Transforming into Social Banking – New Mantra for Banks to Connect with Millennials!

The Millennialization Of Everything – Jeremy J Balkin

In his book, ‘Mil­len­ni­al­iza­tion of Every­thing: How to Win When Mil­len­ni­als Rule the World,’ Jeremy J Balkin stated that by 2025, 75% of the global workforce would be made up of millennials.

He also shed light on the socio-economic events that shaped them. And more importantly, how they are shaping the world.

In an interview, Balkan explains why he calls it the mil­len­ni­al­iza­tion of things, “It describes the evolutionary process of how Millennials and their choices, preferences, and behaviours have disrupted and transformed every major industry, for everyone, and everything.”

The same goes for millennials and banking. Over the past decade, millennials have entered the job market and have been influencing how banking works at scale.

Their journeys from being college graduates to young professionals have been crucial and riddled with financial decisions that they ought to make.

Should I save by investing in stocks? Should I sign up for health & medical insurance? Which bank can offer me the best credit card plan?

How can I get the best reward program? Questions such as these linger in the minds of young millennials who start off as young professionals.

However, it has been found in a study that when they are struck with a major financial decision, millennials usually avoid reaching out to their banks and ask for advice from friends and family instead.

The more young customers feel they cannot go to their bank for financial guidance, the more banks miss out on a potential long-term growth opportunity to support millennial customers.

Social Banking – The New Approach

We live in the age of social media, where everything we do is showcased to everyone on social media platforms.

From fancy meals to pet moments, almost every waking moment people are sharing their lives on platforms like Facebook, LinkedIn, WhatsApp, Instagram, WeChat, TikTok, Messenger, and more.

The millennial generation enjoys it and attaches a great deal of value to it. Hence, it is crucial for businesses to consider this as an important point of interaction.

However, banks are considered the exact polar opposite of how millennials experience and live life. Banks are extremely traditional and consider their trade to be purely transactional and nothing beyond, this is obviously before the wide popularity of digital banking.

In addition, banks understand that having a social experience could mean risking the security of their clients’ information.

Naturally, this difference creates friction for new customers who are more digitally savvy and expect a more casual and engaging experience such as features like WhatsApp banking.

Empowerment Over Engagement

Millennial customers come with a set of cultural and technological challenges. However, they present new opportunities for banks to learn from.

Millennials are entering a stage in their lives where they are ready to be homeowners, ready to start a family, and ready to settle down. Banks can and must accordingly strategise keeping millennials’ buying behaviour in mind.

The mantra banks need to keep in mind today is – empowerment over engagement.

Financial service providers spent years trying to offer an experience so seamless so personalised that it became the pinnacle of digitisation in banking.

However, when it comes to the new generation of customers, banks need to rethink how they position the financial services they offer.

Empowering them to live authentically and comfortably, by increasing security and transparency. And finally, by providing them assurance that their bank is more than a financial institution is how banks can step in the right direction in evolving engagement.

One such way banks can empower their young customers is by implementing the Buy Now Pay Later (BNPL) feature.

In the post-pandemic world, where inflation rates are increasing and financial stability is hard to maintain, the BNPL feature is the knight in shining armour.

It is easy and convenient, and millennials love it for all the right reasons. The transparency and convenience of the process also empower young buyers to indulge in spontaneous buying decisions.

Due to the rise in BNPL service providers, card credits are becoming less popular. The BNPL service is growing at a rate of 39% a year.

Another such behaviour that is driving change in the banking sector is the need for banks to be more than financial institutions.

Millennials today are entering the housing market; they are slowly being phased out by Gen-Z (the demographic group succeeding Millennials).

Thus, it is easy to say that millennials (and Gen Z) are in the market for banks that also provide financial advice.

Banks no-longer fit in the brick-and-mortar category. Banks are expected to offer holistic services to their customers that also enable financial wellbeing.

This study by The Drum highlights that millennials and Gen Z are aware that banks possess data that can move mountains.

They are just evolved enough to know there are ways that banks can leverage the data to offer better services, one being a personal financial management tool.

Empowering the young customers is one surefire way banks can engage with them more!

Evolving Engagements With Millennial Customers

Banks have already stepped up their game with engagement by integrating AI/ML to offer a smart, safe, and seamless user experience. Corporate banking along with retail banking have begun offering AI chatbots to their customers.

But the new generation seeks new and improved ways. The right place for banks to start is by understanding their customers.

Understand who they are and focus on their life needs and the goals they have set for themselves. Then, pair this resourceful information with data to provide trusted, transparent, and useful insights.

Data can be leveraged for this process. If the goal remains to attract and retain millennials, banks can employ analytic solutions that can help:

• Predict where in the human life cycle is a particular customer and give personalised banking product recommendations.
• Highlight certain touchpoints or features by developing a deep knowledge of each customer’s life.
• Being open to learning and operating through different channels of communication – bringing social banking to life.

The idea of being “customer-intelligent” goes beyond creating spreadsheets about customers and their likes and dislikes.

Being a customer-intelligence led business heavily relies on operating through a model with next-generation data architecture and advanced analytics capabilities.

Read more business articles from our guest authors at SugerMint.