How to work with millennials and their money

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Millennials are people born after 1981. They are distinguished by their thirst for digital technologies and quick adaptation to a changing environment. This generation has already become the main source of income, having changed their parents. Business development depends on the ability to work with Generation Y.

Millennials are the largest and potentially most influential generation in history. The number of millennials and their long-term purchasing power will open up incredible opportunities in the coming decades. Banks are already preparing to focus in their work not on Generation X, but on Generation Y, which is completely unusual and unaccustomed.

Research by Jim Marous. … dedicated to this generation shows that 71% of millennials would rather go to the dentist than listen to what the banks tell them. And 33% generally believe that they will not have to go to the bank in the next five years. To succeed, banks need to learn how to work with mobile technologies, apply sophisticated analytics and build effective strategies to attract customers who currently do not see the need for loans.

Despite the fact that today the main profit comes from generation X, millennials will replace it already in 2022, and in 2030 only people from generation Y will determine the profit. In addition, millennials will determine financial policy for 32 years or more.

TSYS Corporation develops solutions for electronic transactions with bank cards. Her report on Millennials says that this generation has already become the main source of income, having changed their parents. Business development depends on the ability to work with Generation Y.

Millennials in a nutshell

According to Pew Research Center Richard Fry., in 2015, millennials became the largest generation in history. Before that, the "record" belonged to baby boomers. Generation Y will be the main workforce in 2018. And it's time for banks to prepare for the dominance of this force.

3 differences between millennials and previous generations

There are three significant differences between millennials and previous generations (Gen X and baby boomers). They need to be considered in order to build successful strategies in the financial services sector.

1. Millennials embrace new technologies easily

This is the first generation to grow up on the Internet, surrounded by digital technology. Therefore, millennials demand immediate answers to their questions from companies. They do not tolerate poorly designed interfaces, and sellers of goods and services need to provide convenient, intuitive solutions, and also take into account that consumers can go online using smartphones and tablets.

Based on eMarketer research eMarketer Company. …, in 2015, about 59% of smartphone users aged 18 to 34 used mobile browsers, apps or SMS to contact a bank, credit institution, broker, or manage a credit card. In comparison, fewer than 28% of baby boomers used mobile banking or similar services.

As millennials choose mobility, banks will have to invest in developing new technologies that work as efficiently and familiarly as Apple, Amazon, Google, and so on. The financial sector also needs to master social media in order to share experiences and talk about money.

2. Millennials are not attached to brands

According to a study by the consulting company Accenture Accenture Company. …, 18% of millennials changed banks last year, with 10% of consumers aged 35-54 taking the same step, and only 3% of consumers over 55. This is partly due to the mobility of generation Y. But this is mainly due to the high demands on the companies that millennials contact most often.

This generation spares no time in preliminary research. Before purchasing or before entering into a contract, they evaluate products and services. This means that financial institutions that want to collaborate with millennials need to make a website and an application, always with simple navigation and complete information about products and solutions. Any transaction should be convenient and account management intuitive.

Meanwhile, if millennials have chosen a certain company, then they will turn to Boston Consulting Group. U. S. Millennials Engage With Brands Much More Extensively And Personally Than Older Consumers. for more services. That is, financial institutions need to think less about servicing individual transactions, and more about how to build long-term relationships with each client. This requires serious analyst work.

3. Millennials use alternative payment systems

Generation Y is drawn by Jim Marous. … to new methods of payment and settlement. Millennials are twice as likely as Gen Xers to use mobile wallets like Apple Pay or Google Wallet (32% versus 16%). More than half of millennials use payment systems like Venmo or PayPal. Finally, millennials should be viewed as a group that is willing to actively use peer-to-peer lending. 23% of millennials are considering this. For comparison, the interest of baby boomers in such services is 10 times lower.

Millennials often use mobile banking apps. Among the users who use these apps every day, 59% are millennials. So financial institutions need tools that will allow the client to keep in constant touch with the company. The mobile application must provide access to the account, money management and making any payments.

3 marketing strategies

TSYS recommends three strategies for financiers to meet the needs of millennials.

1. Data collection and serious analytics

For decades, customer data has only been used for reporting purposes. But now there are many highly functional and affordable analytics tools out there. You need to use customer data to evolve products, calculate audiences, build relationships with them, and provide customers with the solutions they need in the here and now.

Millennials will be attracted by personalization. TSYS offers four scenarios that may come in handy:

• attracting clients;
• long-term cooperation;
• product development and bonus offer;
• improved communications.

2. Attracting customers using technology

Digital engagement works through personalized, customer-driven, relevant online solutions that span multiple devices and communication channels. It helps to assess the behavior of millennial consumers when interacting with the company, as well as to develop interest and develop new proposals for current and future financial needs.

Research by Ross Wainwright, an analytical division of the British magazine Economist. … showed that 82% of banks' representatives agree: in the next five years, customers will contact the bank using mobile devices. So financial institutions, TSYS estimates, will do well if they integrate digital tools into their operations to help millennials choose and make the right financial decisions. These are such services as customizable notifications about low account balances, automatic recurring payments, notifications, and software for monitoring finances.

3. Bonus strategy

A 2015 study by TSYS Corporation. … TSYS has found that bonuses and loyalty programs continue to affect customer behavior of all ages, and millennials are no exception. Moreover, generation Y perceives bonus programs not as a way to get something for free, but as evidence of belonging to a special group. They are ready to use the services of one company if they feel that they are entering a special club where not everyone can get.

Those financial institutions that understand millennials, strategize around data, technology, easy access to services and bonus programs, will benefit in the near future. Understand what Gen Y needs and capitalize on it.