While every generation requires great customer service, there are differences in the expectations of people from different demographics. Here, GMC Software GM Nick Dempsey explores the expectations of Generations X and Y when it comes to customer experience and communication with financial institutions.
Generations X and Y have very different expectations of their financial institutions than previous generations. According to recent research by Telstra, online-only banks are winning share of wallet when it comes to this market segment, but mobile-only banks are catching up.
As the report notes, “UBank and ING Direct are relatively new entrants in the Australian market. UBank was established in 2006 and ING Direct in 1999 – both use eVerification processes for on-boarding new customers online. In that short period of time, they have acquired approximately two million customers and penetrated six per cent of Australia’s Gen X and Y population.
This demonstrates, firstly, how quickly digital can move a market, and secondly, how digital relevance translates into customer acquisition. The question now is: what will happen now that we have moved into a mobile-first financial services world?”
However, establishing trust is critical for financial services businesses to win the hearts, minds and business of Gens X and Y. According to Telstra’s research, what’s positive for financial institutions is that of all organisations, Gens X and Y trust their own financial institution more than they trust the other entities with which they do business, including government and semi-government bodies, communications service providers and internet retailers.
Importantly, the research also shows consumers are willing to share personal information with their bank – as long as they believe this information is safe:
- 68 per cent are prepared to share their personal information such as their date of birth with their financial institution.
- 58 per cent are prepared to share their legal identification such as their passport.
- 52 per cent are prepared to share their employment details.
This is a massive advantage for financial institutions because they can use this information to offer better products and services and to communicate more effectively with their customer base.
However, financial institutions must recognise that mobile is now the primary device Gens X and Y use to access financial services. Fifty-one per cent of consumers access their day-to-day accounts through a mobile device. While they value security and privacy when accessing their accounts through a mobile, what they also want is convenience, speed of access and flexible user experience in managing accounts, including identity authorisation.
Businesses that understand this can start to develop consumer offerings and communication strategies that address these needs.
Communication the key
Of course, the method through which Gens X and Y use to interact with their bank is only part of the puzzle when it comes to truly engaging with this segment. What’s also essential are the communication tools and methods financial services use to connect with this audience.
According to research by Ernst & Young substantial work needs to be done by financial institutions when it comes to communicating with their customer base, especially when it comes to fees and charges. This is especially important given its research indicates lack of transparency over fees and rates is an important reason for closing an account.
Overall, satisfaction with clarity of communication from financial services businesses is lower than the average for other businesses. Which means banks need to be able to more effectively use communication channels to demonstrate simplicity and clarity to their Gens X and Y stakeholders.
Ultimately, all financial institutions have an opportunity to reconsider how they engage with their Gens X and Y – and soon their Gen Z – customers. No longer is it appropriate for banks to use communication and service delivery methods they have become accustomed to using for previous generations.
The best and newest financial institutions are already recognising this and are putting in place initiatives to meet this need. Those that use this approach will be able to maintain or increase market share. Those that are not already doing this need to think now about what they can be doing to improve their customer engagement and communication with this segment.