News that bank customers in Singapore will soon be able to exchange money on social media via Facebook or Twitter shows how far retail banks have come in their quest to meet the demands of the hard-to-please millennial generation. Under the new service agreed by 20 Singaporean banks, traditional account numbers and sort codes will no longer be required. All customers will need is a social media account.
In the US, Facebook users are already able to transfer money for free via Facebook Messenger, while Snapchat offers a similar service called Snapcash. With millennials accounting for 25% of the EU and US populations, it’s not surprising that retail banks want to pay catch-up with social media innovations in order to keep this hard-to-please demographic onboard. If the market researchers are right, they could be facing an uphill struggle.
According to the influential Millennial Disruption Index, a third of US millennials believe they will not need a bank at all in the near future, while 73% claim they would be more excited about a new financial services offering from Google/Amazon/Apple/PayPal than from their own bank. In short, millennials have very little time for (or trust in) traditional financial institutions.
The reverse is true when it comes to millennials’ relationship with social media. The average millennial in the US spends 26 hours a month on the Facebook app, and this doesn’t include Twitter, WhatsApp, Pinterest or Instagram. Millennials are also more likely to trust their social network of friends and peers than the average bank.
Connecting with millennials
So what are the four lessons bank brands could learn from social media about how to apply new technologies to connect with millennials in a meaningful way? The first is to:Learn about and understand millennials on their own terms. It’s pretty much a truism that millennial experiences are mobile-first and digitally native – we estimate that around 90% of millennials use smartphones. But what does this mean for banks?
Instead of traditional products driven by long-term client/adviser relationships, millennials want innovative products inspired by new multi-channel relationships. In fact, American Banker states that 92% of millennials would make a banking choice based on digital services, while Facebook research shows that millennials are 2.5 times more likely to put their trust in an algorithm such as a robo-adviser or automated portfolio management than Gen X or Baby Boomers.
Social media brands understand their users’ desire for innovative services and are constantly evolving their services, adding new features and functions in order to stay ahead of these needs (look at Snapchat adding a Memories feature, allowing users to add special snaps and stories to a folder). Instagram, a platform hugely popular with millennials, has evolved to enable them to be more creative and expressive with communication, as is their desire, by adding things such as layout, hyperlapse and boomerang.The second is the need for deep personalisation. Engaging with social media is a very intimate experience: social media brands know enough about their users to recommend new friends, Twitter personalities or contacts, and groups they may want to join. Facebook nurtures this intimacy with videos commemorating friendships, and infographics showing users their most frequently used words. Twitter knows how long it’s been since you last checked in, and brings you up to date on what’s happened with “While you were away”. Retail banks also know a huge amount about their customers, but can they combine this knowledge with great UX design and smart tech to develop a much more personal relationship with customers?
The UK’s Atom Bank app offers every customer a personalised experience, as they have their own logo and colour scheme, as well as using selfies, as part of the security process. It’s not surprising that Atom Bank is a mobile-first offering. Other ideas could range from simple things such as sending a birthday message, to allowing customers to personalise their statements to include data visualisations and more. Or it could include clever ways of revealing surprising things to customers about themselves, such as “Did you know you spent £500 on shoes last year?”. After all, who said banking had to be boring or a chore?The third area where brands can learn from social media is trust and transparency. Millennials are the “recession generation”, whose direct experience (or whose parents’ experience) of market volatility and job insecurity during the global financial crisis of 2007-2009 has impacted their finances and their trust. So how can banks respond? Again, borrow from the clear, uncomplicated way in which social media brands talk to their users. Instead of using jargon and relying on small print, speak human and be upfront about fees and charges. A fourth lesson where banks can learn from social media is conversational commerce, which involves using bots, chat and Apple-Siri-type interfaces to drive interactions between people and brands. Sparked by the success of Facebook Messenger, WhatsApp and other similar experiences, companies across all sectors are trying to identify their conversational commerce opportunities. In banking, this looks set to include messaging, chat and voice platforms in a way that enables consumers to carry out transactions within a social context. An example of this is Capital One’s Amazon Echo app (or “skill”) that allows customers to perform basic retail banking activities using Amazon’s voice-activated virtual assistant, Alexa.
Interact and communicate
Meanwhile, one of the most popular financial apps among millennials is Venmo, a peer-to-peer payment app that includes a social feed, similar to Facebook’s timeline, and which encourages emoji-based acknowledgement of money transfers.
When it comes to conversational commerce, banks aren’t just learning from social media – they actively need to integrate with it because, with their instant messaging payment services, Facebook and Snapchat are increasingly moving onto their turf.
In short, for banks to solve their millennial problem, they need to recognise that the use of messaging, social and voice platforms to connect to brands and services is here to stay, and that payments through Facebook and Twitter are just the latest example of this trend. Banks need to embrace new ways for their digital products and services to interact and communicate with millennials to stay relevant and be successful among this next generation.
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