Banks have been obsessed with millennials for what seems like an age. Douglas Blakey comments
And the love affair with those customers born between 1981 and 1997 is only becoming more intense.
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Traditionally, banks tended to focus their attention on customers aged 35 to 50 and likely to be in their peak earning and spending period.
But no longer. The millennials segment has even been called ‘the crown jewel’ of demographics.
In the US alone, there are more than 75 million of them and according to Sarbjit Nahal, head of thematic investing Strategy at Bank of America Merrill Lynch, millennials ‘are the most important group in terms of the workforce, and by 2018 they’re going to overtake the boomers. By 2025, we’re looking at over $8trn worth of annual net income’.
The segment’s importance has not escaped the attention of the credit card sector and with impeccable timing, TSYS have released a report entitled Addressing the Generational Shift Among Cardholders: Strategies for FIs to Successfully Engage Millennials.
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By GlobalDataTSYS’ argues that financial institutions must cater their services and marketing to or risk being left behind by digital-oriented providers (FI and non-FI) that leverage advanced digital and mobile technologies.
Key takeaways from the report include:
- 18% of 18-34 year olds switched their primary bank within the past 12 months compared with only 10% of GenX (aged 35-54) and a mere 3% of boomers (aged 55+);
- 43% of millennials will use credit cards by 2018, and
- 59% of 18-34 year-old mobile phone users accessed their bank, credit union, credit card or brokerage account via mobile browser, app or text messaging on their phones at least monthly in 2015.
So, how can marketers at card issuers leverage these key insights into millennials’ financial and best prepare for the dramatic generational shift underway?
Three strategies are suggested.
- Implement the Use of Data and Analytics
- Develop an Advanced Digital Engagement Strategy, and
- Build a Compelling and Affordable Rewards Strategy
The report is well worth a read. But on the third point, perhaps millennials are not so different to other segments.
Just about every report I’ve read on the topic suggests that customers of all ages appreciate rewards and it remains the biggest single influencer in driving consumer choice.
Release of the report from TYSYS coincided with equally interesting research from Collinson Group into over 6,000 consumers within the top 10%-15% of earners in Australia, Brazil, China, France, Hong Kong, India, Singapore, the UK, the US and the UAE.
Collinson’s research mirrors TYSYS in arguing that brands need to prepare digital loyalty initiatives now or risk losing patronage from digital natives.
In particular, it finds that banking loyalty programmes were found to encourage 82% of members to spend more, while credit card initiatives positively influenced 79%.
Collinson argue that millennials typically engage across up to five screens simultaneously and their ‘relationship with brands is also completely different – they want instant gratification and claim not to want to save up loyalty points over a longer period to access a reward’.
