Banking on the future: What is your bank doing to remain relevant?
In just five years, 50 percent of the workforce will be Gen Y. Digital natives, they use technology intuitively and expect the same from organisations they interact with. Rarely without a smartphone; chat, memories, relationships, travel and banking are all conducted on the phone.
It is no surprise, that in our third Banking on the Future report, for the over 1,400 KPMG Gen Y professionals interviewed, a digital experience remains the most coveted banking attribute. Although online is still the most popular medium, mobile and app capabilities are soon to override it.
So, given the insights from our report, what would the ideal bank of the future look like?
First off, it doesn’t have to have an imposing edifice; but it does need to deliver a superior customer experience. Gen Y professionals expect any interaction to happen ‘instantly’ and as smoothly as possible. Uber has set a new benchmark for seamless and convenient interaction without the hassle of payment. This experience is a growing expectation by Gen Y.
But despite their love of digital, there are still some transactions they want face to face, especially if it involves a big financial decision like a mortgage. For many Gen Y professionals, traditional bank opening hours just don’t match their lifestyle so a face to face discussion during work hours is just not going to work. But they still value the comfort of a face to face discussion.
Lloyd’s Bank customers have introduced virtual advisors with customers able to speak with a mortgage advisor “face-to-face” via a video link on a laptop, desktop, or tablet computer. Customer feedback following the pilot, reported 95 percent of customers rated their experience as good or excellent.
Important to this digital transformation and to open your ‘future’ financial institution to innovative disruption requires an open technology stack, a flexible and extendable API platform. This enables you to plug and play new capabilities and easy adoption of new technologies.
Being a digital bank is no longer a differentiator. So how can your future bank meet Gen Y professionals evolving lifestyle needs?
Unlike Gen X, whose spending habits were influenced by home ownership, Gen Y professionals, driven by the mentality of YOLO (You Only Live Once), are prioritising experiences; travel and luxury items for the ‘now’. So while 74 percent use personal spreadsheets to manage their finances, overall they have poor understanding of their spending habits and value easy ways to manage their finances.
Think apps that monitor spending habits or make budgeting easy. And preferably at no cost. This generation is not impressed by fee for service.
This cohort continues to feel underserved with wealth advice. They want to learn more about wealth management and investment, but they feel existing products are not tailored to their needs. This gap in the market opens up opportunities for financial institutions to lure and keep these customers.
Climbing the corporate ladder to make the C-suite is no longer their career dream. Gen Y professionals are innovators with over 50 percent having started or planning entrepreneurial pursuits. Their entrepreneurial spirit is worth encouraging. Look for opportunities to partner with them and tailor products and services to support them. Make sure your products are globally applicable as they see opportunities on a world stage and they want their financial institutions to travel with them.
Given the size of the millennial segment and the potential financial impact of these Gen Y professionals their economic importance cannot be underestimated. They are the ‘mass affluents’ of the future. So rather than being their biggest pain point now is the time to be their trusted partner. Their loyalty is not a given, but they will be if products and services meet their needs.
Gen Y professionals have told us what they want, and while there is no single route to success, it is clear financial institutions must urgently consider and act on their demands to retain their business.
Read the full report, Banking on the Future