The Future of Banking by Julia Kent

White Paper

The Future of Banking: An Exploration into the “The Next Great Generation”

Presented by

2016 1

Contents

Introduction

Millennials Demographics Behaviors Key Behaviors

Drawing Parallels

Next Steps

Key Findings

Conclusion

Bibliography

Introduction

Business revolutionary John D. Rockefeller once

have started to gain in popularity, due to their user

said that, “if you want to succeed you should strike

experience and customization capabilities. These

out on new paths, rather than travel the worn paths

banks have learned from their start up brethren

of accepted success.” Banks have too long relied a

that the key to success these days is to study

financial model inherited from their predecessors.

Millennial demographics and behaviors and build

They appear to the world as invulnerable institu-

their business plan accordingly. In an age where

tions. However, one phenomena will finally disrupt

the ideals of altruism and transparency are at the

the banking industry— the Millennial generation.

core of business, a fundamental shift in core values

Defined as the generation born between 1980s and early 2000s, their influence dictates culture, society, and technology, among other sectors. A Goldman Sachs’ study shows that Millennials are the largest

is necessary. If the bigger banks under-appreciate the degree to which catering to their new Millennial clientele will influence their future, many banks may become obsolete.

generation to date, surpassing even the Baby

However, through a renaissance of ideas, services,

Boomers. Failing to adapt to their needs and desires

and innovation banks can recapture their client

will result in a failure in the banking system as

base. To do so, banks must leverage this new

Millennials turn more and more to local or startup

consumer segment and open up a dialogue that will

options for their financial needs.

harness the energy and innovation of this young

A Millennial-centric study by Viacom Media revealed that “nearly half [of Millennials] are

generation. Only then will a symbiotic relationship between banks and Millennials be established.

counting on tech startups to overhaul the way banks work. They believe innovation will come from outside the industry.” And they aren’t wrong. Banks like Simple Banking, Mondo UK, and Atom Bank 4

Millennials “Millennials... [are] often defined by their access and literacy in technology, they are also a generation of diversity, skepticism, intelligence, creativity, and — paradoxically — hope.”

Millennials came of age in an era of uncertainty.

“some 43% of Millennial adults [identifying as]

They witnessed the Twin Towers fall. They saw

non-white, the highest share of any generation”

the dot-com bubble burst. They felt their parents’

(PEW). A further breakdown of Millennial patterns

anxiety as the market crashed in 2008. The latter

show a tendency to vote with the Democratic party

hardened the already skeptical generation further

and to be quite liberal in their view of various social

against the financial institutions that failed them

issues such as abortion, gun control, and race

and their families. Millennials’ trust is hard to

relations.

regain, especially as their needs and values are neglected by banks.

They consider themselves spiritual rather than religious, and have put off the larger life decisions,

Millennials represent a large portion of the world’s

such as marriage and home ownership, until later

labor force and economy. Often defined by their

in their lives (PEW). The Census Bureau founds

access and literacy in technology, they are also a

that “30.3% Millennials” are still living at home with

generation of diversity, skepticism, intelligence,

their parents. They place a new value on family and

creativity, and — paradoxically — hope. With the

community, “roughly half say that it is important

largest age cohort in their mid-twenties, they have

to them to live close to their friends and family,

just started to enter into the economy.

compared with 29% of Baby Boomers” (The Council

Demographics

of Economic Advisors 9).

Millennials have become the largest generation in

tunity-starved job market, Millennials have become

the United States. In addition to their sheer size,

one of the most educated generations to date.

they are the most diverse generation to date with

The number of 25-34 year olds who have received

In an attempt to waylay their arrival into a oppor-

Millennials “The U.S. Census Bureau anticipates that Millennials will make up 50 percent of the population by the year 2020 (WIRED)...It’s time to start listening.”

post-secondary degrees jumped to 47% in 2013

personal capital will eventually lead to increased

(The Council of Economic Advisers 12). While

success. This generation is going to have to do

this trend towards higher education attainment is

something with their money, but only on their

encouraging, it does come at a cost. The increas-

terms.

ingly economically diverse student population is more in debt than ever before. Combine this with a 1,120% increase in tuition costs since 1978 and the result is a skyrocketing of outstanding student debt (Bloomberg Business). While this percentage increase doesn’t adjust for inflation, the mere 224% increase in food costs serves as a basis to contrast the shocking rise in tuition costs. One study sites that “total student outstanding debt surpassed $1 trillion” (The Council of Economic Advisors 16) by the end of 2014.

