Yet another report has been released that highlights millennials’ disengagement with banks. But banking was never going to be a love affair for this segment. Rather than worrying about winning the hearts of millennials, banks should focus on winning their business. They can do this by delivering the products these consumers value in the ways they prefer to bank.
Scratch, an internal consultancy firm within media giant Viacom, has released a comprehensive three-year study on millennial disruption of various industries, including financial services in the US. Banking in general is savaged as unpleasant (71% would rather go to the dentist than a bank) and ripe for disruption. The gap between millennials and banks has never seemed larger, with a fear that the segment will be lost en masse to fintech disrupters.
Some of this report clearly reflects the unique experiences of the US market, and shows that the financial crisis has left its scars on millennials. However, the findings do hold broad truths for all banks dealing with young, tech-savvy consumers. That millennials see banking as commoditised, thus have very little incentive to remain loyal to a brand, is unsurprising. After all, how different are the services most retail banks offer their clients? Expecting consumers to value one account more than another because it has a Visa debit card rather than a Mastercard version, or a slightly different rate on an overdraft, is a big ask of any consumer.
Millennials are not looking for a bank they can love. They want a safe place for their money to grow, convenient access to it so they can buy where and when they want and, if they need it, a loan to pay for the things they can’t afford. All in all, they’re similar to the rest of society, with the only difference being that these digital natives are more open to trying new digital solutions.
Australian millennials are a case in point: 84% bank via a mobile app, 25 percentage points higher than the overall market, while online banking use is near-universal among the segment. So if a bank makes it difficult, expensive or clunky for a millennial to buy something online, split a brunch bill with friends, or grow their home deposit, they’re going to look for alternatives.
Improving the core digital offering so that the customer-facing end of it is as smooth, fast and efficient as possible is therefore crucial. Millennials may never love their bank, but they will love being able to access credit when they need it and pay for things easily at low cost. It’s better to be useful than loved if you can’t be both, and banks are having enough trouble with the first without worrying about the second.
– This article is reproduced with kind permission from GlobalData Financials. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo by Jerry Kiesewetter on Unsplash.