Trends in millennials' banking has been saved
Perspectives
Millennials just entering the workforce must quickly make a lot of routine financial decisions as well as plan for longer-term financial goals and needs.
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He has landed his first full-time job and is looking forward to joining fellow millennials (those born between 1981 and 1996²) on the journey from college graduate to young professional. But Evan is also feeling a bit overwhelmed: There are a lot of financial decisions he has to make in just a few weeks. Where should he direct-deposit his paycheck? Should he sign up for a health savings account? How much of his salary should he allocate the company’s 401k plan? Which credit card should he choose; one offering cash back or travel miles?
Evan is also thinking about longer-term financial goals and needs: travel, purchasing a house, returning to school for a graduate degree. But first things first: How does he want to pay for his celebratory lunch? Mobile app like Venmo?
Starting a job means adjusting to a new phase of life. Evan wants guidance as he makes important financial decisions, but who is he likely to go to for advice? His parents and trusted friends, sure. The professionals at his bank? Maybe, maybe not. He is generally satisfied with the day-to-day services his bank provides—he will probably direct-deposit his paycheck there—but he doesn’t know if his bank understands the needs, perspectives, and motivations of newly employed millennials like himself. Unfortunately, this means that banks may miss out on a potential long-term growth opportunity to support Evan’s—and other young millennials’—everyday financial needs and important life events.
How do we know what kind of engagement newly employed young millennials want with their bank? We asked. Through an online research campaign, Deloitte Pixel™ engaged 40 individuals in five days of interactive "missions" to better understand the financial decisions millennials make when starting a new job; recognize the goals they are planning for; and identify pain points that create friction in their daily financial transactions.¹
My bank is not really helping me, but they’re there for me to talk to if I have any problems; because right now they’re kind of just holding my money... So they’re not really helping me do the work, and they’re not helping me to reach my goal. And there’s nothing really helpful that they’re doing to help me earn additional money.
– Kavita D.
Millennials' financial needs are rarely about products; rather, they are a function of four dimensions: money mental models, jobs people need to get done, moments of financial pressure, and life events (Figure 1).
The stepping stone for changing how banks engage with their customers—and how millennials think about their banks—is to design experiences that meet clients where they are, across these dimensions. The following principles can guide banks' steps to improve customer engagement and drive next-generation growth, one millennial at a time:
Figure 1:
Banking needs are prompted by life needs—big and small. While many banks have embraced customer journeys, they often construct them around a banking product. Typically, though, the product journey is secondary to the life-need journey customers are on: buying a home, taking a trip abroad or, even going out to lunch.
Banks should think about users, uses, and usage of banking products in the context of serving those motivations and aspirations and uncovering new value. Then, when thinking about the life need journey the customer is on, consider these strategic choices:
My credit card saves me 5 percent, it's a no brainer. I always try to have a credit card that will save me money in every category.
– Jason E.
"Omni-channel" is a term born of the retail industry to describe bringing together distribution models that were built upon different inventory and infrastructure. But as physical inventory gives way to digital and information products, the concept of "channels" loses relevance. This is particularly true in financial services, which almost exclusively offers information products. Banks, therefore, should design customer experiences that are untethered from channel thinking; what we call "post-channel" experiences. These experiences should be continuous and intuitively guided by the customer across all endpoints of their journey. An effective post-channel experience extends beyond modality (e.g., two-dimensional print, digital) and delivery technology (e.g., mobile, web, AR/VR) to better reflect human behaviors and preferences.
By reconciling two somewhat contradictory design principles, banks can create captivating, post-channel customer experiences to encourage engagement when life needs overlap with banking needs.
Offering customers a carefully carved pathway requires understanding how, when, and where each endpoint should come into play. Yet, also remember that customers won't always stick to the bank's intended path. For a truly customer-centric design, customers must be able to jump between endpoints easily whenever and wherever they choose.
If my bank had a tool that let me understand what my spending habits are and helped me figure out how much should go in my savings account per month to get to my goal, that’d be awesome! I’d trust it more than third party apps because it already has all my information and best shows my purchasing habits since it details everything I purchase.
– Lili M.
At every endpoint within every journey, customers want their banks to be sentient and engaging (understand who they are; focus on their life needs and goals, always on, anywhere, in real time); trusted and transparent (be appreciative of their trust and reward loyalty, grounded in science and algorithms, and sensitive to their human emotions and rational motivations); and modern and frictionless (be aware of banking activity on any platform, automated and invisible when possible, and capable of seamless transitions between machine-based tools and human-based services). A customer-intelligence-led operating model based on next-generation data architecture and advanced analytics capabilities is critical to help banks meet these (as-yet unarticulated) expectations in-context, at the right moment, and on a customer’s preferred endpoint.
If banks want to attract and retain millennials' business from first job to first home and beyond, they can employ analytic capabilities that can provide data intelligence to:
Figure 2:
| Rob Berini Managing director | Deloitte Consulting LLP rberini@deloitte.com |
Ketan (KP) Parakh Senior manager | Deloitte Consulting LLP kpparekh@deloitte.com |
Staying on top of new financial services industry trends, emerging technologies, and changing regulations isn’t easy—it’s not enough to rely on the headlines to understand the complete picture. Our InFocus series takes a deeper dive into the issues that affect financial services organizations and gives you the insights needed to make more informed decisions.
¹ Deloitte study; Next Generation Growth – One millennial at a time: Understanding and anticipating the millennial customer's need. February 2018, Deloitte Consulting LLP.
² "There’s Finally a Clear Age Range for Who’s a Millennial & It’s Pretty Tragic," Thrillist Entertainment, March 2, 2018, citing Pew Research Center.
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