While most qualities ascribed to this generation by their non-contemporaries are both critical and sweepingly stereotypical, one strong characteristic perseveres. Millennials are the most tech savvy generation yet. Growing up while the world was on the precipice of an exponential growth in technology shaped Millennials view of the world and how they interact with it. Forbes found that “87% of millennials use between two and three tech devices at least once on a daily basis” and Ad Week revealed that Millennials check their phones, on

This generation’s potential is only just being

average, 43 times a day. This reliance on technology

explored now in the job market. Troubled by

has led to a more interconnected global commu-

the lingering effects of 2008’s economic crash,

nity. Millennials combine a position of intelligence

Millennials are eager to begin their climb towards

with compassion and community to create a new

success. These students are smarter and more in

world order, one where humanity shifts back into

debt than ever before, and while many question the

the core of consumerism.

true cost of a college education, this investment in

Millennials

The Boston Consulting Group accurately hypothe-

to date, similar patterns emerge from the vast

sized that “Millennial attitudes are early indicators

expanse of personalities and beliefs. Patterns such

of more widespread future trends,” and they go

as communal ownership, altruism, social, trans-

further to state that “companies that pay attention

parency, empathy, subversion, and design thinking

today can gain valuable insights into tomorrow’s

are just a few business practices that resonate

opportunities and get a head start on capturing

with today’s youth. As “early indicators” and an

a larger share of the Millennial wallet” (2). And

upcoming segment of labor, Millennial behaviors

with Millennials’ “direct purchasing power” at an

have been meticulously studied and analyzed.

estimate of “$200 billion… and $500 billion of

Companies based in the Millennial ethos have

indirect spending, largely due to the influence

begun to appear, turning insight into profit.

on the spending of their mostly baby boomer parents” they are worth the effort (The Millennial Generation: Research Review). In order to capture this “purchasing power” companies will need to study and understand the behavioral undercurrents of this diverse group.

Behaviors By utilizing insights into the Millennial psyche, companies are in a position to create lasting

The U.S. Chamber of Commerce puts “Millennials’ ‘direct purchasing power’ at an estimate of ‘$200 billion… and $500 billion of indirect spending, largely due to their influence.”

relationships with their customers. Although Millennials boast the most diverse customer base

Millennials

Communal Ownership More and more, Millennials are putting off buying houses and cars, choosing rather to partake in a sharing program. This serves as another permutation of Millennials’ focus on community and interconnectedness. The idea of ownership has ebbed and a new

from different hemispheres with ease. Aided by technology, Millennials’ understanding of the world has fundamentally shifted. Because of this newfound globalism, the definition of community has irrevocably changed. A Forbes study found that “75% [of Millennials] said that it’s either fairly or very important that a company gives back to society instead of just making a profit.”

sharing mentality has emerged in its place. Many Millennials choose to rent and share various everyday services. Not only is this financially beneficial, it can be seen as a way to invest in a new community, local mindset. Many companies have capitalized on this new trend, turning private

“75% [of Millennials] said that it’s either fairly or very important that a company

ownership into community based sharing.

gives back to society instead

Altruism

of just making a profit.”

In the last century the confines of society have expanded, wearing thin until they dissolved all together. As a community, we are no longer bound by geography, no longer tethered by the limitations of technology. The world has become microscopic, unseen machinery connecting people

Disgusted by rapacious, bloated companies, Millennials want to give back, engage and contribute to others. Social awareness and consciousness is one of the ways that brands can engage and maintain a loyal user base.

Millennials “Disgusted by rapacious, bloated companies, Millennials want to give back, engage and contribute to others.”

Social While globalism and social awareness have opened up an avenue for Millennial behavior, more than anything they value social validation. Companies are working on crafting an authentic narrative, a narrative that Millennials’ identify with. One Millennial stated, “‘I trust my friends more than ‘corporate mouthpieces;” they “tend to see multiple sources of information, especially from non corporate channels and they’re likely to consult their friends” (BCG 6). This idea of crowd sourcing— not only for funding, but also ideas and

content has created a frenetic need for validation. This communal recognition combined with the new sense of brand ambassadorship can allow companies to shift their position to engage with their users on a new and more personal level.

