Millennials: a contrarian generation
Imagine a future in which, rather than using a traditional bank, you turn to new FinTech intermediaries such as PayPal or Amazon for your financial needs. Does it sound like a utopia? According to KPMG’s “Digital Banking” report, it is a scenario that may not be too far off. This is especially the case with regard to the millennial category, or rather, the generation born between the 1980s and the 1990s.
Indeed, the study highlights the way in which there is a greater coldness on their behalf towards traditional financial instruments: 53% of respondents think that their bank does not offer them anything different to other banks, while one in three are ready to change in the next 90 days, a sign that there is high resistance to becoming a loyal customer.
Of these, as reported by Scratch, a Viacom creative consultancy firm, in “The Millennial Disruption Index” research, carried out on more than 10,000 American millennials, 73% would be more attracted by an offer of financial services from Google, Amazon, Apple, PayPal, etc., compared with one from their country’s main banks. Why is this? It’s simple: millennials trust these companies and not the banks. This is mainly as a result of the 2008 financial crisis, during which millennials saw their parents “struggle” without receiving any help. It is also due to the fact that the global economic institutions have never looked after them very much given their less substantial savings compared with those of older generations.
Who is emerging in the Financial Sector?
For now, the new players are riding the wave: Amazon, for example, the e-commerce giant, has begun to offer ever more competitive services to become a point of reference in the world of transactions too. The current landscape of financial services offered up until now features digital payment systems, targeted programs for credit or debit card purchases, and loans to small and medium-sized enterprises, etc. But, many other developments are in store.
At the same time, PayPal, as stated in KPMG’s “Customer Experience Excellence” report, has jumped up the rankings in Italy’s CEE Score, reaching eighth position in the Top 100: credit goes to its continuous innovation process in particular. Indeed, it is starting to propose a model that is getting closer and closer to that of a bank, innovating its own debit cards and integrating its service so that it can be increasingly used in everyday life.
These technological companies have a huge advantage over banks. They invest on average 10-20% of their income on research and development compared with 1-2% by banks. The survival of the banks therefore depends on their ability to transform their business models to respond to new customer needs.
Let’s use the data from We Are Social’s “Digital in 2017” research to identify some trends: in Italy, 25% of the population uses mobile banking, but the e-commerce phenomenon is on the rise, as are online payments. If we then consider that 87% of young people between the ages of 14 and 17 regularly use the internet from mobile devices, I’ll leave you to imagine what the future has in store. It has already been seen between 2016 and 2017, when internet banking transactions increased by 4.9 percentage points, with 37% of the population (young people between the ages of 18 and 35) turning to mobile and ATMs. This is why it can be deduced that high levels of customer experience on mobile channels could represent an important incentive for banks in the process of obtaining new customers.
What should be done?
How should banks react? Luca Gualtieri, reporter for Milano Finanza, gives us an answer. He believes that the first weapon that should be used is technology, particularly Artificial Intelligence. What advantage do the banks have over the new technological companies that are disrupting the financial market? The answer is simple: they have a capital of customer data, deposited over time. Who better than a bank to be able to say what the tastes and needs of consumers are? It is here that the banks must take advantage of AI to intercept customers before other operators: the answer lies in personalization.
We often speak of content marketing as a tool that supports the achievement of a company’s success. This awareness is universally recognized and proved. But, the question that we are asking ourselves is a different one: Can companies that operate in the financial sector use content marketing like companies in other economic industries? Of course they can! Content plays an extremely important role in strengthening relationships with consumers. Don’t millennials trust you anymore? In that case, use content to build a relationship based on trust.
Given that technology will be able to manage the so-called “basic” services, banks must work on the consultancy side of things: people turn to banks (and, therefore, to expert figures) in search of concrete information that they can trust. And, here, content can work miracles: indeed, it can become a receptor for prompts on customer interests thanks to Content Intelligence (AI applied to content). As a result, it can help experts to offer increasingly personalized consultations that meet customer expectations.
To differentiate themselves from the new players, banks must offer that something extra that encourages loyalty. Obviously, in order for this to happen, the need is felt for greater integration between the digital and the physical (phygital), so that the consumer experience is consistent and multichannel.