This, according to Scratch, a unit of Viacom, which recently released The Millennial Disruption Index, a three-year study with over 10,000 respondents.
Key findings from the Index:
- 53 percent don’t think their bank offers anything different than other banks
- 71 percent would rather go to the dentist than listen to their banks
- 1 in 3 say they are open to switching banks in the next 90 days
- Nearly 70 percent say that in five years, the way we access our money and pay for things will be totally different
- 33 percent believe they won’t need a bank at all in the future
- Nearly half are looking for tech startups to overhaul banking
- 73 percent would be more excited about a new offering from Google, Amazon, Apple, Paypal or Square than from their own bank
According to industry expert Jim Marous, banks are having a difficult time keeping up with the needs of this segment.
“While branches may not disappear, they need to integrate new processes and technology so that the transition from mobile to physical is seamless,” noted Marous. “Banks also need to find better ways to differentiate themselves, since millennials view all banks as being the same.”
The prevailing thought is for banks to consolidate relationships to offer customers more value and convenience. What changed this paradigm is technology. Mobile devices and clever web technologies make the friction of the past a non-issue. As AlixPartners notes, mobile continues to play a critical role in bank switching decisions – a trend that is likely to continue as device sales increase and consumers spend more time using their devices for banking transactions.
If we consider the cost-to-serve implications, it’s in the best interest of financial institutions to provide Millennials with a solid mobile offering as an alternative to traditional banking options. According to AlixPartners, as mobile channel usage increases, the use of higher-cost channels, such as branches or call centres, appears to be declining, with a 39 percent drop in monthly branch visits for mobile banking users.
So, what to do when the next generation of bank customers don’t see a reason to develop deeper relationships with their bank? One clear message for banks is to either create a stronger value proposition or re-invent themselves into something more nimble.
What do most Millennials want?
- A place to store their money at a low cost
- A way to pay for things and get things done simply, quickly and easily
- Mobile-first access, including avoiding branch interactions wherever possible
- An integrated, always-on experience, with access to social networks and helpful tools to get information they need on their terms
BBVA purchasing Simple, for example, was a bold (and strategic) move; an established bank sees the disruption and elects to buy into it. Best of all, Simple will continue to operate independently in parallel with BBVA’s US banking operations.
Take Bank of America’s recently-launched SafeBalance account geared toward younger customers. With a monthly fee of $4.95, it’s a simple, straightforward checking account that acts like a prepaid card: no minimum balance or direct deposit threshold, no overdraft capability to avoid overdraft fees and no paper checks. However, customers have access to B of A’s mobile and online channels and its vast ATM network, as well as FDIC insurance (not available for prepaid cards). A no-frills, digital-oriented account can serve as the backbone of a targeted, mobile-first proposition for Millennials.
Over time, Millennials will still need access to a credit facility for home loans, car loans and credit cards, as well. By pairing tailored product propositions with relevant loyalty programs and an optimal omnichannel experience, banks have a fighting chance to compete for this emerging customer segment and set the stage for future long-term relationships. Product and Pricing Lifecycle Management makes this a reality.
Brett King: The Future of Banking
Brett King, award-winning author of Bank 3.0 and CEO of Moven, shares some compelling insights on the future of banking.
For more information on how miRevenue can deliver complete Product and Pricing Lifecycle Management for your banking needs, please contact us at email@example.com.
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