Transparency Over 87% of Millennials say that their smartphone “never leaves their side” (Opera News). This constant stream of content, both incoming and outgoing, creates a web of intelligence that is accessible from every smartphone in the world.

experience— multiplies the influencing power of

Millennials have a desire to interact with the

the already mighty Millennial. This notion of crowd

world in the only way they know how to: digitally.

sourcing also manifests into an intrinsic need for

Millennials are comfortable leaving reviews and

social validation.

feedback on sites, such as Yelp and Amazon. This

Everything a Millennial does is broadcast to the world, in order to receive affirmation from their peers. Perhaps it stems from their inherent desire to be accepted by their peers, a sort of social pressure

means brands are more than ever held accountable for their actions. Businesses are no longer exempt from criticism. Corporate transparency is paramount in an age where everyone’s story can be told.

in the extreme has emerged. Constant communi-

A Forbes study found that “1% of Millennials

cation combined with endless avenues for social

surveyed said that a compelling advertisement

Millennials “The downtrodden path of their ancestors is firmly eschewed with an almost maniacal defiance. Ironically, disruption has become the new status quo.”

would make them trust a brand more,” traditional

understanding will allow a relationship to form, one

methods no longer apply. “Earned” social media

based on key Millennial tenants and one which

attention is the only currency of relevance.

will last.

Empathy

Subversion

The old corporate model of hierarchy between

A deep distrust of larger, established institutions,

company and consumer crumbles before this

is inherent to this generation. Their understanding

new and vast web of information. Companies

of the world was shaped by the 2008 market

must elevate the user, until they are equals not

crash, whether they knew it or not. Because of this,

inferiors. This relationship is key to engaging with

Millennials are drawn to the subversive companies;

modern consumers who fear the “big” companies

companies who promise to turn tradition on its

and their perceived amorality. By listening and

head, to do things differently. The desire to go

adapting to Millennial behaviors, companies

against expectations, forging a new and uncharted

can engage and capitalize on the new emphasis

path is ingrained in Millennials. They want to stand

placed on brand loyalty.

out, exceed the expectations of their parents. They

Not only does this work to build a relationship with users, but it also creates a veneer of community. Millennials have begun to turn to local banks and away from fiscal giants in order to regain the lost sense of empathy. By engaging users, larger corporations will recapture the service orientated ethos of smaller, local businesses. This newfound

want to interact with the world in a way never seen before. They have become digital explorers, learning from and expanding on the fast paced world. They thrive on this inconsistency, the hum of innovation and discovery. The downtrodden path of their ancestors is firmly eschewed with an almost maniacal defiance. Ironically, disruption has become the new status quo.

Millennials

Design Thinking Design is at the core of innovation. The phrase, “design thinking,” connotes a focus on aesthetics. It is defined as an iterative process that leads to innovative and problem solving. It reworks the thought process and expands the way people solve challenges. No longer content with merely upgrading an existing system and framework, design thinking aims to solve the root problem in a multi-system, holistic way.

The world is becoming increasingly design-centric as creativity and innovation become industry standards.

thinking. Rapid iteration and unfettered exploration has caused technology, education, and countless

It has become synonymous with innovation and out

other industries to explode. This type of innovation

of the box solutions. This process can be applied

and rapidity of process appeals to the Millennials

to every industry, the ideology is ubiquitous. The

propensity for efficiency. By placing the user in the

tenants of design thinking are simple. They include

center of the equation, companies can recapture

a multidisciplinary team looking at a complex

Millennial consumers.

problem through the eyes of the user.

Appealing to such a varied and intelligent conglom-

Embracing ambiguity in the thought process allows

erate appears overwhelming. How to be credible

teams to tackle problems in a way that creates

in an age where people smell inauthenticity from

unexpected solutions.

miles away? How to amaze a generation for which

A key aspect of design thinking is “fail early and often.” The idea of failure is integral to design

technology advances regularly soar beyond the myopic capabilities of the human mind? But, most

importantly, how to regain the trust of a generation

customization, optimal distribution, and innovation.

brought up in times of economic anxiety?

33% of Millennials believe that in the near future,

The answer is deceptively easy, but banks must be willing to build themselves up once again. Not as the towering institutions of the past, but as user-centric, innovative leaders of tomorrow. The key principles of banking must be simplicity,

banking, as we know it, will cease all together and â&#x20AC;&#x153;68% [believe] in 5 years, the way we access our money will be totally differentâ&#x20AC;? (Viacom Media). If banks donâ&#x20AC;&#x2122;t pivot to accommodate this shifting tide of innovation, they will be swept away.

consumer centricity, information, transparency,

By studying Millennial demographics and trends, key behaviors arise that provides insights into next steps towards connecting with and utilizing the capabilites with this young generation.

