3 Ways Banks Can Pass the Test of Millennial Customers
Let’s face it. Millennials have a bad rap when it comes to their relationship with traditional retail and financing institutions. We’ve heard of the many industries millennials are allegedly “killing”, from napkins and bars of soap, to homes and diamonds. But for all the supposed damage we’ve done, other industries are thriving on millennial economic activity: public libraries, gyms and coffee are all enjoying renewed success thanks to this demographic.
It comes as no surprise that Generation Y (also known as millennials –born after 1980, and before 2000) would influence the banking industry, since banks underscore the basis of most economic activity. In 2013, a study in the United States called the Millennial Disruption Index looked at the economic sectors that were being most transformed by the demands and habits of the cohort. The Index found that the banking industry is at the highest risk of disruption. Its finding highlighted a deep sense of skepticism among millennial consumers, many of whom are distrustful of banks. The study produced some startling revelations about millennial attitudes: 71% would rather go to the dentist than listen to their banks and 73% said they would be more excited about Google, Paypal or Facebook offering financial services than their own banks. Nearly half believed that tech start ups would completely overtake traditional banking through innovative technology.
These findings paint a grim picture for the future of the banking industry. But the title of this article isn’t “How Millennials are Killing Banking” for good reason. Taking a closer look at these statistics, we can see that millennials are expressing a clear set of demands. They feel alienated from their financial institutions and want their banks to better connect with them. Most importantly, they demand innovation: banks cannot remain technologically stagnant if they wish to compete within the growing and changing economic landscape where finance and technology are increasingly converging. It’s a simple case of survival of the fittest: banks must evolve if they want to remain viable to this consumer demographic. The demand of millennials for innovations in finance must be met with a supply.
There’s hope for banks yet! Here are three ways in which banks must begin and continue to transform, to keep their positions at the top of the economic food chain.
1. Gain consumer trust
Owing to the 2008 financial crisis, millennials have become cynical about the reliability of banking institutions, and banks must meet these fears with a policy of transparency, working towards developing a more friendly and welcoming reputation among young people.
Those employed on the front lines of banking and in customer service departments, must abandon the stuffy banking jargon and attitudes of old and embrace new ways to engage with consumers. Banks and their employees need to become relatable and hip! They must replace the transactional nature of banking by humanizing it, creating a personal experience for its users. Why have businesses like Starbucks and Google done so well among millennial demographics? They have successfully engineered a social presence and brand that speaks to young people. Banks must do the same. Some banks have already made a start, posting on social media outlets like Twitter to interact directly with their customers. Not strictly limited to millennials, all consumers will feel more comfortable if their visit to the bank feels like a real conversation between individuals, and not just an interaction between a customer conglomerate. Banking should be simple, and unintimidating.
2. Embrace the Eroticism of Immediacy
For those of us born at the dawn of the digital age, a life without instant access to information and communication seems unfathomable. However, as far as technological progress goes, banks have often lagged behind their counterparts in other industries. As millennials have come to expect and demand quick results, other industries have evolved to meet these needs. Banking like every other profit-driven industry must pursue innovative ways of making the customer experience as efficient, effective and effortless as possible. And in the face of a boom in technological growth and development, ATMs and credit cards just don’t cut it anymore.
We’ve all heard the cliché, “Time is money.” When it comes to banking, it’s more than just a figure of speech. That’s why at Sqirl we’ve taken it upon ourselves to help banks deliver immediacy in an area where they need it most: the credit eligibility verification process. We recognize the importance of performing compliance checks in a time and cost-effective manner, to minimize the wait time for consumers wishing to sign up for a credit product or commercial loan. That’s why we created the Financial Passport (FINPASS). Credit is an indispensable component of the economy and we believe that both consumers and banks would benefit from the ability to circumvent the waiting period currently needed to issue credit products. Millennial or otherwise, consumers value their time, and by incorporating solutions like FINPASS into their business model, banks can deliver cutting edge service and stay ahead in the race to innovate.
3. Invest in A Seamless Omnichannel Experience
Though it may seem that banking has stagnated when compared other economic sectors, the truth is we’ve come a long way. From the teller behind glass establishments of the mid-1900s, to today’s ATMS and mobile banking apps, the consumer has much more freedom over where, when and how they bank, than they did 60 years ago. But as a powerful source of current and future purchasing power, millennials still aren’t quite satisfied with the services offered by most traditional banks.
What millennials ask of their financial institutions is a safe, but seamless way of accessing financial information across multiple platforms. They need easy-to-navigate methods of tracking their financial status. What if consumers could check their credit scores like they check the number of likes on their most recent Instagram photo? What if they could gauge how much credit they’re eligible for on the same device they used to call an Uber? Banking and credit could be revolutionized in these ways, and more, with an innovation like FINPASS, a simple way for banks to streamline and promote consumer engagement and retention. At Sqirl, we want to see banking be frictionless. Removing access barriers is one of the most important ways in which banks can respond to the demands of consumers for a more simple and effortless way to bank.
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