If you think of customer demographics as a ‘pipeline,’ you can picture a young person entering the pipe and passing through life phases such as consumer, saver, borrower and investor.
With this in mind, it’s clear that young professionals joining the workforce today will drive retail banking revenues tomorrow. Since getting what this group wants ‘right’ will differentiate the winners and losers in retail banking, a study by KPMG in Australia provides insights into what tomorrow’s sophisticated banking customers will expect.
KPMG in Australia surveyed their 1,300 plus 18 to 24 year-olds staff working for the Australian firm. Our research explored how this demographic feels about their branch, social media, and what they think a ‘great bank’ would look like.
The future of branches
Just 10 percent of survey respondents ranked a branch among the top three ways they would like to interact with their bank. One in five actually said they cannot see themselves ever using a branch going forward. Convenience drove this response, since time-strapped young professionals find branch banking too time-consuming.
But will consumers really deposit their money or discuss complex products with a bank that lacks a high street presence? When KPMG pursued these themes, we found that young professionals are not concerned whether their bank had a physical location. Instead, they are drawn by the quality of a bank’s digital capabilities. And when it comes to discussing complex financial matters, they prefer for the “bank to come to me at work or home.”
Bankers as social media gurus?
While this demographic loves social media, our research revealed the contrary when it comes to banking. Sixty-five percent of respondents said they would not want their bank to interact with them through social media (Another 20 percent said they were “unsure”). “Social media is leisure …I want to separate my personal and business life,” observed one study participant.
The great bank of the future
When asked what a “great” bank looks like, this demographic emphasized security, low cost and a great customer experience –with a few twists on these traditional retail banking value drivers:
- Security: Young professionals embrace technology, but are concerned about security. Recognizing the data privacy and fraud risks of online and mobile payments technology, they place value on a bank that can address these. A great bank will ensure robust security, for competitive advantage.
- Low cost: This generation shows great price sensitivity, albeit in unconventional ways. Just 1.6 percent expect low- or no-fee accounts at a great bank. Rather, they are concerned about what they perceive to be “unfair” fees. Young professionals understand the need to pay fees for the service provided to them, but they will avoid seemingly unjust charges.
- Customer experience: Young professionals believe a great customer experience goes beyond simply “getting it right” and “being nice.” A great bank is proactive and delivers services outside the branch, with direct and convenient access to teams of knowledgeable staff, familiar with products and client needs. They desire simple, self-service solutions that share insights and information held by the bank.
As young professionals become a significant revenue driver, retail banks must consider their distinctive priorities and preferences. Listening to the voices that echo from the demographic pipeline will help to differentiate a great bank of tomorrow from those that will be left behind.