Key Behaviors

Communal Ownership: Millennials

5. Empathy: Companies that spend the

are more likely to partake in renting/

time creating a community and a

sharing programs in order to postpone

relationship with their consumers will

larger purchases, such as cars and

gain the loyalty of “influencers” and

houses.

“brand ambassadors.”

2. Altruism: Millennials’ world view has

6. Subversion: They no longer accept

shifted from isolationism to altruism.

the rules and will be drawn to any

Companies must align with these

company bent on subverting the status

values before brand trust can be

quo.

developed 3. Social: An inherently social generation,

7. Design Thinking: Design thinking must be used to solve the system issues of

these “digital natives” seek constant

finances, security, and investment to

social validation.

create a multichannel, unique solution

4. Transparency: An ingrained skepticism

that is centered on the users.

of established institutions has created wary consumers. Companies that increase transparency will gain social worth and consumer support.

Drawing Parallels

While some startups come crashing down at the

and drop it off anywhere when they are done. The

feet of the young idealists who conceived them,

idea of ownership has ebbed and a new sharing

many have become viable businesses that harness

mentality has emerged in its place. The company

the kinetic power and brilliance of a generation.

has grown to hundreds of thousands of users

These companies no longer play by the rules.

across multiple continents. Sharing, not buying, has

They are built upon something more solid than

become the new consumerism. Many companies

the atavistic institutions. They are based in design,

have capitalized on this new trend, turning private

innovation, and a propensity for dialogue over

ownership into community based sharing.

secrecy. By studying these success stories, patterns begin to emerge. The key to success is no longer an inherited business model, it is a subversion of consumerism that puts the user exactly where they want to be, the center of it all.

While Car2Go capitalizes on a new local community awareness, eyewear startup Warby Parker created a “technology-based lifestyle brand” (Fast Co) that combines style with heart. Their website states “Warby Parker was founded with a rebellious

Startup Nation

spirit and a lofty objective… leading the way for

Millennials are more likely than previous gener-

makes it easy for Millennials to give back while

ations to participate in a sharing based program.

also getting, a solution that aligns with Millennial

Transportation startup, Car2Go, takes advantage

behaviors. Millennials have a new sense of

of this new trend. They offer a low cost solution to

community, reaching beyond their immediate lives

on-demand transportation. Car2Go cuts costs by

to a more global and connected world. Creating

letting the customer do the driving. Unlike taxis,

an authentic narrative that resonates with users

Car2Go allows users to pick up a car around them

and taps into this global awareness is the key to

socially conscious businesses.” Warby Parker

Drawing Parallels “While some startups come crashing down at the feet of the young idealists who conceived them, many have become viable businesses that harness the kinetic power and brilliance of a generation.”

successful brand loyalty. This type of altruistic

of the Venmo experience is the continuous scroll

marketing taps into lofty ideals such as community,

of [user’s] friends’ microeconomic activity as told

social consciousness, and global empathy to create

through droll synopsis, inside jokes, and emoji.”

a positive branded lifestyle. And with brand loyalty

This newsfeed mimics the continuous chatter of a

a new type of marketing emerges, an authentic

social media and engages users as they scroll. The

subset of traditional consumer engagement where

feed isn’t about finances, it acts as a microcosm of

users act as brand ambassadors.

activity. Users are constantly updated on what their

A new, social style of commerce has been brought into the digital age via smartphones and perseveres through a modern bout of social validation. The mobile payment company Venmo attributes

friends are doing, where they are doing it, and who they are doing it with. Venmo taps into Millennial’s aspirations for constant cultural recognition to create a memorable experience.

