What do young customers expect from financial services? 18 August 2021
Furthermore, the proliferation of neobanks, fintechs, and digital wallets means the field of competitors has widened dramatically. Customers are no longer limited to choosing between banks when it comes to handling their financial needs. Peer-to-peer payments? There’s an app for that. Investing? Cross-border transfers? Starting your own business? Short-term credit? Phone insurance? Fintechs abound that handle all of those needs. And these fintechs are technology companies first, financial companies second. They don’t have to tack on some new technology to a legacy infrastructure system as part of a years-long transformation project. The user experiences are top notch. And user experiences are a key differentiator in our digital economy.
So, with intense digital competition and young customers flush with options, what can banks do to ensure they are meeting and exceeding the needs of the next generation? There are some must-haves. A younger customer seeks low or no fees, ease of use, and on-demand services. A current account and an accompanying debit card are the bare minimum when it comes to financial services. Customers do not expect to pay for the bare minimum. With the amount of options at their disposal, if they are going to pay for a bank account, it needs to be delivering value for money. A yearly fee should not be merely getting you in the door at a bank.
Ease of use is self-explanatory. A customer’s money belongs to them. It must be easily accessed and used whenever needed, and with speed. If they have questions regarding their account or a certain service, they should be able to ask someone and receive an answer immediately, from the comfort of their home. Many banks now provide chat-based customer service 6-7 days a week in multiple languages. A young person doesn’t want to sit on the phone for hours waiting for a customer service representative. Nor does anyone of any age, for that matter.
One advantage for banks is the painful process of leaving. Banks are not something a person swaps as easily as their preferred movie theater. You can simply go to another movie theater in the city if you have an unpleasant experience. Transferring all of your money, changing deposit information with your employer, and updating all of your card information at merchants are just some of the switching costs that are incurred when changing banks. It is not an appealing proposition for most customers.
This is why neobanks throw gobs of money at customer acquisition. They can become the institutions that people are reluctant to leave when they grow old. If a neobank is able to acquire customers before they turn 25, they can cultivate the customer loyalty and the lifelong relationships that are so valuable to any financial institution.
Regardless of when a young person signs up with a bank, they expect a completely intuitive, friction-free digital experience. That is what banks must deliver. Whether it is the onboarding process, making payments, transferring money internationally, or accessing cash, it all needs to be smooth and enjoyable. Banks must serve a facilitating role, and not be a hindrance in the lives of their customers. If they don’t grasp this reality, young people will store their money with a fintech that does.