The Millennials (those born between 1981 – 2000) have spoken. And those not listening, do so at their own peril. Many young people today do not care much about cars, and many find Banks to be irrelevant. So, Millennials have spoken – Anybody listening?
Facebook, Twitter, Instagram and Whatsapp allow this generation to connect without owning a motor vehicle. High cost of vehicle ownership (purchase price, insurance, maintenance and fuel) and environmental concerns don’t help matters. And Uber offers a convenient alternative. My daughter now uses Uber to and from work – and it costs less than a day’s parking in Cape Town!
According to Gartner, a staggering 46% of drivers aged 18 to 24 said they would choose Internet access over owning a car.
Recent study on Millennials
In a recent USA study, millennials ranked the top four banks (in the “ten least loved brands” and 71% would rather go to the dentist than to their bank. This segment of the population has grown up in an era that saw trust in banking erode due to the financial crisis and a near stagnant economy. This is also a period when new technology has enabled firms like Simple, Moven, Square and PayPal to be more relevant with a generation that would rather handle finances on their phone than in a branch.
Here are some of the findings from the study:
- 53% don’t think their bank offers anything different than other banks
- 1 in 3 say they are switching banks in the next 90 day
- 33% believe they won’t need a bank at all in the future
- Nearly half are looking for tech start-ups to overhaul banking
- 73% would be more excited about a new offering from Google, Amazon, Apple, Paypal or Square than from their own bank
(As a Gen X myself, I can fully associate myself with these findings about Banks)
Banks are failing
Most banks are having a tough time satisfying the changing consumer needs. While banks spent time improving the online banking experience, millennials had already moved to mobile devices for communication, transacting, entertainment and information. The industry’s response, for the most part, has been to provide mobile access to online banking platforms. The millennial consumers (as well as older generations) are using other industries as a point of reference for what they expect from their financial services institutions. If they don’t receive the experience they want, they will look outside traditional Banks to meet their needs.
Millennials are aged between 16 – 35 today. They form a large and important section of current and future customers. They have different needs and expectations whilst many other generations are also influenced by them. Any business ignoring these changing trends, will find it hard, or impossible, to sustain a profitable business. ALL industries will be disrupted in the coming years, it is only a question of when?
How to react
So what should industry do to counter these disruptive innovations? Every business should start by reinforcing customer relationships, and determining what and how to update their business tools, technology and capabilities. Here are a couple of ideas:
- Analyse your customer database (Remember – “the money is in the customer list”). Today you need to know everything about your customers.
- Forget everything you know. Think like the millennials, forget the “old” ways.
- Integrate all your consumer touch points – website, social media, contact centres, email, mobile and personal interactions. Stay consistent between the channels and make it easy to buy.
Ready?
Ready or not – disruptive innovation is here to stay. Rick Mueller states it so well:
“It’s time to think about the instances where new entrants are eating away at the edges of traditional financial services, offering alternatives that don’t seem of paramount importance at the time, either due to minimal perceived lost revenues or even the ability to reduce costs. But how many of these ‘minor’ disruptive innovations does it take to completely transform an entire industry? Just ask some of the retail, transportation and communication firms that are no longer with us today.”
The tribe has spoken. Are you listening? And if you do, what are you doing about it?