It’s the age of The Internet of Things, and one of those "things" is banking. The rapid pace of technological evolution has created many super trends like cloud computing and big data analytics that have reshaped the business world, but have also turned an entire generation – Millennials, also known as Gen Y – into digital natives, who have very different expectations around how they want to bank.
Millennials use apps to buy transport, food, accommodation, fashion and beauty, and consequently, expect the same technology-driven convenience when it comes to customer service and communication from their bank.
These young consumers, aged 21-37 in 2018, represent 14 million consumers or 27% of the South African population, and arguably the most dynamic and prominent banking consumer base out there. Millennial consumers are the dominant force in the marketplace, wielding 55% spending power worth over R100 billion per annum – more spending power than any generation before them. We need to fit in with them, not the other way around.
Create that human connection
Young people are always hustling. They want to be at the forefront of making smart financial decisions that are customised to their daily needs. For Millennials, it’s a case of one size does not fit all, in fact, the desire to have a unique banking experience that resonates with their lifestyles has become a priority for this generation, and most importantly, is fast becoming the foundation of a long term relationship with a bank that tailors its offerings to their needs, now.
"Millennial consumers are the dominant force in the marketplace, wielding 55% spending power worth over R100 billion per annum – more spending power than any generation before them."
Millennials no longer choose a bank just to have a safe place to stash their cash, they have a lot more to consider, like acquiring their first tertiary education loan, first home loan, and setting up vehicle finance. However, they have their unique financial challenges. Young people today struggle with low credit scores partly because they don’t have the time behind them to establish wealth and lending experience, they lack of financial literacy, and the inability to stick with a long term financial partner.
The process of finding a trusted financial partner at this stage of life is an important one that will influence long-term spending habits, their ability to save, spend and invest, and the type of relationship that an individual will have with money as an adult. So being able to provide banking options to a progressive audience, informs what the future of banking will look like.
In order to connect with young people, a banking brand needs to be able to walk with them from the moment they are tweens (8-12years old) who need to start a savings account, through to a teenagers, and young adult who need to make serious decisions around their future.
Adapt or die
A financial service provider must adapt to the rapid pace at which things are evolving, especially on the digital and customised solutions side of things. Being able to listen to the demand and create solutions through the customer’s financial journey, is what customer service is all about. Looking at how the youth engages digitally, indicates that they are only consuming snackable content that is readily available and is also authentic. Multiple screens have replaced television.
Reach me on my mobile
The SA Social Media Landscape 2018 shows that Facebook is now being used by 29% of the population, and with no less than 16 million South Africans using Facebook, with a massive 14 million of these people using their cellphone and tablets. This factor has influenced the most powerful tool that Millennials use in this day and age – information sharing. It has contributed to content personalisation and a culture of instant communication, not just with their peers, but access to other news sharing platforms.
Social media plays a pivotal role in increasing financial literacy and planning as it allows Millennials to be proactive, and provides them with another channel to consume information and access online banking services from anywhere, any time.
The entry-level banking solution for young people must influence the culture of saving and financial literacy, from early on. In addition, it should cater to those who have just opened their first account and do not have the financial capacity to deal with extra monthly banking fees, card swiping fees or ATM cash withdrawal charges. This offering has to provide that extra value for them to receive discounts at selected stores, which they actually frequent.
Survival of the fastest
Traditional bank survival depends on adaptation of new technologies and the ability to respond to the demands of the digital world and digital consumer – not just the Millennial or tweenager. It’s vital to see the difference between the demands of the future customer and the previous generations to create an effective business strategy and also to understand it. To win their loyalty, banks must do more than deliver a solid experience and high-quality services.