Tapping into Millennials
Charles Schembri, Vice President at Psyma USA
Millennials represent a significant audience for financial service firms. Born between 1980 and 2000, this up-and-coming generation includes a vast and diverse population, estimated around 95 million people. The most educated demographic group, many Millennials are nearing significant life events (marriage, job, children), which will profoundly impact the financial services sector and further shape the economy.
While presenting a big opportunity for new business development, this market segment has different behaviors, preferences, and attitudes than Generation Xers and Baby Boomers. In fact, most will tell you that they don’t like financial services firms at all. Instead, Millennials have a deep affinity for technology and use mobile devices when conducting most finance related transactions. However, interestingly enough, physical interactions and personal connections are still highly valued, especially when addressing their finances. The combination of positive emotional connections and seamless technological experiences are essential to developing relationships with this generation.
Unfortunately, most Millennial marketing efforts focus on traditional transactional services that don’t fully resonate with the cohort. Financial service firms must cater to the whims of this generation who wants to conduct business on their own terms. Here are two major tactics that financial institutions should employ to better understand and capture the attention of Millennials.
1. Mine Your Treasure Troves of Data
To ensure that new fintech players don’t “eat their lunch,” traditional firms must better analyze existing data and, in many cases, conduct additional research to fully understand the financial habits of their Millennial customers. As many may never actually enter a physical location and conduct the majority of transactions online, careful attention to the types of transactions they take on is critical. For example, while seemingly doing business with you, Millennials may be transferring large sums of money each month to other institutions that offer a similar, albeit differentiated, set of capabilities or services. Understanding the online activities and motivations of this cohort can help firms make better decisions regarding the products, resources, and services necessary to capture and retain their business.
2. Create Desirable Partnerships and Experiences
Subsequent to gathering the appropriate data and research, many financial services firms will likely find that they do not have the in-house resources or services to create the “ideal” experience that Millennials desire. As a result, creating an extension or partnership with one or a variety of fintech services/providers has the potential to improve preferences and better meet the needs of a sizeable portion of the cohort.
While it’s too early to determine if they’ve struck a chord with Millennials, Citi’s partnerships with Demyst Data (for credit scoring and lending) and Plug & Play (offers startups mentorship), Banco Santander’s partnerships with SigFig (guidance and best practices) or BBVA’S partnership with Juntos (financial capability building) are setting the tone for what will likely be a constant trend in the financial services sector. By developing the right partnerships, financial service organizations will raise the bar to create new experiences in a timely and cost-effective manner that are unmatched by traditional institutions.
While they’re probably not the most valuable client base right now, Millennials are the future holders of massive amounts of wealth. Financial institutions that understand this growing audience and invest in the tools and services to attract them will succeed, while others who don’t may falter.
Psyma can help you can gain actionable insights and information on this provocative generation to devise a long-term plan for capturing and sustaining their future business.