Retail banks have huge opportunities for sustainable growth, and they have Generation Y to thank, announced Cisco Tuesday.
Cisco’s global consultancy arm, the Internet Business Solutions Group (IBSG), conducted a survey of U.S. consumers and discovered that if retail banks listen to the preferences of Millennials, there is an opportunity to increase revenue by five to ten percent, said Phillip Farah, Director of Cisco IBSG Financial Services Practice.
Not surprisingly, considering they entered the job market right in the middle of the financial crisis, the survey found Gen Y wants financial help. But, even though nearly 40 percent of Gen Y’ers turn to their parents or books for financial advice currently, 33 percent say they want that help from their banks.
The survey found Millennials want their banks to:
- Deliver financial advice via video and their mobile phones
- Help them make important financial decisions
- Provide robust and interactive Web-based personal financial management tools
The survey also found Gen Y places a high value on financial advisors and they want to interact with their bank’s advisors--but not just in the local branch the way it has always been done.
Gen Y wants to interact with experts in virtual communities or through video both in the branches and in their homes. Cisco recommends banks improve consumer intimacy by utilizing high-definition video--thereby attracting not only Gen Y, but the high-net-worth population as well.
Many banks have dabbled into creating online personal financial management tools, but most have done little more than bring various account information into one place, said Jorgen Ericsson, Global Lead of the Cisco IBSG Financial Services Practice.
Gen Y doesn’t just want to consolidate information, they want to receive real time alerts, reviews and direction on their financial decisions from these Web sites, which are also available on a mobile platform. Ericsson said banks such as Citi, JP Morgan Chase and ING Direct are currently developing enhanced online personal management tools.
Even though they are looking to their banks for help and for change, Gen Y is still mostly satisfied with their banks. When you add in the rest of the survey participants (Gen X and Boomers), nearly 88 percent are satisfied with their current bank; however, Gen Y is the most likely to switch banks. Twenty-six percent of Gen Y’ers surveyed said they would consider switching.
This creates a sense of urgency for banks to act now. Ericsson says he anticipates banks acting quickly to capitalize on Gen Y’s preferences, either out of desire to be the market leader or out of fear of losing customers to that leader.
This is definitely a case where it is in everyone’s best interests to listen to Gen Y. Banks who chalk up Cisco’s study results to spoiled Millennial tendencies and keep the status quo will miss out on a real opportunity for substantial growth coming out of a financial crisis where small losses were considered a victory.
The double whammy? Those same banks will quickly lose customers to the banks who are listening.
Looks like Gen Y will be a catalyst in bringing the financial crisis to a final close.
Study information: Cisco asked 1,055 U.S. consumers aged 18 and older, through a 75-question survey, about their financial priorities, service expectations from banks, video adaptation and interaction preferences. For more information about the Cicsco IBSG retail financial services survey, visit www.cisco.com/go/ibsg/financialservices.
Comments
I don't know what generation Obama and Geithner and Bernanke are, but they're responsible for the fact that the banks are open at all, so I say 'generate THIS'. If you want to end the financial crisis, then start working out ways to make it so that there's standards and practices in the banking industry that'll get adhered to, instead of trying to hype and fish for a new generation of suckers. Loan sharking just hasn't gotten the job done, there, and neither has Madoff-onomics. Let's see the BANKS become conservative, and save themselves, and us, a lot of heartache and trouble, by skipping the gimmicks, sleazy sales pitches, and other garbage. Maybe Y will get advice from X and 'boom' and stay away from financial institutions that have a 'past', and also stay away from telecom companies that do less for more, to more people. Do you NEED an IP-phone? No.
Great article Sharalyn! I found this information to also be true and consistent with different studies done by Deloitte, etc. Keep up the good stuff! :)
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