5 banking trends to engage the millennial audience

Millennials: the first generation of digital natives

Millennials are those who were born between 1980 and 2000. Analysts say by 2020, Millennials will comprise half the global workforce. Not only are they becoming the biggest consumer demographic, but also the most important in terms of technology adoption. Around 50% of Millennials count on social media when buying online. Millennials’ affinity for technology is reshaping the banking industry globally, including in India.

Banking trends that can engage the Millennial audience

Millennials are banking differently than any preceding generation. Besides the now established practice of using digital technologies, including mobile, social and wearables for everything, we highlight 5 other trends that banks need to embrace to engage this unique customer segment.

1. Combining gamification and customer acquisition

WeChat’s Hongbao, a gamification feature that launched during Chinese New Year in 2014, successfully attracted 8 million mobile payment customers – mostly new subscribers – in one night. Millennials, as a generation, take gaming seriously, and integrate their digital worlds into real life. It makes gamification – the use of game mechanics to digitally engage people – a significant tool for banks to acquire prospects. However, gamification means much more than a loyalty program, gesture control, or augmented reality. To succeed, banks need to incorporate gamification into their acquisition and retention strategy, designing from multiple perspectives including gaming elements, targeted players, motivation and awards.

2. Launching digital wallet to battle against alternative payments

More than a half of Millennials has either already adopted or would select non-traditional payment companies such as PayPal, Alipay, or Paytm in a period of next 12 months. While banks are identifying gaps in their existing payment platforms to achieve simplification and transparency, it is even more important that bank CEOs understand innovations happening in the digital wallet space. The progress of the payment operations of players in the financial services, telco and retail sectors will be decided by the battle for control of digital wallet solutions. A successful digital wallet deployment demands banks’ investment commitment, together with a focus on contextualized, value-added services – for instance, digital identity management, payment advisory services, location intelligence, and even crypto currency integration.

3. Automated banking services with robots and artificial intelligence

Banks have been automating human operations since many years with innovations, from ATM to e-banking. But Millennials demand much more than that. For instance, only 14% of Millennials seek advice from financial advisors, preferring to explore new ways of considering investment decisions, which are easy to access and don’t require face-to-face interaction. Banks are now looking at how they can use digitalization to augment human processes, especially by using artificial intelligence and advanced analytics, to offer automated service as a complement to human financial advisors. In the combination of machine learning and self-service, bankers have an innovative digital service that interacts with customers, listens to questions and offers solutions, and takes basic customer services to scale.

4. Frictionless experience in a connected ecosystem

Millennials are digital natives. Most of them were exposed to internet, mobile and social from an early age. 80% of Millennials conduct basic banking digitally. Furthermore, 64% would be keen to experience a wearable technology product offered by an entertainment or media company. Bank CEOs should not only start building ecosystems based on internal and external digital touch points to serve Millennials, but also focus on creating seamless experiences across the ecosystem. In the end, what Millennials want is a more connected, frictionless customer journey – for instance, a mortgage advisory app connected with social and location-based services or an insurance offering that connects with wearable fitness data.

5. Making digital more contextualized, without the loss of simplification

The desire to be treated as an individual is universal, but Millennials’ interaction with digital channels demands more personalized services and contextualized products. Technologies like big data and advanced analytics are accelerating its progress. However, bank CEOs also need to establish a balanced strategy between personalization and simplification. What is valued the most by Millennials is not the number of e-banking preferences or personalized cross-selling by ATMs. At the end of the day, Millennials are still banking customers who seek traditional value: easy-to-use services and low-cost products.

Conclusion

Banking is at the highest risk of disruption by Millennials. Nearly half of them believe innovation will come from outside the industry. Bank CEOs have to act immediately following the trends of digitalization, automation and contextualization, to offer Millennials frictionless experience across multiple digital touch points in a connected ecosystem. Banks that neglect these trends will fail to engage with Millennials in the near future; to quote The Millennial Disruption Index, 1 in 3 Millennials is open to switching banks in the next 90 days.

(The article is authored by Ethan Wang, Product Strategy, Infosys Finacle)

Image credits: indiatimes