In a report released in February 2010 by Cisco Internet Business Solutions Group (IBSG) (download the PDF here – 2.8Mb), the needs of a younger generation of banking customers was investigated. It makes for interesting reading.
Some of the highlights include the fact that 85% of young people (“Gen Y” – teenagers and 20-somethings) report being satisfied with their current banks. Is that just because they don’t believe they have any possible options? Do they choose banks not on the basis of “the best choice possible”, but rather “the least crappy option”? Tough words, but it would make sense of the data.
More than one-third of Gen Y consumers want help managing their financial affairs and they want help to come from their banks. Most of them actually get advice from friends and family, but they appear dissatisfied with this. Social media is good for finding out what movies are good, but are not considered trustworthy for financial management. They really would like more professional advice. More than one-third of Gen Y prefer using professional advisers as their source for financial advice, ahead of peers, personal research, or automated tools. A very interesting point, though, is how they want this advice. Nearly 40% of young people surveyed would be happy to interact with an adviser via video (as compared to 17% for the over 50s).
It’s not just the medium they’re keen on – it’s also that they can speak to a financial representative from the comfort of their home or office at a time that is convenient for them, not between the hours of 9-5, Monday-Friday.
Banks are also going to have to go mobile. Not just banking from your mobile phone, but genuine app-based thinking and the use of social network mindsets to connect with clients. Read one case study from a Spanish bank here.
And this isn’t all about tapping into the “diet coke and movie” type of money usually associated with student banking. The report estimates that Gen Y are now spending the same amount of discretionary money each day as Baby Boomers are. They don’t have the wealth pot built up yet (but let’s face it, most Boomers don’t have that anymore either), but they’re well on the road to being a significant market for the banks, and a key source of profitability.
That’s going to require banks to change their ways. That might be asking a lot, but if it’s ever going to happen, now would be the time.