Banking Article, Banking Finance 2021, Banking Finance September 2021

New Age Customers- Building the Digital Capabilities

Introduction

Consumer markets in India are expected to reap the benefit of favourable macroeconomic parameters as well as its demographics. India is one of the youngest major countries globally and has become one of the major flag bearers of development across the globe. The budding generation of these new age customers are breaking into the workforce, heavily influencing the world around them. Their influence also defines how they are perceived, so that organizations can try to understand how to engage them. The influence they wield have created economic effects and impacted the Banking & Financial Sectors also.

New age customers now enjoy a sense of disposable income and self-reliance. They grew up with increased access to information and consequently will be the best educated and most informed consumers. Banks are poised strategically to take advantage of the opportunities thisgeneration offers. Due to rapid penetration of Internet in India and with access to information, they are ready to drive the banking industry onto a whole new trackin the near future.

Trend, Behaviours and Expectations

New Age Customers, also known as Generation Y or ‘Gen Y’ in short, are a population group in the age bracket of 18-35 yearsand also known as millennials. India is having the largest millennial population in absolute terms globally.  Having a population of over 44 crores, the group constitutes nearly 34% to the country’s total population and chief wage earners in the household in India.

They manage to seek financial advice from independent research, rather than choosing professional help. Many Banks today have not optimized resources to secure these client’s trust. The individualistic and sardonic attitude of many customers translates into a cynical view on big banks and financial wellness. New financial advising and education could be a big opportunity now.

Here are few perception patterns to understand the behaviours, habits, life-needs and expectations of these customers from their Banks.

More alike: New Age Customers have had different experiences than their parents and grandparents. As they have faced different challenges than their predecessors, from a financial standpoint, many are behind where they are supposed to be.

  • The beginning: They are just entering the job market have many financial questions and few places to find answers. Many have not yet formed a strong affinity for their current Banks. Though they demonstrate some general satisfaction with day-to-day services, many do not think banks fully appreciate their needs, perspectives, and motivations.
  • Balancing Branch Preferences and Digital Expectations: Like older consumers, new age customers still want access to a bank branch. As per a study, today’s customers are more likely than older consumers to leave their primary bank for new one. They assume that a bank will offer new channel for digital access to accounts and old ones will also remain available. If an institution’s digital access is poor or virtually non-existent, that will count heavily against it.
  • Design Rules the World: New age customers are the most active age group using social media for communication. They prefer a tutorial on the internet or contact the company online, instead of calling support.
  • Total Transparency: Theyhave got a different attitude towards privacy and used to share private information. They like easy registration and services than time-wasting secured forms.
  • Disrupting Media: New age customers are the most insistent critics, not forgiving brand name for conceit, deceit and neglect. The news of bad service today spreads quickly. In practice, they do not mind speaking publicly about their user experience.
  • Socially Responsible: They understand the meaning of life and they are therefore more focused on human values. And at the same time, they are incredibly pragmatic. Mere marketing promises does not work with this younger consumer. Banks will have to answer for their words and to show the meaning of their existence.
  • Expecting Dialogue: Banks of the future should be open for dialogue. The feedbacks collected and smartly processed become a valuable source of business insight for development and improvement.
  • Omni-Digital: Today, thecustomers prefer to use digital channels to solve their problems. According to a report, 46% of bank customers interact with their Banks digitally. Therefore, to attract the New Age Customers, we need to engage them not only by its resources (e.g. Apps or Website), but also by the platforms that are typical to customers, such as Google, Apple, Facebook and Amazon (GAFA).
  • The service must be built around the Consumer: New Age Customers prefer to spend money on the impressions, not on the things. The design of every touchpoint must be verified and justified for a better customer experience.

They focus on digital interactions and personalized experience and it has become important factor for banks to consider.It is the only way banks can create something valuable for their customers and survive in the age of disruption.

Driving shift in consumption

New Age Customers are driving the shift towards consumption economy. With their low tendency towards savings and increasing spending capacity, provide brands with immense opportunities. It is imperative for banks to understand the mind-set and spending pattern of these young customers and offer the right set of products/services to them.

Key characteristics of the evolving customer’s needs:

  1. Importance of convenience Time and convenience is of essence for the working younger generation. Having hassle-free and varied digital channels, collaborating with other market leaders and providing the digital solution is the best way to gain the trust of these young customers.
  2. Value delivered by the brand These young customersdon’t stick with brands. They search hundreds of the same offers online, evaluate them with ratings and reviews, and choose the most suitable one. Organisations that clearly define the source of their materials or establish work done for a specific cause tend to strike a chord.
  3. Need for personalization Aesthetic aspects are being given more importance than core functional aspect and hence personalization is gaining focus for these young customers.

 

What they want from Banks?

