Millennial habits are driving financial innovation
It’s no secret that traditional banks are facing a Millennial problem. According to the influential Millennial Disruption Index, 73% of US Millennials claim they would be more excited about a new Financial Services offering from a company such as Google, Amazon, Apple or PayPal than from their own bank. More worryingly, a third believe they will not need a bank at all in the near future. With Millennials accounting for 25% of the EU and US populations, this is a worrying development.
So how can banks keep this important group onside? One answer is to look at what the brands Millennials do admire – such as social media – are up to. The average Millennial in the US spends 26 hours a month on the Facebook app, and that doesn’t include Twitter, WhatsApp, Pinterest, Snapchat or Instagram. Millennials are also more likely to trust their social network of friends and peers than the average bank.
For their part, social media brands such as Facebook and Snapchat seem to understand Millennials desire to transact differently from the way their parents did. Facebook US for example allows it’s users to transfer money for free via Facebook messenger, while Snapchat offers a similar service called Snapcash. Meanwhile in Singapore, banks are experimenting with social media innovation with the result that bank customers in Singapore will soon be able to exchange money on social media via Facebook or Twitter. Under the new service agreed by 20 Singaporean banks, traditional account numbers and sort codes will no longer be required, all customers will need is a social media account.
It’s not surprising that Millennials want their financial services and spending to be more mobile and social. It’s pretty much a truism that Millennial experiences are mobile-first and digitally native – 83% of Millennials sleep with their smartphone! It explains the popularity of Venmo, a peer-to-peer payment app that includes a social feed, similar to Facebook’s timeline. The app also encourages emoji-based acknowledgement of money transfers. Pinterest shopping – a service that allows people to snap a photo of a desired item, image search the item online and seamlessly complete the purchase all within the app, is another Millennial trend.
Put it all together and Conversational Commerce, a term coined by Uber’s Chris Messinareferring to the use of messaging, social, and voice platforms to connect to brands and services—is here to stay, and payments through Facebook and Twitter are just the latest example. But how can you use conversational commerce in a meaningful way for your brand?
1. Recommend products to your customers
People usually need guidance when choosing the right credit card, loan or other financial product. Through a chat-driven interface, conversational commerce could help guide customers through the decision making process and then help them to complete the transaction. The value of this extra advice and support is especially valuable for Millennials, as they may be new to making major financial decisions.
Retail is leading the charge with this approach. Sephora has launched a Kik messaging app that uses a survey-like process to direct customers to the right beauty product.
2. Enhance your customer rewards experience
Financial services companies often provide rewards and lifestyle offers as a benefit to customers, however it can often mean a phone call or tricky web user journey in order to activate them. Conversational commerce could make the process more Millennial friendly by ensuring it is mobile-first and digitally native. So, instead of calling customer service to redeem a reward, just chat via a messaging app.
American Express is due to release the Amex Bot in the next few months in the US which is expected to enable restaurant recommendations and simplify access to American Express airport lounges for their relevant customers.
3. Get to know your customers better
For any brand, the challenge is to create a one-to-one relationship with their customers in order to gain in-depth understanding of their needs and values. By offering different channels for interaction, the potential to obtain more meaningful data and to create CRM opportunities is high which is especially important when dealing with Millennials, who are less likely to visit a branch than an older generation. The benefit to the brand is that a better understanding of your customers’ financial needs can lead to tailored advice about new products and services.
4. Help your customers to be more financially responsible
Treating customers fairly is a mantra of the banking world today. Offering products and services to help your customers save and understand their own spending habits can help to differentiate your brand from the others. One example is Digit, which uses a chat based interface to automate savings, helping customers to save more. But you could also chat to customers about how much they spend in different sectors (if they sign up for it) helping them to understand where their money goes and educating them to be more careful with money. Penny, a personal finance coach app that uses a chat-driven interface to understand people’s financial situations, is a service which does this.
In summary, in order to engage and succeed with Millennials, banks need to embrace new ways of using digital to interact and communicate with this next generation while staying true to the overall branded customer experience. If you are using a chat bot, what’s the personality? How does it reflect your brand? What might be the right on-brand personality for a more traditional bank with high net worth investors won’t work for a bank with a broader customer profile. The key is to understand what your customers want and need and to ensure their experience is seamless while being an accurate reflection of your brand.