Part 1 of a series on millennials and personal finance. Don’t miss the next part – read it here.
Traditional banks are struggling to engage with their younger customers. Do millennials simply think banking is boring, or is this a sign of a deeper problem? Why is it that the old guard of financial services find themselves having to offer cash incentives of £100 or more to make customers switch their current account, while neobank Monzo have a waiting list to sign up?
To help answer these questions and more, we’re in the process of conducting research with real twentysomethings – our Millennial Cohort. We want to know what they want from a bank – and why they feel they aren’t getting it from major financial institutions.
The initial results aren’t good for traditional providers. It’s evident that they’re failing to connect with this key target customer group both practically and emotionally: this message from one young professional to banks and financial institutions summarises the sentiment behind many of the responses we received:
‘I want something that shows [my financial data] as a life – I am more than a machine money comes in and out of.’
But it’s not only the inclusion of these features that participants have demonstrated that they value. Personalisation was also an area highlighted by many, with one participant commenting that:
“I think [personal financial management] depends on the person and it depends on how you feel about your expenses. So generalised systems do not work for everyone. You have to create your own.”
The “one size fits all” approach that most major banks – and even neobanks – take towards personal finance interfaces left participants cold. Beyond allowing transactions to be exported as spreadsheets, there’s little possibility for customising how financial information is presented. For participants, this meant that understanding their financial status and how to change it feels out of reach.
This should worry banks. The “open banking” initiative and its related legislation – such as PSD2, in force as of January this year – mean that there is a significant opportunity for enhanced personal financial customer experiences.
A large range of smaller ‘fintech’ firms now offer more sophisticated, more user friendly and more customisable tools than the major banks, and as “open banking” grows, the savviest banks will begin offering a selection of these to their customers.
What our research so far has begun to show is that banks who do not embrace these changes will be left behind. There is a significant gap among millennials between offerings and expectations in personal finance – and that has led us to commit to further direct research in this area, with the aim of delivering clear messages and guidance in this area to banks.
In our next part, we’ll look at four key learnings that have helped shape the next stage of the research. Don’t miss it – follow us.
If you’d like to understand how our research techniques can help your business understand its customers better, contact us at https://www.experience-lab.com/#contact.