Banks want to be active and adapt to their unique set of preference as they change across offer, occasion and time. For the finance industry to truly succeed and stay relevant for these customers, they will need to tackle and own the following key themes:

  • They want some help, but banks are not top of mind: When thinking about long-term goals, these customers might not have the knowledge to get where they want to go. They would look to Banks/FIs to provide this support. But are we prepared? 
  • Focus on Perks: They want banking products and services that offer a little extra bang for their buck. (e.g. Better rewards, higher interest rate on deposit accounts, cash-back on purchases and no-fee banking).
  • It’snot about the Bank/Bank’s product: They think about their needs, not Bank’s products. Banks need to consider how their products may serve their aspirations. Some ideas to consider:
  • Keep it simple: Allow moments to happen smoothly, coexisting with third parties to make transactions as seamless as possible across a multitude of platforms (e.g., mobile, online). Don’t overstep; be there only when they ask for help.
  • Address a pain point.Understand the life-need journey from the customer’s point of view and consider touch points as opportunities to solve issues and remove complications.
  • Help guide the journey.In most cases, there is lead time between the identification of a need and its actual fulfilment. We need to be with customers along the way and help them focus on the goal.

Turn new age customers into lifelong customers

1. By understanding the Trend, Behaviours and Expectations

  1. The post-channel experience: Banks need to design customer experiences that are unleashed from channel thinking; what we know as “post-channel” experiences. These experiences should be continuous and intuitively guided by the customer across all endpoints of their journey.
  2. Allow customers to design their own journeys: Provide flexible options so customers can drive their own journeys. Leverage data intelligence to allow customers to interact and fulfil their needs on their own timeline in their own way.
  3. Reinvent the Branch:They love experiences and they want to make memories in everything they do – even if it’s just a trip to the Bank. In order to make banking fun, Banks must gamify the experience and offer appropriate rewards.
  4. Become A Trusted Advisor:Financial advising is becoming the hallmark of today’s service. Banks/FIs will have more opportunities to build relationships with the new age customers and do what they do best and that is“provide financial advice”.
  5. Access to the talent and skills:If the Bank officials (technical/non-technical) do not have the skills needed to build and operate an effective digital channel offerings, we need to build the human capital strategy through revitalised recruitment, learning and development, partnering and cultural initiatives.
  6. Protect privacy: Customers must feel their information will be used to benefit them. If protecting the information is handled poorly, privacy violations could invite a heavy-handed regulatory response. Banks/FIs will need strong operational controls in place so that data is not being misused.

  1. By building the technological/digital capabilities

     1. A report estimates digital payments industry in India to touch $500 billion by 2020 spurred by smartphone penetration. With the growing acceptance of P2P, Banks need  to provide innovative services that complement their existing online bill pay and money transfer services.

 

            Here are some tips for success.

  1. Embrace Online/Mobile solution: 84% of young customers in India already reliant on mobile broadband, spending an average of 17 hours a week glued online. They want banks to meet their 24X7 digital demands with the automation and speed. They expect traditional branchservices, like depositing cheques, opening account etc. to be available on their smartphones. Banks need to be agile and ready to move with rapid innovation in the payments space as well as greater integration of banking services with other apps and services.
  2. Adoption of emerging Technologies:Banks need to incorporate new technologies like Artificial Intelligence (AI) and Machine Learning (ML), Analytics, Distributed Ledger & Blockchain Technology, Cloud computing, Internet of Things (IoT), Augmented Reality (AR) and Virtual Reality (VR), Quantum Computing and Biometrics to efficiently meet the today’s customer needs,such as Biometrics-enabled customer identification, Paperless/Signature-less account opening service, AI powered virtual assistant to answer the questions etc.
  3. Personalize using AI/Analytics: AI,Big data and analytics need to be leveraged to extract insights into how customers’ lives are changing and predict what they want even before they know what they want. Banks need to use these insights to personalize messages and offers and create highly targeted cross-selling offers.
  4. The future of interactions:A menu with a host of generic services may not be enough to lure them; they would need a focused set of highly relevant services designed exclusive for them. Banks to work on this.Talking to a bank and receiving an intelligent personalized response is possible through AI. It uses natural language for both queries & answers and can complete its analysis in seconds.

Conclusion

The new age customers are influenced by the culture and world developing around them. The changing social dynamics and technology have a profound effect on their beliefs and actions. To dismiss them as simply arrogant, lazy, or over-opinionated neglects what makes them special and different from other generations. This group will challenge, expect more and desire a better idea for how to live in. Banks they have built relationships with today will be the ones they are loyal to tomorrow. Banks need to urgently respond to the needs of the trend setting young customers, to truly redefine the consumer story across the country and realize the market’s potential in its entirety. Ignoring them may well lead to the demise of our brand.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *