Bridging the Great Divide Between Banks and Millennials

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Eliminate stereotypes by treating Millennials as individuals and giving them the trust, transparency, and personalization they seek.
Customer Experience

Despite an increased emphasis on personalization, many industries perpetuate the very stereotypes that devalue individualization efforts and hinder brand growth. Banks, in particular, have an extensive history of skewed strategies when it comes to connecting the emerging Millennial demographic.

Though banks believe these consumers are difficult to attract and retain, Millennials seek three key facets from their financial relationships: Simplicity, transparency, and affordability. Because they grew up in an era of economic turmoil, Millennials want services that both match their lifestyles and protect their money and personal information from fraudsters and data breaches. But, while these stipulations may appear to belong to this new wave of clients, such requests and expectations have come to spread across all age groups, making the subsequent assumptions null and void throughout the industry.

Contrary to popular belief, Millennials don't shun human contact. As Neill Osika, vice president, financial services at TeleTech, explains, Millennials typically prefer to conduct research independently as they begin their buying journeys. However, when it comes to committing to given products or services, these emerging consumers seek advisors who can engage in conversation, educate them on offerings, and guide them along the path to purchase.

Rohit Mahna, senior director, global lead financial services solutions, at Salesforce, notes that Millennials crave authenticity, as these consumers wish to be known. For Millennials, brand loyalty no longer exists, as they don't need one single provider. Therefore, financial brands must cater to these individuals and meet them where they are. Banks must comprehend that obtaining customers' contact information is no longer enough. Instead, they must grasp their clients' aspirations and goals so they may offer effortless service and proactive outreach via social and mobile. Breaking down organizational silos will also allow brands to create an internal culture of collaboration and teamwork that enables all advisors to deliver the personalized, proactive advice Millennials typically seek.

Much tension arises, however, from the fact that, while Millennials seek money-saving options, such as free checking and low-interest credit, these features generally cost banks, thereby infringing upon their bottom line. In response, banks use these loss-leaders as incentives to attract Millennials only to upsell more profitable products down the road. Rob Heiser, president and CEO of Segmint, emphasizes that such actions are the very reason banks alienate Millennials today.

"When Millennials fail to purchase, the banks start charging things like ATM fees and huge overdraft fines to make money," Heiser adds. "This naturally angers Millennials and drives them to alternative products. Banks need to do a better job of identifying what each customer wants-it's that simple. Once you can make that determination and offer people the services they want, then you have developed a relationship that's a lot closer to a service than sales. Making customers feel like products are tailored for them, rather than unloaded on them, will go a long way towards reestablishing trust and loyalty."

Banks must also realize that not all Millennials are created equal, as each subset within the demographic requires different services at their present stage of the customer lifecycle. Michael Charest, executive vice president, global sales for Prinova Inc., explains that, while younger Millennials, ages 16-18, may need to open an account so they can cash the first check from their new part-time job, those ages 18-22 are likely in the market for their first credit card as they head off to college. Millennials age 22-25 are just starting their careers and need advice on how to budget their money so they can pay off student loans, while those age 26-30 often seek assistance around investments and purchasing their first home. Thus, strategy must move beyond demographic groups to meet the needs of each customer individually.

Because Millennials are used to being targeted based on their purchasing and browsing behaviors, sharing such insights has become routine. However, banks are often unable to give Millennials the information they want at the time they want because they don't have the analytic data in the proper place to facilitate real-time targeting. Clay McNaught, vice president, insurance, financial services, and healthcare for GMC Software Technology, highlights that banks hold vast amounts of data about each of their customers, yet most are incapable of using it to effectively promote increased client engagement and support improved personalization. "It is becoming more and more critical for banks to have a system in place that makes it possible to automatically trigger each communication with relevant information based on what they already know about Millennial customers in order to retain them and keep them loyal."

McNaught adds that, by establishing this deep understanding of customers' needs at any age, banks have the opportunity to cultivate the types of brand relationships that endure and evolve over time. "Younger customers turn into older customers, so if you ensure they have what they need to be financially sound at this time in their lives, yet prove you can also service them as their needs change, you are more likely to keep their loyalty."

Ultimately, financial brands must treat Millennials just as they would any other generation, for all should be regarded as individuals, not some stereotype. By focusing on each customer's personal needs, banks demonstrate their dedication to personalization and service, while cultivating the loyalty necessary to sustain relationships well into the future.

United Capital Embraces Gamification to Enhance Engagement

In an ecosystem where most financial institutions are still focused on selling Millennials product solutions, Mike Capelle, chief strategy officer at United Capital, a financial advisor firm, realizes that today's youth doesn't have an appetite for risk. Instead, Millennials seek transparency, for this ingredient acts as the foundation for long-term trust. Thus, serving Millennials means integrating elements that relate to these young clients on their own terms. United Capital has hired Millennials, as the firm recognizes that having Millennials in-house helps the business understand the needs of this demographic and enables the company to orient its services in ways that attract Millennials.

Capelle also notes that United Capital has integrated gamification into the financial planning process in an effort to build the online client experience Millennials prefer. Money Mind and Honest Conversations allow United Capital to generate insights based on behavioral biases so the company may better tailor their services to the consumer in question. "Millennials want to be engaged and want to understand how the input affects the outputs and the guidance we provide," Capelle explains. "Gamification creates that level of engagement. Historically, consumers saw a financial planning session as more akin to visiting the dentist. We've worked to change that perspective and provide value to clients quickly, so they feel like the effort they put in is well worth it."

For instance, the Honest Conversations exercise contains 15 cards highlighting different goals that clients are then asked to prioritize. Using an iPad, customers go through the process by putting cards in the order they want so United Capital's firm of advisors can easily deduce the client's primary goals. Married Millennials are also encouraged to conduct this exercise separately so advisors can understand their individual priorities and facilitate compromises as couples prepare for their financial future.

With this newfound wealth of information, United Capital can then create guidebooks, which highlight the customer's self-identified goals, noting areas of progress and opportunities for improvement. "Advisory services have had to evolve to respond to Millennials," Capelle adds. "No one wants to receive a 100-page planning document they cannot understand. That's like going to the doctor's office and the doctor giving you an X-ray and asking you to interpret it. The guidebook interprets complex financial jargon into simple, relatable language focused on goals and objectives." By bringing this information together and generating content that links back to their goals directly, United Capital demonstrates an effective way to connect with Millennial customers and create the trust, transparency, and collaboration these clients seek from today's unsettled market.

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