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The popularity of private banks has been declining in comparison to the growing amount of FinTechs among the millennial generation. Institutions that follow traditional models have been experiencing hardship retaining the existing customers and acquiring new ones, due to reluctance in integrating innovation to meet growing customer needs. Let’s look closer into the factors that could be useful for beating this challenge.
Given the fact that by 2020 about half of the world’s workforce will be represented by millennials, they must become the key focus for banks that are conducting research and analysis of potential customers. As of today, it is more than half of millennials that are unsatisfied with the wealth management services they are being provided and do not find their service provider trustworthy, which causes them to have more than one.
Today’s market environment is clearly pushing banking institutions to rethink their ways of approaching customers and value proposition, as well as upgrade user experience by integrating innovative tools. If private banks remain passive, they risk losing customers who identify as millennials in the near future, given high level of competition from alternative service providers.
The first thing that should be subject to improvement is traditional banks’ offerings. Research shows that about 80 percent of millennial customers are considering trusting FinTechs with their money. The legitimacy of the latter has grown in the recent years, which has positively affected public perception and significantly decreased security concerns.
An interesting fact is that when choosing a service provider, millennials primarily look at the quality and brand rather than price. Therefore, instead of competing on the basis of price only, private banks should focus on bringing their customer experience on a new level. Good examples to follow would be such companies as Apple or Netflix and the practices they have integrated into their operation in order to retain millennial customers. One fundamental thing is viewing innovation as the core. This implies that there is a set of features that are absolutely essential to keep a millennial happy when using your services: 24/7 access, the option to choose a relationship manager, customized recommendations, price transparency, along with convenient and exclusive product offerings. On a general scale, ensuring the presence of those is a challenging task for private banks. However, with a range of tools and solutions that exist today, banks can easily purchase the necessary digital infrastructure instead of developing the technology in-house.
Digitalization is the key, and the way current situation will evolve depends solely on how soon this will be understood by traditional banking institutions.