Banks looking to forge new lifelong relationships with 18 to 30 year-olds must offer them the Web-based communications channels they prefer or lose out to competition, according to a new survey.
Dubbed the “millennial generation,” the18-30 year-olds responding to a worldwide study sponsored by Microsoft Corp. expressed that online banking is important to them and more Web-services are needed. Canadians specifically showed a preference for using tech when dealing with a bank.
The 200 Canadians surveyed were about twice as likely as the rest of the respondents to say that instant messaging (IM) was a preferred method when getting support from a bank. About one in six would use IM to open a new account, or receiving financial advice, for example.
“Banks need to step up their game in terms of online presence to attract this young generation,” says David Vander, worldwide managing director of banking for Microsoft. “If you’re not focusing on next-generation consumers, you’re not building a long-term, sustainable value proposition.”
When choosing a new bank, one-third of millennials cite online services as important. That’s second only to competitive rates and fees, at 53 per cent.
The financial sector has a lot of work to do to catch up with a tech-savvy generation of 80 million that are entering the workforce, agrees Pritesh Gandhi, senior manager of online and enterprise strategy at the Bank of Montreal (BMO).
“The financial industry needs to wake up, because traditionally it has taken a long time to make any change,” he says. “Change is definitely needed and if we are looking to market to these people, we have to react to these people.”
BMO uses Microsoft Earth to locate branches and ABMs.
BMO is trying to react quickly. The firm plans to launch a new branch and ABM locator on its Web site Monday. Using Microsoft Earth, the locator is much improved over the old system, Gandhi says.
“Locating a branch was a tedious task, you had to go through multiple steps,” he says. But now “from a locator point of view, I think we’re one of the best in class.”
Users can also choose to send an SMS or e-mail message containing directions to their destination.
That should be one way to reach a lot of millennials, 90 per cent of whom have mobile phones (83 per cent use text messaging), and 88 per cent of whom use Web-based e-mail, according to the survey.
Helping the young generation find physical locations is also still important. There are certain services many still prefer to talk to a person for, such as opening a new account (57 per cent) or applying for a loan (52 per cent).
That shows that the branch has progressed from its past role as a service centre to become a sales centre for banks, Vander says.
“The opportunity now is that every service touch-point that satisfies a transactional need can also help push sales,” he says. “They provide an opportunity to delight the customer with the speed of their response.”
In Canada, the adoption of text messaging by millennials is something banks should take a good look at, Vander adds. He points to an example of a successful program at a Netherlands bank.
ABN AMRO unveiled a feature about a year ago allowing customers to check their bank balance with an IM. The promotion was able to attract 1,000 new customers a week – all in the 18 to 35 age range.
BMO is also looking at using IM on its Web portal to connect with customers. This is already something done for the investment brokerage accounts, where users press a “click-to-talk” button to open up a chat window with the next available service representative.
“We’re seeing a lot of requests for it on the online banking side,” Gandhi says.
While the fundamentals of financial services remain, banks will have to not only learn to keep pace with a tech-savvy new generation, but respond quickly to moves by competitors. Millennials also prove excellent at shopping for services, leaning on social networks and collaboration tools to make a judgment.
“This generation is really in tune, intelligent and aware of what really matters,” Vander says. “It’s the ‘Why-not’ generation. When one bank offers a service, the consumer will wonder why another bank can’t do the same.”
The demographic are most likely to ask family and friends first (65 per cent) when considering a new financial institution. The next step is a visit to the provider’s Web site (58 per cent).
At BMO, they want to make sure that Web site grabs their potential customers’ attention. The bank is getting ready to revamp the site with several Web 2.0 tools, Gandhi says.
The branch locator tool is also being optimized for mobile phone Web browsers. Upon launch, the service will provide users the nearest branch or ABM when they type in their location.
The bank also recently started taking applications for new accounts online.