Millennials–defined as people born between 1980 and 1994–is a much-discussed age group, one wielding increasing influence in the world as it grows older, and a demographic that could be worth a reported $24 trillion by 2020.
This is a valuable group for the financial services industry (FSI) to target, but the question remains: What makes an FSI brand attractive to this group, also known as Gen Y?
For that, CMO.com turned to a pair of Millennials who have made a career of discussing finance with their peers and offering their advice on the subject. Here, Grant Sabatier, creator of Millennial Money, and Josh Hastings, founder of Money Life Wax, share their opinions about what their fellow digitally savvy savers want from their financial services.
1. Understand Their Motivations
One of the greatest worries for this age group is saving to buy a home, which some are concerned may never occur. Indeed, a report published by a British think tank estimates that one-third of UK Millennials will spend their entire lives in rented accommodations. “Housing is a huge concern for people my age; owning a property can seem out of reach for some of them,” Hastings said.
The same report found that the unemployment rate in Italy, Spain and Greece had more than doubled in between the early 2000s and the years following the financial crisis, and remains above 25% in 2018.
Another long-term investment that’s always lurking in the Millennial consciousness is retirement, which can appear unattainable at this stage in life, especially with student loans still a long way from being paid off.
“Older Millennials may have been saving for their old age a little, but they’re worried about ever being able to fully retire,” Sebatier explained. “There’s this intense fear that they’ve started too late, or they’re not making enough money to save for the future.”
2. Offer Engaging, Personalised Content
Gone are the days when generic calls to refinance student loans or consolidate credit card debts will suffice. This generation seeks a more personalized message. “You have to have the personal touch and re-create that through digital experiences,” Hastings commented. “Anytime that I go with any sort of brand, it’s all about relationships. If I’m going to invest money in a company, I want to feel like they know me.”
The good news is that FSI firms seem to appreciate the demand for these experiences and are rising to the challenge, with 37% making targeting and personalisation a top priority in 2018.
It’s not enough to simply present personalised information to this group: These young investors want a compelling narrative to engage with. “I think the most important thing is to tell a truly human story,” Sebatier said.
In his discussions with peers, he sees that managing finances in young adulthood can often be about rectifying past mistakes and finding workarounds, which are stories he feels are absent from financial institutions’ messages.
“I think it would be great to see a financial brand tell the individual stories of people who’ve struggled and have turned things around,” he said. “I think if a bank, for example, could tell that story and then show how it has supported the person through that process of recovery, it would be a powerful message.”
3. Start Conversations
Hastings said he sees social media as a powerful tool to engage with Millennials one-on-one and build on the authentic experiences created through personalised content. “I think social media Q&As are an excellent way for brands to connect with people, but it’s important to couch it in accessible language and remember that not everyone has the same level of financial expertise,” he said.
Sebatier agreed that dialogue is an essential tool to supplement brand communications. He said he thinks that brands spend so long getting young people to engage with their finances and invest responsibly for the future that they sometimes don’t put enough energy into showing why products and services may not be appropriate for certain people. He sees an increase in two-way interactions helping in this regard.
“I don’t see enough conversations about the long-term impact of financial decisions,” Sebatier said. “What would be really helpful would be more conversations about the implications of this investment versus the outcome of that one.”
4. Build Upon Existing Loyalties
While finances can be an extremely personal subject, it would seem that it’s a topic Millennials will happily discuss with their families. “Loyalty is still a big thing. A lot of people I speak to will follow their parents and invest in the financial companies they do,” Sebatier said. “There will be a huge wealth transfer between Boomers and Millennials, and a lot of that will go to brands that have had a relationship with the older generation.”
This seems to be a counterintuitive state of affairs, as Millennials are often portrayed as an impatient bunch who will follow the brand du jour. Indeed, research found that only 7% were self-proclaimed brand loyalists.
However, this rule doesn’t appear to apply in the case of FSI brands. Market research carried out last year found that half of this group (51%) have never changed financial institutions, and a significant portion of the same cohort (41%) chose to bank with the same company that their parents use.
5. Delight With Technology
When you’re dealing with a generation of people who look at their phones nearly 80 times a day, it’s clear that you’ll have to embrace technology if you want to get their attention.
This group’s love of the digital world is such that 40% of Gen Y users would consider banking with an online service provider, such as Google, Apple, Facebook, and Amazon, while 36% would consider buying insurance from one of those companies.
Sebatier said he would like to see brands do more with artificial intelligence (AI), a technology he envisions having a huge impact in this area. He’s consulted with brands developing personal finance apps, which utilise machine learning, and is enthusiastic about their potential.
“The apps ask you questions and, over time, develop a sense of where the gaps are in your financial knowledge, making recommendations to help you reach better decisions,” he said. “One day it could get to the point where they can fully automate your entire financial life.”
Whether it’s through social media interactions or the latest AI innovations, one things is clear: The demand for great experiences is only going in one direction.
“There’s a lot of exciting disruption going on, and that bar will continue to get higher and higher,” Sebatier concludes.