As technology develops, banks are forced to shift priorities in order to meet the needs of the young generations that evolve through digital transformation.
With the upcoming FSI Transformation Assembly approaching, Digital Diary takes a look at the younger customers that financial business leaders may struggle to target.
Millennials are Financially Illiterate
According to CNBC, Millennials are pretty clueless about how to manage money.
This is caused by many factors, such as growing student debt, and wrong placed investments.
“Two-thirds have at least one source of long-term debt, including a student loan, home mortgage or car loan, and 30 percent have more than one type of outstanding long-term debt.” According to research adapted by CNBC.
Since Millennials are in so much debt, it creates a shift away from the urgency of financial planning, such as having emergency funds and savings accounts.
“From buying a car or a home to getting married and even having children, many millennials are putting off life’s major milestones because of their outstanding loans, studies have shown.” CNBC reported.
When Millennials choose to no longer plan for future financial decisions, the banking industry is negatively affected because it draws traffic away from banks and the services that are offered.
This forces financial institutions to adapt to a generational shift, placing Millennials in a big position to disrupt the banking industry.
Millennials are Digitally Driven
Apart from being financially illiterate, Millennials are known to breed a lot of entrepreneurs, which means they are digitally advanced and possess attitudes that seek innovation and change throughout businesses.
“These distinct characteristics mean that the Millennial generation will demand new financial services from their banks, different than the generations before them.” According to The Financial Brand.
Millennials are changing the way traditional business tools are carried out, enabling a new wave of technology to make an impact on industries.
Banks Must Adapt
Financial business leaders understand that it is important to adapt to the traits Millennial’s offer, in order for their services to remain useful and relevant.
Since Millennials are so digitally advanced, industries like financial services feel the pressure to adapt to the digital transformation in order to effectively communicate with the younger customer.
This can be done by restructuring financial environments in order to meet the needs of the Millennial, staying above the digital wave by using innovation.
“This is why work toward innovation is critical in that it forces alignment between your work and new generations of banked and unbanked customers. While many companies believe they’re investing in innovation, the truth is that they are “innovating” on top of legacy mindsets, processes and risk thresholds.” The Financial Brand reports.
With digital banking trends evolving constantly, financial services can implement different tools that will further position them to be ahead of the competition.
Millennials tend to rely on technology, which means that they expect their everyday business encounters to be suitable for their digital devices.
Banks can cater to this need by adapting their tools to become virtual while enhancing mobility by enabling online channels to check bank balances and to pay bills, benefiting both the customer and the business.
“The Millennials and Banking study also noted that frequent users of a bank’s mobile app were more satisfied with their overall banking experience. Seventy-eight percent of app users reported a willingness to refer their friends to the bank.” According to gobankingrates.
This will ultimately create long-term relationships with the Millennial customer and the bank.
Mobile Payment Services
There is a new demand among Millennials that involves paying for products or services in a mobile way.
“While mobile payment usage is still low across the board, younger demographics (18-34) are twice as likely to already be using mobile payments vs. the 35+ demographics and much more likely to start using mobile payment in the next 12 months.” Fico.com reports.
The trend of mobile payment trend has taken over the banking industry and is forcing banks to adapt their technology and services to meet this tool.
Traditional banks tend to stick to traditional communication methods such as mail, in order to contact their audiences.
“The key to a differentiated experience is understanding customer preferences and matching how each customer chooses to interact with their bank.” According to Fio.com.
As technology is advancing, these tools of communication should as well, which will create an overall digital banking experience.
Integrating text message alerts, as well as using email and website features, bridges the divide between the digital and physical banking world.
In order to effectively reach the Millenial audience, it is important to communicate through marketing strategies what specific promotions are offered to customers, further enhancing positive customer engagement.
“Based on the survey results, banks are not taking advantage of the rich transaction and life stage information they possess to make the right offers to their customers.”
Catering to the on-the-go Millennial customer is a task for banks that will be accomplished through out of the box thinking, as well as innovative ideas to further implement a relationship that will last.
ABOUT FSI TRANSFORMATION ASSEMBLY
The banking industry has no choice but to adjust its priorities in order to successfully target a younger audience. By doing this, new digital tools will be adapted to meet the needs of these customers. It is vital for leaders in the Financial Services Industry to understand what tools will further put their business above the competition. Understanding the convergence of Mobile, Social, and Cloud as well as Artifical Intelligence, Machine Learning and Blockchain is vital for readjusting a business structure to meet the needs of a new digitally driven audience.
Join FSI Transformation Assembly Key Note Speaker Scott Dillon, Head of Technology Infrastructure Services at Wells Fargo and Company, to gain informative knowledge about this industry. His unique insight into how his team provides availability, security, and global interconnectivity for the more than 70 million customers who interact 12 billion times a year in person through the company’s 9,000 stores and 12,000 ATMs, on the phone, or online at www.wellsfargo.com will be offered through his presentation during FSI Transformation Assembly.
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