Consumer research conducted by FICO in 2016 found that millennials are 2 to 3 times more likely to switch from their existing financial service providers. Increased fee and negative customer experience are a few of the reasons cited for considering making a switch. Unlike their predecessors who were reluctant to change financial service providers due to the effort required in making such a shift, millennials have no such qualms. They are open to taking their business elsewhere if they feel they are not getting their money’s worth from a service provider. Converting a millennial prospect into a customer is no guarantee that he/she will continue to stay with the service provider. The millennial is aided in this process not only by customer-friendly regulations favouring them but also by digitization of financial services itself – which makes the transition simpler and easier.
All these factors can pose as challenges to financial service providers such as banks and insurance companies. It can put greater strain on operational costs and compels service providers to constantly upgrade their technology platforms to offer innovative services. While the scenario may seem bleak, it certainly isn’t so.
The millennial is socially aware
Before we can understand what financial service providers must do to stay ahead in the game, let’s focus on how millennials to understand the factors that drives them to sign up with a service, and stay with one when they sign up. The millennial of today is twice as likely to use social media to research information on the products available. The parameters they consider while making a purchase decision are costs, ease-of-use, availability of service on multiple platforms, long term benefits, and quality of customer service. The millennial prefers to interact with customer support on a digital channel rather than traditional channels such as telephone or personal visits.
Fintech companies have a considerable lead against traditional financial service providers for the very reason that the former spend considerable effort in seeding information across digital channels – including social media.
Innovate, innovate, innovate
Another reason millennial consumers are exploring non-traditional financial service providers is the innovation that fintech companies offer. On the technology front, fintechs leverage the power of technologies such as cloud, marketing automation, and analytics to optimize their digital footprint. They also leverage big data to gain valuable insights into their customer. This allows them to create newer features and products to consistently excite their customers. In contrast, traditional financial service providers are relatively slow to innovate – partly, bogged down by tight regulations that are imposed on them.
A winning customer experience is key
A winning customer experience is not just about resolving customer problems or queries when they arise. A potential customer begins his experience before they even make their first purchase. They evaluate their experience with a service across each stage of the buying process – awareness, consideration, purchase, retention, and advocacy. While service providers must pay attention to all the stages, the millennial behavior of having a tendency to switch services easily indicates that they are less likely to remain in the retention stage, let alone transcend to advocacy stage. This indicates that financial service providers are less successful in providing a sustained customer experience. To combat this, having robust technology platforms and leveraging digital channels such as social media to deliver exceptional customer service, can help service providers to stay lean and maximize their revenues. Such platforms can also provide an omnichannel experience to engage with millennial customer effectively.
The challenge that lies ahead for financial service providers is immense. If they are to succeed in winning customers and beat out the competition, they must leverage technology to optimize every aspect of their operations. They must also leverage digital channels like social media to continuously engage customers to deliver personalized service, customized offers, and a winning customer experience.