May 24, 2016 | Written by: Laura Gargolinski
Categorized: Community | Security
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Viacom Media recently conducted a survey of over 10,000 millennials asking them their perception of banking. The results were not encouraging: 71% of respondents would rather go to the dentist than listen to what banks are saying.
71% of respondents would rather go to the dentist than listen to what banks are sayingAccording to Millennial Disruption Index survey by Viacom Media
As a child, I would go to great lengths to avoid going to the dentist. And yet today’s millennials would rather do that than read a Tweet, watch a commercial, or consume any type of message a bank is sending. An even bigger problem banks are facing with millennials is loyalty.
Here are a few nuggets from the survey that support this growing dilemma:
- 33% feel they don’t need a bank at all
- 1 in 3 are open to switching banks in the next 90 days
- 73% would be more excited about a new offering in financial services from leading technology companies than from their own bank.
According to the Census Bureau latest statistics last year (1), millennials make up one quarter of the US population, and are more diverse than previous generations.
While many millennials are ridden with loans, they prioritize saving right after paying monthly bills. According to the Nielsen Company, more than a third of the American workforce is made up of millennials, 27% of whom earn over $75,000 a year (2). The same study reports that 60% of these millennials are more likely than an average customer to have an IRA, and 87% more likely to have a 401k plan.
“Millennials are starting to buy homes and save for retirement and college funding. It’s going to have a huge impact in 10 years, and in 20 years the banking landscape will be completely transformed,” says Odysseas Papadimitriou, CEO of the personal finance websites WalletHub and CardHub.
Connecting to Millennials with the help of technology
If one quarter of your customer base, or prospective customer base is apathetic towards not only your services, but the very foundation your business is built upon – that’s a cause for concern. So how do banks change this disconcerting mindset? The answer to me is simple – use technology to make the experience of banking easier, faster and more delightful.
- MOBILE BANKING: Pew Research found that over 85% of millennials in America own a smartphone, and more than 70% have used a mobile service in the last year. Modern banks have been facing stiff competition from nimble, financial technology startups like Venmo, Lending Club and Bitcoin who are shaking up the industry with their low cost, quick solutions to cumbersome financial tasks. Many banks have their own mobile applications, but they need to use these platforms as competitive differentiators.Take Tangerine Bank, who uses IBM Bluemix to efficiently gather customer feedback and actionable insight on its mobile app. Banks can also leverage companies like Monitise, who also works with IBM, to strengthen their customer engagement to manage spending based on behavior and patterns.
- SOCIAL MEDIA: Many banks are stepping into the social media game by creating Facebook pages, Twitter accounts and YouTube channels to reach the masses with company updates, money management tips and education. But banks need to use social media not only for outreach – but customer service as well. Millennials are more apt to air their grievances via social media than call a bank directly and wait on hold. Banks such as Wells Fargo are creating Twitter accounts to use as a customer sounding board and to address their issues directly – thus, keeping them happy and their money in the bank.Banks should also use social media to highlight their corporate service initiatives and philanthropic endeavors. Supporting social causes is something the millennial generation feels strongly about. Millennials are more likely to align themselves with a brand they feel are making a positive impact on society, and with competition so high, this could be a differentiator for banks.
- SECURITY: Many people would argue security concerns, undoubtedly due to recent breaches that have snagged financial information and data from unsuspecting customers, as a top reason for digital banking reluctance. Luckily, companies like IBM have addressed security concerns by developing solutions that optimize risk management for banks and their customers.
Data unlocks power to understand customers of all ages
Banks needs to move to leveraging their legacy systems in concert with cloud-based hybrid systems where they can create innovative mobile and web applications for customers of ALL ages.
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