In the recent publication, Digital Transformation: The Age of Innocence, Inertia or Innovation? from Microsoft, it was reported that there is a great desire for digital transformation in Financial Services.
In fact, 51% reported a driver for digital transformation is survival in the industry. New innovative Fintech businesses and start-ups have come to play and disrupted the marketplace, taking with them a demographic I sit right in the sweet spot of – the millennials. This is particularly prevalent with the rise of challenger banks that offer customer-centric, technology-driven banking platforms, which understand the needs of my very generation.
So how do the old school banks keep up with a generation running circuits around them at challenger banks?
I think a good place for traditional banking to start, is to consider adapting to the cultural shifts in this demographic, not just considering their familiarity with technology alone. I was in a retirement village recently and discovered that eighty-year-olds have Facebook pages and know how to post a GIF. So to take this angle would be a tad presumptuous.
A preference for challenger banks and Fintechs is not necessarily symptomatic of a generation warned in their teen years of early on-set arthritis as a result of thumb agility writing text messages. It’s also about socio-economics and culture. Prime example: homeownership.
In an HSBC study, it was revealed that only 31% of millennials are considering homeownership. So why would they go to a big bank reliant on paper traces, attendance at a kiosk after waiting in line with people cashing cheques (people still use cheques?) and spend endless hours on the phone being ping-ponged between departments with bad elevator music intermissions.
Why wouldn’t millennials go to the bank that they can sign up for from the couch, the banks that can give them intelligent data at a glance regarding how good or exactly how useless they are with money, the bank that thinks less of assets and more of the daily lives of users?
Millennials represent an independent generation that wants to control their spend on the go, in a bar graph that tells them they spent £300 at the pub last month and that was a terrible idea. These are the little things that count and the services that keep millennials captivated – not the potential for great interest rates and slow-burning savings benefits.
Another cultural consideration for millennials is the culture of rapid change
My generation isn’t afraid of rapid change. When the iPhone came out we dropped our key padded phones and flocked. Why? Because we believed in a change for the better. Pressing 7 four times for an S was a time of the past. Yes, the marketing helped, but the technology was fundamentally good.
We won’t stop switching between technologies until we are wholly satisfied to the greatest extent – and that’s all it boils down to: Customer satisfaction powered by better technology. I don’t even think this is an old concept. Let’s take irons with timers on them, the advent of the CD. The difference is that the rate of change is faster than ever.
So let’s think about this in the context of banking
When millennials pay fees, it makes them really angry. When millennials wait on a phone, they fidget and become disgruntled. When millennials aren’t satisfied, they go elsewhere. They find the next best solution and the next best technology to make them satisfied. They aren’t afraid to swipe left on a bank.
So what do the banks need to do?
If banks and wider financial institutions want to capture a millennial market and the generation that follows, they need to think about technology which prioritizes customer experience. ‘Oh but what about security? We need the paper forms, we need the legacy system, we need data on the ground.’ The fact is, no, you don’t. With the advent of Cloud technologies and services like Microsoft Azure, the gold standard for GDPR compliant technology in 2017, security and advancement are symbiotically connected – so is better service – so is an easier way of banking at your fingertips.
If banks want to survive, they should make traditional processes better. To change address, the customer should be able to upload a PDF of their latest power bill and verify their details by logging in to the app successfully. They should be able to get a quote for services from within their mobile banking app using artificial intelligence. Customers should get a consolidated summary of outgoings each month to encourage smart spending or banks should gamify savings benefits. After all, this is the instant gratification demographic. Gratification hits millennials in small bursts and that gratification leads to the most powerful word of mouth marketing there is. If you want millennials to talk, give them a lump sum boost for reaching their savings goals.
So in this millennial musing, I challenge the banks to rethink digital transformation. In an age of Cloud technology aligned with governance, there are just no excuses anymore, at the very least, to start changing.
To full circle back to the stats, ‘exploiting game changer technologies’ sits as a driver among only 36% of financial services companies. To reiterate, ‘survival’ is at 51%. These two things should be flipped. In order for financial services to win the race, to survive, to lead, they need to change the conversation about how they can be better and invest in the new exciting technologies available. Without sounding too apocalyptic, the oldest millennials are now in their early to mid-thirties. The time to transform is now.