Banks need to contend with YOLO and FOMO for market share
The attitudes and expectations of Millennials are shaping up as a key hurdle for banks, as younger customers experiment with new financial service providers and defer major investment decisions such as property purchases.
Consultants at KPMG say the results mean that banks will have to learn the meaning of YOLO (you only live once) and the importance of FOMO (fear of missing out) in order to adapt their strategies and capture this valuable demographic.
The findings are contained in the consultant’s third annual survey of the banking habits of Generation Y titled “Banking on the Future” which surveyed 1400 professionals aged between 18 and 30 years old.
In what amounts to a shot across the bows of the banks, the survey showed that 28 per cent of respondents had relationships with as many as three product providers and that 84 per cent would consider banking with tech giants such as Apple or Google.
KMPG financial services partner Daniel Knoll said that this finding represented a profound change in attitude from younger customers.
“What we see with this group is that they are considering the tech giants if they are deemed to provide better products and better experiences, however, its important to note that social media companies were not included,” Mr Knoll said.
Mr Knoll said companies like Apple and Uber were removing pain points for customers, enabling seamless transactions through initiatives like Apple Pay and Uber’s popular app.
Younger customers were also turning to less well-known financial technology or fintech applications.
These include automated micro investing service Acorns and peer-to-peer foreign exchange company Transferwise which claims to be eight times cheaper than many bank services.
The popular WeChat ecosystem developed by China’s Tencent also allows users to paying for taxis, utility bills and money transfers.
Despite a strong preference for online functionality and convenience, 76 per cent of survey respondents wanted face-to-face conversations with a bank about mortgages.
KPMG’s Daniel Knoll said they expected to see a material drop in the preference for such meetings but acknowledged that the technology available allowed them to be significantly better informed about the market than previous generations.
“They were very well armed about price and service levels. For this group’s second mortgage we may see a more digitised experience get traction but right now having a conversation with a banker or broker remains a high priority” he said.
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