its success to this viral attention. Venmo make

A focus on transparency is at the core of these

sharing the financial burden by making splitting

“new” business models. When CEO and co-founder

the check easy (and free). Venmo piggybacks on

of Oscar Health, Mario Schlosser, found himself

top of traditional social media platforms, such

lost in the perplexing world of premiums and

as Facebook, to seamlessly integrate into the

co-pays, he began to question if he was simply

multitude of pre-existing social channels. Venmo

missing the point. After a while, he realized that the

has become so popular that is now a verb, a

problem lay with the way healthcare businesses

sure sign of success in this day and age. Venmo

operate. By turning the healthcare system on its

creates loyal users, who “bring in friends and

head and designing user centric model of health

this triggers a powerful cycle of growth” (Tech

and wellness, Schlosser was able to build a system

Crunch). Bloomberg Business believes that “part

that celebrates the sanctity of clarity within the

Drawing Parallels

customer-company relationship. The company

Their website claims that “Uber is evolving the

claims “to disrupt an entrenched industry by

way the world moves. By seamlessly connecting

focusing on the customer experience, leveraging

riders to drivers through our apps, we make cities

technology to make buying and using health

more accessible, opening up more possibilities

insurance easier and, well, friendlier” (L.A. Biz).

for riders and more business for drivers… Uber’s

Especially when surrounded by unscrupulous

rapidly expanding global presence continues to

health care giants, Oscar Health works to establish

bring people and their cities closer.” By identifying

a long term and symbiotic rapport with

a Millennial attraction to a fracturing of rules and

their customer.

regulations, Uber has successfully disrupted the taxi

With simple things like letting the customer know

industry.

exactly what they pay before getting to the doctors office, Oscar has rebranded healthcare as a transparent wellness industry. This type of trustworthy relationship between company and customer is a shift in antiquated business practices and leads to a bevy of Millennial“promoters,” who utilize their standing as influencers to gain attention and a user base for companies. Uber, a taxi service that uses a mobile app to connect drivers and users, brands itself as something unlike any transportation company.

Uber’s success can be attributed to their insights into Millennials’ needs.

The Economist notes that in just three months, New York City suffered “an aggregate loss of some $4 billion of value” in 2014. Uber’s irreverence to the

Drawing Parallels

status quo has resulted in a new, innovative, and

app, boast a quick and response time, never play

effective business model, whose appeal extends

pre-recorded menu options. Everything they do

beyond the confines of a generation. Millennials,

is based on an old-fashioned model of customer

considered “early adopters,” steer the market

service, updated to the modern age. With this

towards companies who offer a subversion and

understanding of their users customers feel like

new interaction with the world around them. This

their needs and wants are being valued, creating a

new community of “explorers” is based in social

friendly marriage between company and consumer.

connection and a unorthodox shared experience. This direct appeal to Millennial values is what caused Uber to grow “at a rate of about 40% each consecutive quarter” (Forbes).

One company has chosen to reposition their entire business model to center it on design thinking and a new iterative process. IBM, a technology firm, recently published their own design thinking

Simple Bank leverages other key Millennial insights

manifesto. Holding user centrality at its core, this

in order to establish a rapport with the consumer.

new policy is the new foundation upon which IBM

They works to build a relationship with their

will move forward.

customers through transparent business practices (including no fees) and friendly, community oriented service. Their customer service really sets them apart. Simple users rave about the help that listens, helps, and advises. Their key is empathy, they understand that most of their users are just trying to plan for the future while also paying off past debts. They respond to comments about their

This forward thinking more will propel IBM into the forefront of user based services. They recently hired over a thousand new designers to forever marry technological innovation with user experience design. In addition to rapid iteration and prototyping, IBM aims to treat the user with empathy in attempts to forge a relationship with

Drawing Parallels

them. The three core principles are a “focus on user

exactly encouraging in an environment where tech

outcomes, multidisciplnary, and restless reinven-

giants and fintech startups have began to dominate

tion” (IBM). By leveraging this way of thinking, IBM

the financial world.

is able to recapture this young generation.

In a sea of faceless, looming financial edifices,

The success of these companies stands in sharp

Millennials are drawn to the silicon valley flash and

juxtaposition with the atavistic world of banking.

new-age innovation of tech giants and startups,

In a time when brand loyalty, technology, and

who offer enticing opportunities to defect from

social interactions dictate human behavior, banks

banks. The U.S. Census Bureau anticipates that

have fallen behind. Viacom found that “the four

Millennials will make up 50 percent of the popula-

biggest bank brands are among the ‘least loved’ by

tion by the year 2020 (WIRED).

Millennials,” while “71% said they would rather visit the dentist than hear what banks have to say.” Not

It’s time to start listening.

In this increasingly mobile world, companies that understand Millennials’ relationship with technology and emphasis with efficiency will seize the attention of new and upcoming consumers.

