Although previous myths about millennials not being valuable customers have been disproven, significant challenges remain for retail banking leaders who want to engage the millennial banking segment
The world is adjusting to living with Covid-19 and the growing impacts of climate change. Financial institutions will learn just how successful they have been at helping people through the recent challenging times.
As financial institutions take stock of their successes and failures, the world now expects major financial institutions to have a sense of purpose that extends beyond generating profit for shareholders.
These institutions are now expected to make financial products and services accessible to under-banked populations. They should also focus on incorporating sustainability considerations into their investment approaches, building trust among younger generations and taking a leading role in confronting the climate crisis.
Financial service firms undergird much of what makes a nation’s economy dynamic and safe, and support continued economic growth and well-being. Products and services should make life easier for customers, and lending should enable people to build organisations that would not have been possible otherwise.
But unethical behaviour at the high-profile level and financial crises have soured much of the public on the industry. There is also the broader point of finance firms becoming “rent seekers” that profit from fees and interest as opposed to creating lasting value for societies through sustained economic growth. So, the financial industry should be more proficient at explaining how its actions benefit the rest of the population.
The financial industry needs to earn the trust and confidence of millennials and Generation Z. The overarching doctrine of “trauma-informed care” approach should be adopted to apply to financial services.
Services should focus primarily on ensuring customer safety. Not only should financial institutions protect their clients’ capital, they also should facilitate interpersonal interactions in a method which gives customers a sense of safety and control,
Millennials- for instance, will likely feel the safest starting an application through their mobile phones, but will later appreciate human interaction and guidance. Customers should be offered flexibility in how the consumer communicates and engages throughout the customer experience (i.e. text, phone call, etc.).
Institutions should also offer them service locations outside of the office such as a local coffee shop or hotels, so the participants feel safe to gather information and connect without the fear that they will be sold to or that they require divulging their financial situation on-site.
It is also important to create clear expectations with clients about what the process will entail, how they will be communicated with, and offering additional resources for education and understanding.
Institutions should respond openly to consumer questions with omni-channel accessibility while offering a clear understanding of their personalised purchasing options, Disclosures, contracts, negotiation offers, etc.
Lenders should ensure clients can independently review their available mortgage products, understand the rate and associated fees, and be able to view various scenarios based on their personal preferences (i.e. down payment, product choice, etc.).
Access to a trusted advisor to support smart decision-making is crucial who will offer quick responses to questions and inquiries during live video or in-person calls when reviewing major decisions in the process (i.e. contract, mortgage product).
Institutions should have the recognition of the consumer’s ability to self-advocate and achieve long-term financial wellness. They should empower the customer with education and resources to continue to build wealth and a sustainable future.
This doctrine is used by countless providers to build trust with the most distrusting populations, and it only makes sense to apply it in the context of a distrusting consumer segment.
Now it is evident that the millennials want to do business with companies that prioritise having a positive impact on the world. It is also evident that millennial banking customers switch their primary bank about 2.5 times more often than baby boomers.
Millennials are the least engaged generation when it comes to their primary banks. They have more banking problems and switch banks more often than other generations. Banks can use data-driven decision-making to appeal to their millennial customers.
It is estimated that a big volume of wealth will transfer from baby boomers to millennials over the next few years. Although previous myths about millennials not being valuable customers have been disproven, significant challenges remain for retail banking leaders who want to engage the millennial banking segment.
A robust study is needed in Bangladesh to understand how these generational trends apply to the retail banking industry. Given that customer disputes and problems can decimate customer engagement, it may be hypothesised that millennial disengagement might be due to different experiences with their primary banks when they have problems.
It is found that millennials were slightly more likely to say they had a problem compared with baby boomers or traditionalists. However, millennials were the least likely generation to report the problem to their bank when they had one.
More importantly, among those who did report the problem, very few millennials were extremely satisfied with their problem resolution compared with baby boomers and half of traditionalists.
So banks should predict their problems. Because millennials are less likely to report problems, a better system is needed to predict, intervene and solve customer problems. Banks should closely monitor indicators of potential customer problems and address them proactively.
For instance, one national bank offers credit score monitoring with instant mobile alerts when customers’ credit scores change. Other financial institutions have increasingly relied on mobile notifications of suspicious account activities, such as unusual spending activity or locations.
Financial institutions should also help them speak up. It should be made easier to report a problem, so customers do not have to physically walk into a branch or call a bank representative to settle their concerns.
The ability to report problems via multiple banking channels, such as a mobile app, automated phone line, text, email or instant message can help but only if customers do not have to repeat their information multiple times. Banks also need to proactively use pulse surveys to hear customer concerns and experiences.
Banks should also forgive a few fees. Millennials are most likely to leave their primary banks because of account fees and service charges. Some national banks charge up per overdraft, while newer fintech companies and digital technology firms that enable financial transactions now offer zero-fee options for checking and savings accounts.
It might be more beneficial to overlook a few service charges when considering the long-term relationship with these customers and growing millennial wealth.
It is critical that retail banks understand and segment customer interactions. It should create customer journeys and data maps to establish an omnichannel framework for all customer experiences.
Nationally, crores of adults lack an account. As far as financial inclusion is concerned, the central bank, regulatory agencies and financial firms have been playing roles in expanding the availability of financial services and products to remote regions and underserved populations.
Typically, people associate “underserved” with low-income segments, but the term also applies to people who are excluded because of a disability. Biometrics voice solutions and further advancements in artificial intelligence can actually accelerate the visually impaired audience’s entry into mainstream banking.
Digital technology can help make banking more accessible to everyone. To thrive, individuals and businesses need access to affordable and functional services that suit their needs. Data shows that crores of adults throughout the nation do not have access to basic financial services, such as transmitting money, storing money in a secure place or developing a credit score.
Working toward financial inclusion is a key factor in national development. Without access to financial services, people in the country struggle to invest in health, education and business. Therefore, financial inclusion is central to national development, prosperity and well-being.
Technology is now driving financial inclusion. Traditionally, it has been difficult for banks to expand services into countries without a strong financial infrastructure already in place.
But modern digital technologies have reduced the cost base of operations to the point that established firms can provide banking services to underserved populations without running the risk of losing too much money, even when they lack credit histories.
