What do Millennials expect from their bank?
By 2030, the purchasing power of the so-called Millennials will be greater than that of all other consumer groups put together. In order to be able to better meet the needs and fulfil the expectations of this young generation, it is vital that we better understand them. On behalf of Prime Foundation Partner Belfius, Vlerick Business School studied what Millennials expect from the interaction with their bank.
The study starts by examining the Millennial generation's financial involvement. It also considers their communication with banks, and more specifically their preferences in terms of communication channels, contact person and bank type. The results are based on a literature study, in combination with focus groups and an online survey among 18 to 27-year olds who are currently customers of one or more banks.
Young people’s financial involvement can be improved
Professor Frank Goedertier and researcher Freya De Berti analysed young people’s current financial knowledge, their situation, objectives and future, and how and if they plan to change these things. This revealed that banks can play an important role in this process.
- Although 63.1% of the respondents find it important to have sound financial knowledge, it became clear that in practice only 21.9% are properly informed. Moreover 29.8% indicated that they would like to receive information from their bank to improve their knowledge.
- 80.6% of the young people who participated in the survey find it important to closely monitor their financial situation (income and expenditure). Only 33.9% used a special tool or app for this; the others just relied on their debit account to check this.
- Just over half of the respondents set specific financial objectives for themselves (i.e. savings, a large purchase). Almost half of them also took specific action to achieve this objective. They have a savings plan or set aside a fixed amount every month.
- Almost 75% of the young people in the survey regularly think about their financial future, but only just over 50% also effectively do something about this, e.g. pension savings schemes.
Based on the study we can also distinguish three types of financial involvement.
Almost 40% actively think about their financial future and set specific objectives.
Only 9.6% are just as active when it comes to requesting information or using tools to manage their financial situation.
The majority of the respondents (61%), however, adopt a rather passive attitude. While they find it important to have financial knowledge and to monitor their financial situation, it is not an active concern of theirs.
Based on a more in-depth analysis, which also examined how young people look to the future, we were able to distinguish four types of customers:
- The passively interested customer: 39% of the young people in the study adopt a rather passive attitude. These young people also express themselves in rather negative terms when asked about their financial future.
- A customer with specific objectives: 27% actively go in search of information themselves. They also take action with a view to their future and consequently have a more positive outlook when it comes to their financial future.
- A customer with abstract objectives: just as many Millennials (22%) also set objectives, but on a more abstract level. They do not actively look for information but are nevertheless interested and also want to control their financial future. They also tend to have a rather rosy outlook.
- The not-interested customer: 12% take absolutely no interest in financial matters. Nor do they really focus on their financial future. They are neither positive nor negative about this.
The study shows that Millennials strongly prefer the traditional communication channels due to their concerns about privacy. Good communication about the safety of non-traditional channels may help to partly alleviate their concerns.
They also prefer personal contact with a fixed contact, both when the bank contacts them and when they contact the bank. Knowing the contact personally is less relevant for urgent questions.
Types of banks
Finally, we also asked Millennials whether they had a preference for a certain type of bank. Their answers revealed that the younger generation also still finds a network of branches important. They prefer personal, face-to-face contact with a bank to online contact.