Next Steps “By isolating seven separate Millennial behaviors, financial institutions will find themselves engaging with their customers... These segments are; communal ownership, altruism, social, transparency, subversion, empathy, and design thinking.” Overhauling an entire process crafted over

support, banks would be able to create a sense

hundreds of years is a daunting task. Change

of ownership within their users. And as their stake

and progress takes time. Instead, a fundamental

increases, so does their loyalty and community

pivoting of ideals can catalyze a change across

involvement. Banks cannot afford to wait for

large banking institutions. In the same ways that

these new “co-owners” to come to them. Instead

companies like Uber and Venmo connect with

they must formulate a cross-platform social

users, banks have this capacity for authentic and

engagement plan that allows them to interact with

lasting relationships between themselves and their

their customers on their terms. Whether this is a

customers. By utilizing the behaviors of Millennials,

new twitter campaign or responding to innovative

banks will be able to recapture and expand

customer reviews on their app, banks will be able to

their customer base. By isolating seven separate

glean what users care about, while fostering a sense

Millennial behaviors, financial institutions will

of ownership in their financial institution.

find themselves engaging with their customers on an another level. These segments are; communal ownership, altruism, social, transparency, subversion, empathy, and design thinking.

Companies must show, not tell, the social intentions of their company. In the same way that Warby Parker strives to provide sustainable aid to the global community, banks must partner with local

The idea of communal ownership has manifested

and global communities. This partnership will work

itself into the co-ownership of physical products,

to regain the trust that Millennials lost in 2008.

such as cars. This idea is so much more. It can be transformed into an ideology that celebrates the dialogue between companies and their customers. By expanding the conversation beyond technical

Advertising is not longer authentic. A celebrity endorsement won’t repair a damaged relationship between banks and customers. Forbes found that

Next Steps

“75% said that it’s either fairly or very important

A bank that fits them and only them. And as users

that a company gives back to society instead of

begin to customize they begin to share.

just making a profit.” Authentic altruism paired with transparency— in all things— is not simply celebrated, it is expected. Words are irrelevant,

Authentic altruism paired

only actions matter. Whether it is partnering with

with transparency— in all

a trustworthy non-profit or participating in direct volunteer work, banks must embed themselves into the global community in order to repair their frac-

things— is not simply celebrated, it is expected.

tured public image of self-indulgence and greed.

Words are irrelevant, only

Social integration is a key element of brand

actions matter.

success. Forbes found that “62% of Millennials say that if a brand engages with them on social networks, they are more likely to become a loyal

Navigating the financial world has become a

customer.” Social integration is so simple and, since

jumbled mess of jargon and false promises. This

it engages influencers, it is an easy way to gain

murky facade lacks the transparency Millennials

credibility and loyalty.

have come to expect. Instead of a series of tricks

Banks should allow for personalization and individuality within the confines of a brand. Personal logos or color schemes may seem like gimmicks, but they actually allow the user to create their perfect fit.

and hoops, policies should be open dialogues. Hidden fees leave consumers feeling conned, which leads to a distrust of the entire institution. Banks should celebrate the partnership between them and their users, not bog them down with convoluted

Next Steps

interest rates and flashy (but misleading) promo-

something new, something inventive. And this new

tions. An openness can be achieved with unbiased

found platonic ideal of the corporation holds the

financial advice and education from third party

user at its core. No longer can the one size fits all

sources. Let the consumer decide what is the

approach be applied.

right choice for them, once they have all the facts. Offering education engages consumers and allows them to make smart choices about their financial future. This may seem trivial, but Millennials are ready to learn more about finances. Banks who offer this, with a clear and transparent attitude will gain respect and customers. Millennials are never more frustrated than when their voices arenâ&#x20AC;&#x2122;t heard. Every thought they have is instantly tweeted or posted for the world to see and comment on. This cyclical validation process can be applied to banking institutions. Some companies have begun to create Millennial advisory boards.

While it may seem hard for old-fashioned banking institutions to be branded â&#x20AC;&#x153;subversive,â&#x20AC;? a careful expansion of marketing strategies will allow for banks to slowly undermine their own archaic image. A multi-platform marketing campaign can be used to convey to users what makes one bank stand apart. By proving that they have listened and changed, going against their former selves and their competitors, Millennials will finally see a reason to make the switch to one bank over another. Adopting a youthful and playful attitude towards finances will allow Millennials to feel comfortable with this new

These boards offer a new perspective, one of a

idea of a bank, one that listens and adopts to their

digital native steeped in technology since birth.

needs.

