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Many industries are spending an inordinate amount of time thinking about how to effectively market to Millennials and Gen Z. No disrespect to other generations, but these two generations represent the future of businesses – and financial services are arguably struggling the most with it, having spent a lifetime catering to the needs of Baby Boomers.
Last week, I was fortunate to lead a panel discussion on how financial institutions can better market to Millennials and Gen Z. We had a great panel including:
- David Servais, Head of Credit Card User Experience at Wells Fargo
- Ashley Eknaian, Chief Digital Strategist and Head of Eastern Labs at Eastern Bank
- Kyle Costello, VP Emerging Technologies at Radius Bank
Banks and financial institutions are out of their comfort zone and struggling with how to market to Millennials and Gen Z, both of whom have a bend toward technology that previous generations haven’t had and are laser focused on user experience. It’s a scary world for financial institutions dealing with these new(ish) customer segments but it’s a priority for a number of reasons:
- We are about to go through the biggest wealth transfer in history as Boomers transfer to their Millennial children
- Gen Z is just hitting the workforce and coming in with a very different set of attitudes than their predecessors: they are diverse, tech natives, and committed to causes, in particular, environmental causes. Their drivers are far different than previous generations.
- Most banks have focused on the current wealth holders – the Baby Boomers – yet there has been a huge increase in the velocity of change in everything from how and where people perform banking activities to who they bank with (hint, it isn’t always a bank).
Here are five takeaways that stood out to me:
1. Customer First. Hard stop.
The discussion both began and ended with the fact that banks need to think of the customer first. While this seems pretty intuitive, it hasn’t always been in financial services where accounts – and the money they make off those accounts – has taken priority and, in fairness to these institutions, was accepted by previous generations. All of the panelists stressed that prioritizing the customer over profits or account openings is something that banks must focus on.
2. Products and marketing must focus on the job to be done
While demographics and cohorts like Millennials, Boomers and Gen Z are interesting, the real key for the people developing new products and services is focusing on, as Kyle noted, the “job to be done”. How do you effectively reach these new audiences? While Millennials and Gen Z have viewed their mobile devices as the primary way to do just about anything, the actual functionality and services they expect from their financial institutions often appeal to everyone.
Millennials may have championed peer-to-peer transfers with Venmo, PayPal and Zelle, but customers of all ages gained from the ability to easily pay and split bills. In this example, getting it done was not only to please millennials – who demanded it – but also to provide a free and seamless way for all customers to easily make these payments. As Ashley stated, “now that we know what we want to provide, we have to make these available for everyone on every device and, if applicable, every channel – including branch.”
3. Simplicity works – for everyone
Millennials and Gen Z have also made us think about simplicity in a whole new way. While Boomers may have “suffered” through things like waiting for taxi cabs in the rain for 45 minutes, Millennials just created a new way with services like Uber and Lyft. They break rules, but in retrospect, the rules often seem meaningless or silly in today’s world because of how technology can enable simplicity.
As David noted, people applying for the new Apple Card have only four questions to answer in order to apply. Yet banks and other financial services companies ask 30 questions, and many answers to those questions are readily available without having a respondent fill it in.
Some of the complexity, as David noted, is just legacy behavior. Apple’s new “Unlimited Daily Cash” is one example of shaking up the status quo. Up until now, banks have paid rewards monthly, but there is really little risk and no reason to not pay daily.
All the panelists agreed that non-bank competition like the Apple Card is making them all better and more competitive.
4. Personalize without being creepy
One of the things that Ashley brought up is that Millennials and Gen Z expect a personalized experience. They have grown up with Amazon, Apple and other brands that offer them personalized and relevant options. They know that financial institutions likely know everything about them and can’t understand why that info isn’t used to provide more relevant information to them. Millennials and Gen Z are comfortable with their data being used – provided it’s being used to improve their experiences.
The challenge is to find the balance between convenience and relevance and to avoid being creepy and landing in a news cycle.
5. No more marketing by carpet bombing
Banks can no longer do marketing by “carpet bombing,” according to David. He has found that his customers don’t mind being communicated with, but they want relevant alerts and content. It puts more onus on the banks to really use the data that they have in a transparent and positive way to help their customers accomplish their financial needs and goals.
Banks need to change
The writing is on the wall and banks have to change and become more agile. Some of the legal machinations just have to go away, in addition to the “we’ve always done it this way” mentality that is opening the door for new entrants to disrupt the traditional banking model. Non-bank competition in almost every aspect of banking has arrived, and banks need to break some of the old ways, learn and grow faster by, most importantly, thinking customer first. The good news is that all of our panelists are innovative, motivated and ready for their banks to take on that challenge.
