Electronic monetary transactions and mobile wallets have achieved significant growth in recent years. Every day we come across discounts offers like “Use PayTM wallet and get 5% additional discount on...
New generations of young & technology peoples face a highly complex & uncertain economic environment with a degree of choice & consumer freedom never seen before. Financial institutions need to help Millennials not only to access credit but also to navigate the intricacy of their financial lifecycle. Thus the banks & credit unions do not dill with these challenges, non-banks shall. Millennials are recognized as the hyper-connected & technology-savvy crowds that interact with social media. For others, Millennials represent the middle-class protesters of the occupy movement, the new generations of highly-indebted professionals. Millennials arrogances & preferences are touching upon many features of social & economic life with significant implications for the banking industry.
Millennials are the fastest rising client segment for banks, & financial institutions of all sizes are working hard to attract & retain their business & describes investing in technology: mobile deposit, peer-to-peer disbursement services, structures like thumbprint recognition & mobile & online banking tools that speed up & take the pain out of day-to-day banking transactions.
For big banks, at least, the efforts seem to be paying off. Thanks to their deep pockets &, for some, an even deeper desire to come back from the blows their public image suffered during the financial crisis, they are leading the way in appealing to a youthful demographic. The key differentiator is technology. While consumers say smaller institutions deliver better face-to-face service & charge lower fees, young consumers, in particular, say large banks are winning them over with more user-friendly mobile apps, websites & ATMs.
Most of the minor & small banks offer mobile banking as well, but they simply aren’t investing as heavily in the technology as large banks are, experts said. Mobile check deposit is offered at all large banks & most regional ones, but the service is far from widespread at the community bank.
Millennials application by companies to grip transparency, simplicity, integrity & commitment to social & environmental causes. These values should be taken seriously in order to appeal to this segment of the population. Banks can use CSR (corporate social responsibility) initiatives to attract Millennials, learning from industries that have successfully incorporated millennial values such as fashion designers & restaurants.
Millennials rely on the internet, mobile technologies & social media, & almost 80% have a smartphone. This is critical for brands as the positive feedback on blogs, Twitter, YouTube & Facebook can go viral in a matter of minutes, influencing the behavior of existing & potential customers with long-lasting effects.
In banking, further, than 70 percent of Millennials have used mobile services within the last 12 months vs. only 40 percent of the remaining adult population. Around 94 percentage of Millennials are active users of online banking.
Millennials’ strong dependency on connectivity & mobile devices can turn a positive opinion into a referral with the potential to reach hundreds or thousands of other Millennials. However, the contradictory can also be correct with disastrous consequences for an industry that is painfully rebuilding its reputation. Thus, seeking Millennials’ feedback, listening carefully & responding promptly on a personalized basis, could attract them to banks at a relatively low cost.
Delaying marriage has a direct impact on banking as it lowers the demand for new & existing homes, apartments, furniture & home-related services that are financed through credit (mortgages, CRE loans, HELOCS & credit cards). Additional products like insurance, auto loans, & college savings accounts are also impacted.
Millennials are a complex & diverse group with different needs & preferences. Consider as an example the contrast between the financial needs of a 34-year-old individual with a family & a stable job versus those of a 20-year-old individual still in college. The former may demand a mortgage while the latter may require a credit card to start building the credit history. From a traditional banking perspective, the 30 years old Millennial may be a more profitable & stable customer. However, banks also require dedicating resources to attract the younger Millennials if they want to maintain a stable customer base over time.
Contradictory to the nobles, Millennials are technology natives, meaning that they have never experienced a world without social media or smartphones & are not prone to do business inside a branch. Their relationship with a financial institution has to be built on tech tools from the very beginning. That’s why young Millennials are more likely to embrace nonbanks, outside start-ups, & other challenger brands. The inadequate material available about these alternative credit-assessment tools & the utilization of alternative data in scoring models & credit decisions is already attracting the attention of regulators. Across the globe, they are attempting to get a better understanding & to ensure that innovators proceed responsibly & have strong legal incentives to ensure that their scoring decisions are transparent, accurate, unbiased, & fair.