Disruption defines technology’s role in challenging traditional business models by creating a ‘sharing economy’ or innovating to replace archaic products or services. It’s about iPhone VS. Blackberry, Airbnb VS. hotel industry, Amazon VS. highstreet booksellers, famously Uber VS. black cabs. The one industry on the precipice of disruption is financial services, more specifically, retail banking – its ‘uber moment’ is approaching.
Disruption in the simplest sense is a market adapting to meet public expectations. That’s why Good Rebels and Revoo’s ‘Bank to the Future’ report looking at 16 – 25 year olds attitude towards banks and everyday banking is so crucial. They are current customers and customers of the future, growing up in a space where investment in fintech products has ballooned over the last three years.
In a presentation at Lansons, Good Rebels ran through the executive summary of their findings. It’s clear that the financial services sector radically underestimates this consumer group. Banks need to be smarter with data, be even more transparent with how services work, be supportive by speaking an understandable language, and be convenient.
Thanks to Laura Dinneen (@lauradinneen) I’ve now read through the whole report picking out key pieces of insight. There is a lot more information in the full report and you can see the panel debate that took place last year below. If you have any questions, drop me a comment or give Laura, the real expert, a shout.
#1 Ambitious and optimistic with global outlook
16 – 25 year olds strive to achieve more in life, focus on developing new skills, and have a passion for social issues. Social media has opened up activism on a global scale for them but has also reinforced the need for validation in themselves. From a global perspective, 39% strongly agree that they want to live and work abroad, with 72% wanting to explore the world around them – not as ‘tourists’ but travellers, getting hands on with world cultures.
#2 ‘Always on’ culture
71% say that they are constantly connected online and 53% say it’s critical that they must be contactable at all times. This means the mobile phone is more important than their wallet, not just for connectivity but potentially because mobiles can now be used as a digital wallet with contactless payments. Giving personal details to companies online isn’t a worry, but it must be for the right reasons – a worthy trade-off.
#3 Plugged into the online reputation economy
They seek expert opinion before buying products and services, with the internet playing an important part of this. However, once they find a brand they like it’s common that they stick with it. Demonstrating the importance of getting the consumer experience right for long-term customer loyalty. Although this could be endangered if the company in question has a social issue, clashing with the first insight.
#4 Attitude towards money
It’s worth remembering that life experience varies immensely between 16 – 25 year olds; from students, undergraduates, and young adults in work. The research identifies five different money-types in the age group. This ranges from those heavily dependent on their parents, a group suspicious of modern banking procedures such as online banking, those classed as ‘adults in training’ experimenting with a range of money products, super users who are confident with their finances, and the checked out who are pessimistic about their financial future.
#5 Financial journey, a story of dependent to independent
There are three key financial milestones. Around the age of 14 a part-time job or handling one-off payments such as birthday money aligns with choosing a bank account – occasionally moving away from one setup by parents. The second is going to university that means looking at student accounts, credit cards, or even short-term loans. The third is graduation, having your own home, or receiving a first full-time pay check, leading to shopping around for financial products to fit (also dealing with debt from University).
#6 Savings and investments
It may surprise you, but 72% do have some form of saving or investment, but its older age groups who have the larger investments. Cash, savings and pensions rank highly, but so are alternative investments such as gold, art and antiquities.
#7 Finance back on the agenda since Brexit
Interest in the economy has been on the decline for the last three years, but 2016 saw a resurgence of interest, possibly due to Brexit. Despite this, overall levels of interest in personal finance/investments is down for 16 – 25 year olds, with proportional increase of interest per older age groups.
#8 There are major pain points
There are a few major pain points when it comes to the relationship between 16 – 25 year olds and banks.
- Banks not speaking an understandable language. There is a lot of frustration as the language of banking is full of jargon and terms difficult to understand. This age group crave straight-talking and impartial advice.
- Lack of personalisation. Many feel banks view them as just a number and this age group responds by feeling no particular loyalty towards their bank. Feeling undervalued means shopping around online for another deal.
- Exploitation, the banks just want my money. I can personally relate to this one as moving from a student current account to a standard one can cause havoc with managing overdrafts.
- Banks look down on young people as they have less money. This was a significant feeling, especially as the age group felt banks didn’t trust them with sensible financial decisions.
- Banking technology is limited. This is just a fact for the younger generation who have grown up with smartphones, needing constant connection to the internet. Seamless online banking still needs developing to catch-up with the other activities this age group do through their smartphone. Someone in the study switched banks because theirs didn’t support Android Pay.
Do read the full study for more information and if you have any questions leave a comment or get in touch on social media.