You’ve got one chance and 45 seconds to WOW me… GO!
My granddaughter just turned two and she already knows how to find her favorite Disney video on YouTube. And forget about that five-second commercial at the beginning…if that pops up, she moves onto the next. That’s what we all have to look forward to – customers for whom instant-response technology was there before they could talk. But the current generation is already used to having the world fit in the palm of their hands, and their effect on payments is something we all must adapt to. Now.
You’ve no doubt heard the warnings that you’ll face extinction if you ignore millennials. The problem is that simply paying attention to millennials isn’t enough. Millennials aren’t engaged by the same things that grabbed previous generations. Businesses need to better understand what makes this generation unique.
Despite varied life stages, millennials more globally homogeneous
Millennials span a wide age range – roughly 18 to 35 – which covers several life stages from student to career launch to early nester and beyond. That can mean very different needs for different consumers. However, the advent of instant communications via social media and access to information through the Internet have created a more global generation with more commonalities than geographic boundaries would suggest.
It’s time to think about millennials globally, not just locally, just like you should consider your competition – particularly in the payments space.
Today, mobile is democratizing the millennial generation similarly to the way jeans democratized baby boomers in the 1960s. But mobile is more like the Road Runner’s version of how to level a playing field – it’s making the change at near-instant speeds. Mobile is providing financial inclusion around the world at a record pace, while also offering instant connectivity to people, information, ideas and institutions.
If that wasn’t enough, mobile has made the user experience paramount, with users now demanding:
- Ease of use – e.g., Amazon’s one-button ordering capability vs. going through multiple screens to accomplish a task
- Convenience – anytime, anywhere access to anything
- Seamless experiences in moving from mobile to other channels and back again
- Speed – e.g., immediate responses to questions posed in any channel – digital, social, phone, in person – and money movement in real time. After all, what good is an app that’s supposed to reimburse your share of the dinner bill if your friend can’t receive the money right away?
On a global basis, we see millennials adopting their financial institutions’ mobile payments applications. For example, 42 percent of banked millennials have adopted their financial institutions’ P2P apps. But there are a tremendous number of competitors in the payments space – many of them startups founded by millennials – smart, technologically savvy, experiential, good at spotting white space opportunities and capable of picking off pieces of businesses, including the historically higher margin parts.
Although millennials offer great revenue potential long-term, traditional banking providers will need to make changes to get a bigger share of their wallets outside of deposits. Evidence shows shortfalls for traditional banking providers in owning millennials’ higher-margin business as they shift credit, loans and payment transactions away from primary banking providers to alternatives.
We also find that millennials are not on the same page as most banking providers. Traditional banking providers still see this generation as not providing enough revenue, particularly for the work it takes to gain their loyalty. Millennials, meanwhile, trust banks and credit unions to store their money, but don’t understand why they aren’t rewarded for those deposits. Further, they find banking providers unfair and unhelpful when it comes to managing their finances; therefore, they feel no loyalty from the bank and don’t believe they should provide any in return.
Finally, interest rates and net interest margins – things bankers focus on – matter less to millennials, who tend to focus more on whether they can afford to buy something given their financial situation and upcoming purchases/bills. So when millennials ask for help in determining what they can afford, a notable percentage isn’t looking to their banking providers for that answer.
So how does one come to understand the global millennial? My advice is to start with these five things:
- Adopt an experiential mindset – it’s as much about the journey as it is about the destination.
- Get out of your own backyard and think globally! That’s where competition is headed.
- Understand that millennials can – and will – cherry pick. They buy songs not albums, and payments lends itself to cherry picking. Make sure they have reasons to pick you.
- Do not assume that they will come, just because you built it! Millennials will only habituate to a superior user experience that integrates into their current behaviors.
- Ignore the rearview mirror and embrace what’s ahead!
What are you doing to attract, service and keep millennials as customers?