It’s not just about the Millennials…
The millennials (remember? Those customers who were born somewhere between 1980 and 2000) are changing everything.
1. They are the biggest generation so far …
2. They were born in a time of a rapid change.
3. Their priorities are different.
4. They are doing everything differently.
That’s why they have a huge impact on the economy and companies are struggling to figure out what they want.
Bank’s Focus is on Millennials & Digital Innovation
The banking is a very old industry and a very “big ship” to move. A change in a bank strategy is possible, but it’s not an easy thing and for sure, not a quick one.
For years, banks put all their efforts in the traditional banking: physical branches, traditional banking products such as savings and current account and it worked pretty good.
However, for the last few years, this new generation had come and changed the game rules.
So, banks are still trying to learn those customers, their needs, their behavior and more.
One thing they understood is that “digital is the King” and they did some big stuff like:
- Building Digital Strategy
- Establishing Digital unit
- Developing Digital products
- Integrating Fintech startups
- Closing branches
- Reducing the number of employees
This revolution is not even close to end. It has just getting started.
That’s why we can find so many articles and news about the Digital revolution in banking and about the financial behavior of millennials.
But What About the “Baby Boomers”?
“Baby Boomers” are the parents of the millennials. When talking about this generation, we are referring to people at the age of 50 plus. They were born somewhere between 1943 and 1960.
In the US this generation is about 35% of the population.
This generation had totally different banking expectations and they used to go to the bank frequently.
Not many years ago, when you had to get your salary — you went to the bank, when you wanted to pay your electricity bill — you did it at the branch and when you wanted to take a small loan — you came with two guarantors to the bank.
Then it seems very normal that a visit in the bank (physically, of course) will be a part of your weekly routine.
A lot has changed since then and as I described earlier, people are not going to the branch so often and branches are being closed all the time.
But thanks to the millennials, the Digitization and more changes, those Baby Boomers have changed as well. Sure, they are not digital natives, but they own smartphones and use digital products and even digital banking.
Unfortunately, banks are failing to answer those customers needs.
Banks are putting all their effort in the millennials and since their strategy is very focused, they are pretty much avoiding (consciously, I guess) the needs of those older customers.
So why is it a problem?
- Those customers control about 56% of the US national investable assets.
- They want to try to save more before their retirement — so they are a great potential for saving plans.
- They are trying to help their kids with tuition payments, getting married, rent an apartment and more — so there is a huge potential for loans.
- They are trying to figure out if they saved enough money for the future and how to use it when they will need to — again missed potential for financial consulting.
- Their children often choose their parents bank — so if they will be disappointed from their bank, it could affect their children’s decision regarding their bank.
- They won’t hesitate to use digital tools that will solve their problems.
What banks should do? Which generation to choose?
The strategy has to support those two generations. Both of them will anyway use digital tools as the bank’s website or mobile app.
However, the most important thing is to understand what they need and what they are worried about and trying to build smart tools and banking products to answer their needs.
It won’t be a waste because it will use in the future other generations and might build a string connection both with the parents and their children.
I know that changing a bank strategy is far than easy and to focus in two different generation makes if very complex, but it’s possible to achieve.