Regardless of size, geography or cultural differences, financial institutions around the world are focused on the growing importance of Millennials. This influential generational segment wants to be entertained, educated and inspired. But banks and credit unions struggle to deliver a truly memorable experience that strikes a chord with Millennials.
For Millennials, unique experiences have a profound effect on their brand loyalty, and that they are indeed more focused on experiences than physical possessions. In research conducted by Shikatani Lacroix, 49 percent of Millennials versus only 22 percent of Boomers value the experience a brand provides over the value an actual product or service delivers.
Millennials see themselves very differently from previous generations — as innovators, and early adopters of new technology and disruptive processes. Furthermore, Millennials crave experiences that allow them to be part of a unique story that they want to share with friends, and they want those experiences to be entertaining, educational, inspiring and memorable.
This is one of the fundamental reasons financial institutions have struggled to appeal to Millennials — they are focused on the mechanics of transactions, and not the emotive experience. To be more attractive to Millennials, banks and credit unions need to develop an omni-channel experience around three key levers of change: brand message, integrated processes and structural shifts.
1. Driving Brand Advocacy: Transparency and Coherent Messaging
Millennials witnessed the near collapse of the economy and many saw family members lose their jobs. This left Millennials weary both banks and wary of large companies generally. They are more willing to support smaller upstarts that better reflect their values.
To win Millennials over, financial institutions need to provide greater transparency about their policies, especially where extra costs may impact the relationship (think: “sneaky fees”). Messaging in branches and online will need to offer insights and knowledge enabling Millennials to feel a sense of financial confidence. Focus marketing resources around owning one social responsibility initiative that is relevant to Millennials, and give them with a platform to contribute through their networks and where they wish to invest.
2. Aligning Processes: Reinforce Personalization and Recognition
The study from Shikatani Lacroix found that Millennials are more mobile-enabled than other generations. They spend more time online as much for emotional validation as they do for gathering information. Millennials track and manage practically everything in their lives on an app — from their health and vital statistics to their financial well-being.
Banks and credit unions need to engineer their processes around the life events that Millennials are likely to face (e.g., changing jobs, getting married, moving, or starting a business). At the most fundamental level, financial institutions need to offer an easy, paperless, digital banking experience — one that reduces the number of branch visits involved with securing approval on a loan or opening a new account. Remove points of friction that don’t build value and detract from building better relationships, with particular emphasis on streamlining how efficiently you resolve issues.
3. Structural Shifts: From Access to Experience
For all the investments in branch design and omni-channel initiatives, financial institutions aren’t clicking with Millennials. Why? Because the emphasis is primarily on reducing transaction costs (i.e., self-service technologies).
Trying to reduce transactional costs will truly alienate this segment. They don’t want to come to a branch to talk to a video teller… they could have done that on their mobile phone. While video ATMs may have a role, they are not how the Millennial consumer wants to build a relationship with a knowledgeable financial professional or resolve their issues.
Banking experiences need to focus on creating an inclusive community that helps Millennials feel confident in their decisions, while receiving personalized services as part of offline and online channels. Branches need to migrate to a place where Millennials can get recognition for their contributions to business, learn about how to start a new firm, or help shape the community they live in.
The next big move for financial institutions is to shift from service solutions to personalized experiences built around a unique knowledge and understanding of each customer. Banking providers will need to create customized experiences through all of their channels to drive loyalty and usage.
Meeting these needs will require a major mind shift away from a focus on operations to one centered around building relationships… one at a time.