DigitalNews Today: 6 Strategic Digital Trends Shaping the Relationship between Generations Y Customers and Financial Institutions

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6 Strategic Digital Trends Shaping the Relationship between Generations Y Customers and Financial Institutions

Sunday, August 2, 2015

The Generation Y and the Alpha are generations that are likely to redefine major aspects of the financial services experience due to their expectation of instantaneous, seamless access to multiple channels of engagement. They are also generations which expect some level of involvement in the creation of the products they ultimately adopt and recommend to their peers, whilst also demanding higher levels of customization and choice of financial services and delivery channels.

To surgically reach and monetize this segment in the new digital economy, financial institutions must engage this target group in the digital space through various digital strategies while adopting a holistic approach to going digital and integrating that strategy across the digital ecosystem.

Winning the Generation Y customers requires a transition from a transactional based engagement of these target groups to one that that recognizes and treats them as individuals and enhances the customer experience with relevant, convenient and personalized offerings.

The disruption caused by digitization can create or destroy significant value for Financial Institutions, depending on their starting positions and how well they respond to these growing trends.

Here's a look at six strategic digital trends affecting the relationship between the Generation Y and Financial Institutions.

1. Smart management of new digital customer propositions: They are digitally savvy, brand aware and highly influenced by their peer reviews and recommendations. This segment desires the coolest and latest app or device. They are early adopters of technology which serves as their platform for social and cultural integration. They are socially conscious and highly aware of diversity issues and do know how to harness the power of the collective and will rally others like themselves towards a cause.

There will be a need to adopt new propositions that serve this segment. The preferences of these constituents will eventually become the new normal which financial institutions must consider when developing their engagement and offers. The fundamental trend here is that significant unmet needs can be addressed through an innovative digital proposition.

2. Smart management of Generation Y decision journey: The path toward purchase, from awareness to adoption, has become a multichannel journey for the Generation Y segment. As predicted by EFMA, it is becoming evident that current accounts sold via digital multichannel (online and mobile) have increased by a greater percentage. It is now on record that most Generation Y are consulting multiple channels and returning to multichannel usage in making their buying and loyalty decisions, especially in the awareness stage. The Financial Institution that must win and retain this segment and increase share of wallet must be ready to offer an integrated and seamless customer experience across channels.

Assessing current technology, systems and processes that allow a Generation Y customer to start a transaction through one channel and complete it through another seamlessly is a strategic way towards winning and retaining this segment. Financial Institutions must therefore integrate across channels: this entails generating digital demand with smart tools, intuitive product choices, and use of direct channels for effective customer self-service.

3. Smart management of digital information: Financial Institutions need to act strategically by providing a cohesive, cross-channel experience that the Generation Y customers expects. This is a trend that is now more than ever very vital to winning the Generation Y.

There is now a growing need to mine, interpret and position online data that is unique for each Generation Y and that should be utilized to offer them personalized attention and deepen the customer satisfaction journey to ensure for loyalty. Profitability and more importantly to regain relevance with digital natives

4. Smart management of Social media engagement: Social media has exploded as a way for Financial Institutions to communicate with Generation Y customers, spread corporate news and promote events and personalized products and services in an effort to attract and engage customers and improve bank accessibility. Unfortunately, despite the rapid adoption of social media across consumer segments, financial institutions do not place a high level of importance on social media channels compared with other points of contact with customers at their own risk. Listening on the conversation, joining the conversation and tracking sentiments and mentions are vital aspect to winning this segment.

For those involved in managing or driving the social media presence of financial institutions, they need to understand the disruptive and transformative nature of the social media landscape; one that is massive and constantly changing per day just as the Generation Y preferences are evolving and their demand for meaningful interaction online is ever-growing. Conversing with this segment on their own terms is now a basis for winning these younger generations.

5. Smart management of mobile deployment: A study of Generation Y attitudes towards banking and online banking services points towards the important changes Financial Institutions must make when targeting this critical consumer segment. Saying that Generation Y loves their tablets and smartphones should hardly come as a surprise. But the extent to which they will transform the marketing landscape in the digital economy should not be underestimated.

Research conducted by independent consulting firms and international provider of mobile banking solutions, revealed that only 3% of Generation Y consumers had neither a smartphone or tablet device; 92% own smartphones, 43% own a tablet — 38% own both. 70% of Generation Y spends two hours or more every day on their mobile device, with over a third (37.7%) spending more than five hours.

Interesting enough, just like the other generations, these set of digital natives, despite their comfort using digital channels, are just as concerned when it comes to managing their money through mobile devices. These concerns ranges from the risks they face when using a mobile device to access financial services to how friendly & effective the mobile apps in question are to them.

6. Smart management of digital relationships: In the digital age and space, the Generation Y customers who are taking over from the other generation are the new focus and winning this segment demand that Financial Institutions focus on serving customers at the right digital market space, the right time, with the right level of service and at the right cost. Among the factors driving this segment focus is the Generation Y desire and need for personalization of engagement and convenience and quality of service rather than on product and service features. Adopting new technology to streamline financial products and service delivery and at the same time Ensuring accessibility to all is a winning trend to watch

The Caveat  
While financial institutions are focusing on responding to younger generations by integrating financial services into their digital lives, financial institutions should not underestimate the power of technology to respond to the challenges of an aging population, as well.

We urge financial institutions to be prepared for the digital economy and start the process of devoting resources to understand not just the individual changes, but how these changes interact with one another. This I believe will significantly separate the winners from the losers in the new world.

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