And with this new perspective, banks can begin to turn towards the future, reinventing themselves and shedding their Wall Street-esque vibes for

Banks, and other larger institutions, have failed to see the true genius behind Millennials. They are not

Next Steps

a clamorous population that texts a lot and talks

Millennials questioned “said they are interested

ever more. They are a dynamic and diverse set of

in helping companies develop future products

people who have been taught from their youth to

and services” (Forbes). Co-creation is a mutually

never be tangled up in reality.

beneficial process.

This vivacity and energy, once seen as a symptom

Not only does it allow banks to think of unique

of a content overloaded generation, can be

solutions, it also allows Millennial voices to be

captured and turned into a tool for businesses.

heard. As Millennials invest time and energy into a

Hosting hackathons are a great way to solve

company, their brand loyalty grows.

problems quickly and uniquely. A business offers up a problem and within a few days, these problem solvers, or “hackers,” have created working prototypes. Facebook’s like button and chat feature were born in the frenetic mess of a hackathon. They are spaces of rapid iteration, the first step towards innovation. It puts design thinking to work to create innovative solutions.

Looking Forward This type of collaboration, between Millennials and companies, open up a dialogue and is a step towards a symbiotic relationship. Almost half of

Key Points

Millennials are the largest, most

4. Banks must look to startups to see

diverse segment of the population.

ways to engage with this new genera-

Their behavioral patterns will dictate

tion in innovative and authentic ways.

the future of the economy for years to come. 2. By studying demographics and

5. Banks can use thse trends to uncover new insights which lead to a myriad of actions that galvanize banks into

behavioral patters, seven key

forming lasting relationships

Millennial attitudes can be identified:

with Millennials.

Communal ownership, altruism, social, transparency, empathy, subversion, and design thinking. 3. Companies which correctly leverage

6. By leveraging the key Millennial behaviors, banks can recapture and expand their user base to include Millennials.

these principles have access to a large and upcoming consumer segment.

Conclusion “Millennials have shifted the way people interact with businesses. They demand something new, something that delights them.”

All these steps will lead to a new relationship

CNN Money reported that Bank of America has

between banks and their customers. A relationship

closed 10% of their branches over two years. The

based in trust and dialogue. These steps are just the

entire financial sector, with its cloudy aura of

beginning of how to integrate a new generation into

mistrust, must dissolve into a fluid system that

the financial landscape. With the creative power

conforms to the user, instead of the other way

of the “next great generation” (Howe and Strauss),

around. A system that is flexible to adapt to what-

the limitations of what banks will be able to do are

ever technological innovation is just beyond grasp.

nonexistent.

Anything made convenient is infinitely more

Millennials have changed the way people interact

appealing to this generation. Why stop at a bank

with businesses. They demand something new,

when an Apple Watch holds account balances at

something that shocks them. At the core of this new

your fingertips? Why call customer service when

business model is the user and they rule supreme.

intelligent and automated self-service is

Millennials crave clarity, intuitive design, transpar-

available 24/7?

ency, and —above all— personalization. Everything must be infinitely tailorable, able to adapt to a diverse collection of peoples.

Unlike the generations before, who relied on banks for in-person service and actively managed accounts, Millennials will demand instant, and

This principle must be applied to banking. No

free, financial freedom. They grew up with the

longer tied to brick and mortar sites, banking will

ever-stretching horizon of innovation and creativity

be increasingly mobile. The concept of finances

ahead of them. Any permutation of the status quo

shifting from a sedentary, institution based system

appeals to their sense of singularity as well as

to something different, something decentralized.

satiates their endless need for “the next best thing.”

Conclusion

By identifying the generational behaviors that are intrinsically linked to the success of multi-million dollar companies like Warby Parker and Oscar, banks will be able to captivate millions of new users. Industry is driven by the consumers, not the other way around. Banks have a wonderful opportunity. An opportunity which, if taken, would create a lasting relationship with the largest population segment to date. Harnessing the creative energy and the acumen of this generation would result in a collaboration that would bring banking into the 21st century. Open

“Banks must decentralize their systems so that banking can be liquidated; flexible enough to be carried

dialogue and collaboration are the stepping stones

with the customer wherever

to innovation. Through a series of steps forward,

they are.”

banking can expand their reach. “Accepted success” is no longer adequate. The time for reinvention is now. A seamless integration into the Millennial ethos will cement the future of banking

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