Big tech has a strong relationship with millennial customers – do you?
Younger generations are ripe for rich personalization and customer relationships that are more human, less institutional. But what happens when big tech like GAFA sweeps in and drives those customers away from your FI?
Younger generations like millennials have different banking needs than others, and yet, many financial institutions are losing their millennial customers to the Googles and Amazons of the world.
Why is that?
While most financial institutions do offer general teenage-friendly or college-ready banking solutions—think: student chequing accounts or interest-free savings accounts—these solutions typically aren’t designed to match what these groups of customers need, let alone their preferences, lifestyles, and even financial literacy or education.
This means that most banks and credit unions have yet to figure out how to effectively engage their millennial customers, even though a good portion of this generation has already reached financial maturity. And what about the Gen Z customers who are becoming more aware of and serious about their financial futures already?
All of this begs the question: what about the next, younger generation of customers?
Big tech is here to take your customers (and their data)
There was a time when GAFA and big tech were limited enterprise software; none of them had legitimately stepped into the financial services space, and few financial institutions were concerned that big tech would come for their customers. However, this hasn’t been the case for Gen Z and younger generations; their options are no longer limited to traditional institutions. And they aren’t limited to traditional banking solutions, either.
Today, banks and credit unions aren’t just competing with the institution down the street, but tech companies, too. Younger generations already trust and are comfortable with GAFA and big tech because they’ve grown up with them and are familiar with them as familiar brands. They have confidence in Amazon’s recommendations and think nothing of providing Apple with their sensitive information because these companies cater to their needs — not just conveniently but with the right products.
Take Google’s recent announcement or the launch of Step as examples. Both are targeting Gen Z and millennial customers — Step with its financial literacy for teenagers and Google (more of an indirect play) by enabling digital-first users to manage finances more easily. Not to mention, these same customers might be inclined to partake in Amazon’s Shopper Panel, exchanging their purchase information for deeper financial insights.
The name of the game is personalization
If your financial institution hopes to compete head-on with big tech, especially from a product perspective, you have to think beyond traditional banking — and that means personalizing products and advice to your customers when and where they need it.
It sounds simple, but how do you actually make it happen?
Banks and credit unions must start with becoming a destination for young customers, where they can learn about financial management, the value of savings and healthy spending habits, and understanding their options and needs in a way that’s engaging and interactive. Institutions will need to take a step back and offer products outside of their traditional services to earn young people’s loyalty, well before they’re ready for something more robust, let alone an everyday banking account.
This is where gamification and personalization can help boost engagement. Imagine if your financial institution could create an application that teaches personal financial management, without requiring the user to be old enough for a bank account. Your institution could reward its users with points, allowing them to redeem these points at retailers while teaching them the value of savings and healthy financial habits. What’s more, your application could resemble playing an addicting game like Candy Crush while learning a thing or two along the way—and getting rewarded for it.
Forward-thinking leaders are already doing something similar; through its partnership with Greenlight, Chase is putting the time in now to appeal to younger generations, establishing loyalty early on so these consumers are likely to grow and mature financially with their institution.
2021 could be your year
2021 will be about winning the hearts and minds of younger generations by offering financial support and management. It’s time for banks and credit unions to stop underestimating the next generation of banking customers and start taking the time to invest in these relationships and teach them about managing finances. If your institution fails to do this now, you may find yourself in very real trouble 10, even 5 years down the line, when these customers are ready to take on more serious financial commitments as their lifestyles and needs change.
Discover how you can practice richer, deeper personalization with our latest Ebook — Personalize or Perish: SKU-Level Data’s Role in the Future of Banking. Download your free copy here.