bottom line: updates can’t come at three-year intervals.
Third, millennials need and desire education. This most educated generation values learning, both online and in real-time, and wants more knowledge and skill in managing their finances. They don’t have the time or patience to read lengthy manuals or prospectuses; they want to learn while using. Banking-related apps need to be infused with usability, gaming or virtual education. These are all valid options for teaching these highly skeptical consumers how to borrow, save and invest for the future. Banks must provide a holistic set of services across channels that point younger customers toward opportunities and alert them when action needs to be taken.
Fourth, security is a must. Being well-versed in the risks associated with the online universe (think recent hacking incidents), millennials demand protection and security. While they freely share personal details that shock their parents, they value protection for their money, but still crave convenience and speed. As such, they’ll likely be early adopters of biometrics and mobile-integrated security systems. Far from painful, data security could and should become a strong positive differentiator for banks doing business with this generation.
To the above-mentioned requirements, we see the ATM channel as a key part of a bank’s omni-channel user experience. Clearly, this physical touch point is an important outpost for a bank’s brand and experience – and it’s one that millennials use quite a bit. Because of this, Diebold and other companies are working on cross- and omni-channel projects, encouraging user interfaces, updating designs to be more modern and better leveraging the branding and sales opportunities the ATM can provide.
Banks should consider broadening the options and capabilities available through their mobile apps and online sites and realize that by enabling deeper accessibility at one touch point, they’re creating stickier platforms that encourage loyalty. Based on research we’ve conducted, we believe that 40% of transactions will be with millennials – peer-informed, price-savvy and always connected. Our goal is to bridge consumer banking priorities of convenience, security and self-service, with innovative technology-based solutions that satisfy the need for anytime, anywhere services.
Today’s financial institutions face major challenges ranging from paper-thin margins and non-bank competition to shifting customer expectations and deteriorating demand for services. By reaching millennials with the latest solutions for an increasingly mobile world, these businesses will not only remain relevant but will also thrive and prosper by serving this important segment.
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