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Banking On The 2025 Millennial Takeover

Let's examine how banking would radically change when Millennials reign supreme

Photo Credit : Reuters,

If you Google the word Millennial you'd unsurprisingly discover around 40 million search results. Millennials - an actively demanding generation - would refuse to settle for anything less, even seldom settling down early in life, unlike their previous generations. They have truly arrived with their rising ambitions at the cost of failing business models, making them a spirited force to be reckoned with! According to Pew Research Center, Millennials overtook Baby Boomers in 2016 as America's largest living generation. As you can see from the graph, the Millennial generation is on a growth trajectory while the other older generations like Baby Boomers would drastically shrink in numbers.  

Globally, Ernst & Young (EY) further corroborated that Millennials would constitute 75% of the workforce by 2025. The writing is on the wall: It's not Machines, it's Millennials that are going to rule the world by 2025!

Whether you call them 'entitled' or 'skeptical', when the world is going to be filled with Millennials, what matters is their attitude towards technology disruptions. What was untapped potential as a marketing opportunity would now drive the change they wish to see in the world. Disruptions are going to be shaped by all things Millennial. Welcome to the world of Digital Disruption 3.0: Millennial Disruption, a notch above the technology disruption we see today. According to The Millennial Disruption Index, banking is at the highest risk of disruption. Brace yourself for a first-of-its-kind Millennial Banking Revolution!

"DISRUPT" Banking the Millennial Way
Let's examine how banking would radically change when Millennials reign supreme. The world that we see come 2025 would be defined by what I've conceived as the DISRUPT model, quite literally standing for: D- Diverge, I- Individualize, S- Smarten, R- Reimagine, U-Unmake, P-Popularize, and T- Transform.

Diverge: Millennials are a divergent segment and don't see uniformity from a single lens. They don't care about brands; all that they're excited about are unique experiences. Millennials would look to drive digital banking in an open banking ecosystem. Every product or service that is meant to carry the weight of a brand without an appealing experience would eventually be destroyed. The tech-savvy Millennial would introduce robo-advisors for wealth advisory, branch and query assistance that would spell convenience like never before. Notwithstanding the hype, today's bots are a long way from providing such an experience.

Individualize: Millennials have unbridled energy, staying true to their vision of reinventing the way banking services would be delivered to consumers. Artificial Intelligence (AI) would become more mainstream with intuitive self-service portals for new product discovery; targeting users based on individual preferences would be the foundation of 'Segment-of-One Marketing' that personalizes the experience for each unique customer. Millennials suffer from password overload and would drive biometrics and other advanced identity recognition software for security and convenience.

Smarten: By 2025, approximately 80 billion devices would be connected to the internet according to IDC. Millennials want to make sense of the world around them. A Forrester Report, 'Banking on Millennials: It's Not All About Mobile' says more than two-thirds of Millennials like to do their own research before making financial decisions. Amplified social connectivity should pave the way for trust as a key factor to enable transactions. PYMNTs in conjunction with VISA conducted a How Will We Pay Study that said more than half of the Millennials shared the love of in-person relationships in financial management. I've spoken about the role of robo-advisors earlier. However, this is only to augment the in-person experience and not to entirely replace it.

Reimagine: Let me introduce you to the 3A model that I've conceptualized in how Millennials would reimagine the banking industry. It's the model of Authenticity, Accuracy and Agility. Authenticity is the integrity of the technology of the day to suit the needs of consumers. It's what gives a persona to technology to conduct itself with the right amount of human-centricity to build contextualized engagement into consumer's lives. Accuracy builds relevant and trustworthy information across all touchpoints.  Agility drives decision-making in a way that allows an unparalleled synergy between business and interaction models.

Unmake: The case of Citizens Bank shows how even with a solid digital strategy - simple design, intuitive UX, live chat - low conversion rates were still prevalent among Millennials due to a lack of timely contextualized engagement. They learnt the hard way that digital experience alone doesn't cut it at an individual level unless moments of truth are identified and optimized. There are many such instances where business models need to be unmade as much as stereotypes on Millennials - focusing only digital models of engagement without any relevance in their lives.

Popularize: Millennials identify with the culture of popularity. The Millennial Disruption Index states that 73% of Millennials would be more excited about a new offering in financial services from Google, Amazon, Apple, Paypal or Square than their own nationwide bank. Venmo revolutionized the way money was being spent on campus creating unique experiences of leaving written commentary or an emoji after every transaction thus making it share-worthy. The world in 2025 will have many more advanced versions of 'Venmos' that make them a shareable experience.
 
Transform: Millennials are here to make a mark in this world. They'd want the dreams of their consumers realized at the click of a button without the hassle of navigating 50 odd irrelevant options. Millennials are an entrepreneurial force that wishes to be on top of their finances with Advanced Data Visualization and Machine Learning to transform the banking landscape. Newer transactional systems that offer both security and ease like bitcoins or block chain would be the order of the day.  Wearable watches or glasses offer virtual reality experiences that offer great potential value to be leveraged by Millennials.

Final Thoughts
Srini Peyyalamitta, Head of Banking & Financial Services at Aspire Systems interviewed Jeremy Balkin, the Head of Innovation at HSBC and an award -winning author in a candid interview on the Millennialization of Everything in Banking. When asked what gets him thinking on Millennials, he answered in his characteristic style, "If you're not thinking about millennials, you're not thinking!"

When they are not in majority, we can afford to call a Millennial entitled, skeptical or demanding. When they become the only force that will DISRUPT business models, we need to ensure a smooth transition. Banking leaders should already be putting Millennials at the center of their value chain! Banks today need a Millennial Banking Technology Framework that would enable them to identify technology areas in open-banking ecosystems that Millennials would adapt to in the near future. This will help them jump on the only bandwagon the future has in store: the millennial bandwagon!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Srini Peyyalamitta

Srini Peyyalamitta is head of banking and financial services at Aspire Systems, a global technology services firm specializing in Product Engineering, Enterprise Transformation, Infrastructure Management and Application Support, and SaaS/Cloud.

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