Millennials, also known as Generation Y, tends to be following Generation X and preceding Generation Z. A widely accepted definition of millennials is the generation whose birth years are from 1981 to 1996. The characteristics of millennials changes by region and by individual and the group experiences a variety of social and economic conditions. They are more comfortable in usage of digital technologies and social media. Almost 34% (about 426 million) of the Indian population are Millennials and they are the biggest spending generation. In terms of absolute numbers, India today has one of the largest Gen Y work forces in the world.
The millennial generation, with all its size, promise of enormous buying power, and preference for things digital is now being referred to as the “disrupted generation”. A lot of that might be said of any generation dealing with the current economic and political circumstances. However, the millennial generation now the largest, is vital for the success of financial institutions. Retail banking executives and financial marketers ought to regulate their approaches, products and messaging to keep pace with the evolving views of this generation.
Millennial Customers’ Unique Banking Challenges
- Millennials have diverse banking needs than other generations- Millennials have more debt than other generations, which has a big influence on how we make financial decisions. Although they tend to be cautious of credit and credit cards, more than half of millennials would prefer credit cards in case of financial emergency.
- Lots of market competition, particularly from megabanks and from non-banks- There are a plethora of online banks, non-banks, FinTech, and megabanks out there, all competing for millennial. Millennials may use stand-alone apps for specific problems rather than an add-on product from their financial institution.
- Millennials tend to prefer mobile app and online banking- Of all generations, millennials are the most likely to use both online (92%) and mobile channels (79%), and they use those channels more frequently, according to Gallup.
- Getting things instantly- Instant communication options, like chat, to talk with brands and resolve questions and comments are the preference of millennials. They also give more importance to text/SMS over phone calls in most situations.
- Millennials have high expectations for products and services, searching for minimal fees and great customer service- Millennials tend to be frugal, especially when it comes to fees.
- Millennials are willing to change financial institutions- Millennials are 2 to 3 times more likely than other generations to switch banks. In fact, most of the millennials would switch banks if offered more or better rewards.
Winning Over the Millennial Customers
This generation will have an indelible impact on the banking industry; it would be unwise for banks to not prepare for the future.
- Doorstep banking- This may attract the millennials, where with the help of mobile app they can book certain banking services to be delivered at the place and time of their choice.
- Customised and Innovative Products– Customised Digital products can be made available as per the choice of the customers. Innovative products and services can do a better job of helping millennials in an emergency situation.
- Simplified Process– Loan processes to be made simple, less cumbersome and should take minimal time to be completed. It would be better to make every process digital with minimal/ no paperwork and to be completed online.
- Effective Call Centre– Automated call centre for handling routine banking transactions and prompt complaint resolution using bots with least human intervention.
- User Personal Experience– A bank network supported by a physical branch presence where they can go to learn about new products, but more importantly, a strong online interface. When it comes to creating an experience and an environment where Millennials will spend time and money, banks aren’t just competing with other banks – they are competing with retailers too. So, the branch experience must be memorable, personal, and strong enough to get people leap into the branch.
- Effective Mobile Apps– Millennials customers expect things to be fast, easy and self-service oriented. They want to be able to do variety of financial transactions at their convenience. This means investments in mobile apps. Millennials are accessing their financial information via mobile much more than other generations; a trend that will definitely grow in near future.
- Artificial Intelligence- Bank needs to keep an eye on the competitive scenario, as disruptors are emerging by the day. In order to compete, Bank must launch more sophisticated personalization strategies that enable more targeted marketing and personalized experiences, which means investments in AI and Data science. Millennials are less worried about risk, more comfortable with technology and rather more focused on convenience than any other generation. Using AI-powered tools to provide personalized budget recommendations for millennials that help cultivate financial health.
- Reasonable service charges– Millennials were most likely to leave their primary bank because of account fees and service charges. It might be prudent to overlook a few service charges when considering the long-term relationship with these customers.
- Resolution of Complaints– Making it easier to register the concern, so customers don’t have to walk into a branch or call a bank representative to resolve their complaints. Facilitating to reporting problems via multiple banking channels, such as a mobile app, automated phone line, SMS, email or instant message can be of immense help.
- Predictive Analysis– Since millennials are less likely to report problems; the Bank needs better systems for predicting, tracking and solving customer problems. Using technology to closely monitor indicators of potential customer problems and address them proactively.
- Data-based approach– The Bank should understand and segment customer interactions. Creating customer journey and data maps to establish an omnichannel framework for all customer experiences. By attaching data, both customer perceptions and behaviours, to each touch point of a customer interaction, bank can take a more data-based approach in reacting to and adjusting their services to meet consumer needs and behaviours.
- Associating with Customers– Millennials are relentless rejecters of traditional advertising, which they both filter and ignore. On the other hand, they are receptive to authenticity and customer experiences that are rewarding. That’s why Millennials don’t like to be marketed to on social media. They want to be supported. The bank can use a combination of listening, engagement, community and content.
- Tapping Social Media– As digital natives, Millennials consume vast amounts of data each day. That in turn leads to a short attention span. The Bank can tap into that by using stories on social media, a mix of video, slides and text on a given topic. These stories are up for only 24 hours and then disappear. This will appeal to younger audiences who crave authentic, immediate experiences.
- Rewards programs- Rewards programs are the most effective way to increase millennials’ banking usage. Programs that increase customer savings, like prize-linked accounts or gamification to help customers meet their financial goals, are already gaining traction. Strategies like these foster a connection with millennial customers and engage them beyond the traditional bank-to-customer relationship.
- Safe and Secure Banking– Security concerns are more than just customer complaints; they profoundly affect the bottom line for financial institutions, because customers are altering their behaviour in response to them. Making continual strides towards providing the best security and fraud protection and adequately articulating those efforts, won’t just keep current customers happy, it’s the key differentiator in attracting millennial customers.
The Way Ahead
The millennial population continuously growing and gaining power in the consumer marketplace. There is unique opportunity for banks to grab millennial business as they emerge into financial maturity. Millennials have drifted from choosing companies. This consumer class has kept themselves away from the practices of previous generations. Millennials are inclined to engage with socially responsible and innovative companies that consistently deliver memorable experiences. Although prospecting for millennial clients may be challenging, they tend to be the most brand loyal generation. Banks should be ready to invest in attracting millennial customers as their trustworthiness will increase profitability in the long run.