In this webinar, Aspire Systems launches the Millennial Banking Technology Framework for banks to wade through the millennial customer paradox, making it every global bank’s guide to survival in the millennial age. The Millennial Banking Technology Framework would help banks expand their markets, drive new revenue streams and foster a climate of innovation. Here’s the transcript of the webinar hosted by Mythili Madhav, BFS Delivery Manager and Vishwas Anand, Head of Thought Leadership on BrightTALK.
Mythili: Hello everyone.
Today we are going to talk about millennials, their coming of age in this digital era of fintech disruption and how their behavioral traits are going to shape up the future of the banking and fintech industry.
I am Mythili Madhav from the banking and financial services practice at Aspire Systems and I have with me Vishwas Anand who heads the thought leadership team here.
Millennials, as you may already be aware, are becoming the largest living demographic around the world, numbering roughly over 2 billion, born between 1980 and 1999 and entering their prime spending age. Here is a sneak peek at a few details of millennials:
- Currently aged between 19 to 37
- When compared to Gen X or Baby boomers, millennials want to settle down first and become financially stable and hence delay certain important milestones of life – they get married and have their first child later than any previous generation, buy their first home later than the previous generation
- They have come of age with the Internet, mobile devices, and the ubiquitous social media – they are the so called digital natives
So how are they going to impact the BFS industry? BFS industry today is catching up itself with the digital disruption and is oriented towards being product centric and wants to woo their clients by enriching their product capabilities. A key factor in the enrichment itself being the market feedback it gets from the clients. Gen X and Baby boomers had the tolerance and time to loop back with the banks to present their case. However millennials have a different scenario altogether. On one hand they have a plethora of providers to choose from, on the other they have access to digital content to present them a ready made comparative study of these providers to select the best that suits their requirements, added to this is the peer pressure to choose a uniform service provider for themselves for closer networking which has P2P services under one umbrella. For example, in India, people are moving from Alibaba backed PayTm which charges 2% on the transaction amount to Payzapp which charges 0% – a major factor in this being played by peer feedback in social media.
Vishwas: Millennials are also silent sufferers, neither do they have the tolerance or the time to connect back with the bank to provide valuable feedback. They just move on to another bank or look for alternate financial products that satisfy their needs.
Mythili: Millennials are far more likely than any other demographic to leave their primary bank if that bank doesnt meet their needs.
The smartphone adoption of millennials is a major player for banks to plan on their next wave of digitization. As the stats on screen indicate, a mobile first approach is what will win in the retention of millennial customers.
- Leave institutions that don’t meet their mobile banking needs
- Reject solutions that are fragmented and inconsistent across different devices
- Accept personalized offers for banking services that appeal to them
- Use customizable budgeting tools
This data means that banks should move away from being product centric and rather be customer centric. This would mean analyzing the clients behavioral pattern, predicting what would they want and do next and offering them customized solutions to cater to their needs.
Vishwas: Yes Mythili. For banks who are still wondering if millennials are their right target segment, the simple answer is they wouldn’t exist if they don’t actively transform their engagements with millennials in the next year or two.
The millennial banking revolution is going to take the banking industry by storm globally. The time has come for banks to wake up to the harsh reality that experiences are necessary for millennials, banks are not! They need to have a strong millennial engagement strategy to make millennials experience this change. Rather than a business-to-consumer approach they need to start thinking about a consumer-to-business approach. Only when they put customer outcomes at the centre of this value chain will they be truly embracing the millennial banking revolution.
Mythili: Europe would be bracing itself for PSD2. Come January 2018, this is expected to have far-reaching effects across banks, payment services providers (PSPs), FinTechs, and corporates. The UK government is also mandating an Open Banking Standard to boost innovation. The Monetary Authority of Singapore (MAS) recently chalked out a plan for the central bank to move towards an open Application Programming Interface (API) architecture. As other countries globally are following suit, business models would get disrupted at a staggering pace and APIs are at the heart of this revolution.
Vishwas: Amidst these developments, banks need to know how to tap into this millennial banking ecosystem. Banks that are successful would be able to expand their markets, drive new revenue streams and foster a climate of innovation. The innovators would set benchmarks for real-time collaborative ecosystems.
Mythili: Here, at Aspire Systems, we have devised what we call as the Millennial Banking Technology Framework, a framework which we believe is where the banking industry is heading towards and which will cater to the wims and fancies of the digitally disrupted millennial!
This framework will help banks build new business models for products, services and data in this millennial banking ecosystem. According to the World Retail Banking Report 2017, 91.3% of banks and 75.3% of Fintechs would like to partner with each other in the future. The central idea is to offer next-generation banking services through various channels and build a sustainable ecosystem.
Vishwas: Millennials are at the centre of the value chain, highlighting the strong customer-centric approach that banks need to visualize to win over their millennial audience. Unfortunately, according to research by Cassandra that tracks generational trends, millennials are turned off by banks because they don’t offer appealing products and services.
Millennials are surrounded by Mobility and this should be the first layer of focus. Instant gratification from a readily available mobile device is what a millennial seeks. In keeping with the Facebook, Apple and Amazon age, sleek mobile apps, digital payments and IOT integration for accelerated connectivity is paramount to touch those MOTs.
Mythili: In the UK, app-based digital bank Atom uses gaming software for engaging customer interactions. In India, DBS Bank launched Digibank that uses biometrics.
Vishwas: We move to the next layer of Amplified Social Connectivity or in simple terms Killer Customer Experience (CX). Omnichannel has become a way of life for millennials and they crave for experience-driven banking in any channel of their choice.
Mythili: Tools like Temenos or EpiServer help build a dynamic, rich UX responsive design with consistent CX and self-service across multiple channels from a single platform with seamless integration to 3rd party systems and apps.
Vishwas: The final layer is Contextualized Analytics that cuts through all the layers and creates trust in a bank’s services. Unfortunately, this is missing in a lot of banks today. In our last webinar, we spoke about banks only focusing on the medium rather than the message. The key here is for banks to use the 3 A model of Authenticity, Accuracy and Agility to optimize moments of truth in a Millennial’s journey. A phygital strategy is essential as a rich message needs to bring in the human touch at the right moment.
Mythili: Accenture conducted a study across 18 markets and found out nearly two-thirds of consumers still want human interaction in financial services especially with advice related to complex products like mortgages (61%).
Vishwas: All the different layers fit into the larger picture involving regulatory compliance, API Management and Risk Management. Millennials interact with other financial service providers through solutions developed in the layers either through digital banking solutions offered by their banks or through 3rd party partnerships with service partners, solution partners, aggregators or payment providers. The future of millennial experiences is in challenging older transaction systems with new systems like bitcoins or blockchain. Cloud-based technology is expected to play a key role to deliver digital banking experiences with the highest standards of risk management, security and compliance.
Vishwas: Thank you for joining us and I do hope you have some key take aways from this webinar towards your millennial banking journey.
Latest posts by Vishwas Anand (see all)
- Silence is Not Golden in the Millennial Banking World - November 3, 2017
- Millennialization of Everything in Banking: Exclusive Interview with Jeremy Balkin - October 13, 2017
- Connecting Millennial Banking Dots Builds Financial Well-Being - October 9, 2017