Banking for Millennials has been saved
Banking for Millennials
What do they want from banks?
Luxembourg, November 2019
The banking industry is continuously facing new challenges that mainly depend on the exigence of clients’ expectations. In a constant effort to ensure its ability to help solve clients’ most complex issues, Deloitte Consulting has conducted a market analysis in order to strengthen the completeness of its banking offering in Luxembourg.
Our research work on Millennials and banking enabled us to highlight some assumptions to understand who they are. We selected several clichés that are usually used to qualify this generation to identify what kind of Millennials Banking Persona they result in.
The survey was conducted in May 2019 to either reject or confirm these selected clichés and to understand to what extent these clichés reflect reality.
With more than 140 respondents from 20 countries, this survey enables us to have a clear understanding about how Millennials are perceiving today their own bank and the banking industry and what they expect from them in the near future.
The answers to the survey define a generation that doesn’t only want to be targeted as random clients but be reached by a certain quality of offers and services that match their requirement level, their personal life and their ambition.
Millennials believe traditional banks have no future
of Millennials are a client at alternative banks
of millennials use alternative payment methods
Of the 71% who are not clients at an alternative bank:
intend to use them by the end of 2019
intend to use them in the distant future
Of the 66% who do not use alternative payment methods:
intend to do so by the end of 2019
intend to do so in the distant future
MILLENIALS EXPECT TRADITIONAL BANKS TO CREATE SERVICES TAILORED TO THEIR NEEDS
Understand the needs of the generation that is about to become the largest client group
Enhance the range of services to compete with neobanks, especially in regards to instant services such as fast account opening, instant wire transfers, approving credit card applications, etc.
Offer simple, inexpensive products that are accessible any time and implement state-of-the-art technology: alternative payment methods, app-only ATM withdrawals, biometric authentication, etc.
Devise a strategy with a value proposition tailored specifically to this target group
Millennials are not sufficiently loyal; will switch banks as soon as a better offer comes up
are interested in having part of their portfolio with another financial player
believe their bank is not making an effort to retain them
expect their bank to be more transparent in their way of addressing new challenges
MILLENNIALS NEED CONSTANT REASSURANCE THROUGH ACTIONS TO BE LOYAL
Keep demonstrating expertise in regards to complex products such as loans and savings, and offer enhanced services (e.g., online sharing of documents to support loan applications)
Your customers engage with different providers. Position your bank as indispensable or become a good complement
Offer simple and personalized services making your customers:
- Connect with your bank in a variety of ways: automatic bill payments, access to ticketing services, etc.
- Feel unique: card personalization, dedicated offers, etc.
Millennials see traditional banks as an old-fashioned place to store money
say that new financial players understand their needs and adapt the offer accordingly
say that traditional banks understand their needs and adapt the offer accordingly
- …believe that the bank has, at least to a certain degree, a proactive role
- …expect personalized advice even when this has not been requested
of the respondents who started using at least one new financial service within the last five years (loan, new account, etc.)
The life stages at which this happened were:
Buying a home
MILLENNIALS EXPECT THEIR BANK TO BE THEIR TRUSTED SUPPORTER AT KEY LIFE STAGES
Change the way you interact! Be the actor that understands millennials and can advise them on how to make their plans a reality:
- Offer strong customer support at the right time through innovative and interactive solutions: AI, chatbots, automated and targeted messaging when your client is looking for a specific product/service etc.
- Introduce non-banking services on the app that are useful in daily life: the option to buy public transport tickets, pay for fuel without a card, order service vouchers, etc.
- Offer advice proactively: based on their spending behavior, banks can anticipate clients’ needs and expectations.
Millennials expect full digitization across all channels and don’t want to be bothered by their bank
New financial players frequently offer services that are only accessible via a smartphone. Their success demonstrates the increasing importance of mobile applications (that work perfectly) for customer retention.
expect their bank to always offer the newest features on the app
access their mobile application multiple times a week
expect regular communications from their bank
expect the communications from their bank to be personalized
MILLENNIALS WANT PERSONALIZED COMMUNICATION FROM THEIR BANK, NOT SPAM
Seize the opportunity and be the actor that contacts millennials at the right time
Millennials expect a targeted approach offering a fully personalized service and products they want or need:
- Inform clients of the newest features they are likely to be interested in
- Target millennials with new solutions to help them in their day-to-day financial decisions
Millennials place their values at the center of their decision-making
Traditional banks nowadays try to attract customers via offers around costs (fee calculator, free credit, free credit cards, etc.).
New financial players position themselves as tools.
Banking institutions must combine all these factors in an intelligent way to survive.
Factors motivating millenials to change banks:
MILLENNIALS WANT TO EXPRESS THEIR VALUES THROUGH PROFITABLE INVESTMENTS
Gain millennials’ trust by becoming a socially responsible actor
Realize that millennials refuse to consider money as the sole success factor and become the player that helps them “be the change they want to see in the world”
With regards to traditional portfolios, be ready to offer transparency via monthly reports on the impact of your clients’ portfolio, for instance
Show that banks do care by offering better interest rates on loans for passive houses, for instance