KPMG Banking on the Future Report 2017 shines light on how banks can better engage with millennials
Key long-term behavioural patterns, as well as emerging trends about what Gen Y professionals want from their banking experience, are a wake up call for financial services according to the latest ‘Banking on the Future’ Report from KPMG Australia released today.
“Given the growing size of the Gen Y segment, its economic importance cannot be underestimated,”said Daniel Knoll, KPMG Partner and Head of Financial Services Management Consulting. “They are the ‘mass affluents’ of the future – and interestingly, their individual customer experience with their bank is currently their biggest pain point.”
Gen Y, or millennial professionals, are defined as those between the ages of 18 and 30 years, university educated, relatively well paid, tech savvy and more globally minded. They are a major demand influencer and KPMG says their digital sophistication will reshape how banks deliver products and services. Millennials will form 50 percent of the workforce in just five years and, significantly, the Gen Y cohort already makes up 22 percent of Australia’s population.
“Delivering an enhanced customer experience is the key to attracting and retaining this group,” said Mr Knoll. “Convenience, whether managing money, making payments or accessing funds, has become the cornerstone of true engagement. The KPMG Report shows that mobile and tablet banking have risen to number two in the most valued attributes of a bank, with internet banking service retaining the top spot. This underscores the demand for convenience we’re seeing from Gen Y.”
The third edition of the KPMG ‘Banking on the Future’ Report surveyed 1400+ KPMG Gen Y professionals about what they want and expect from banks, wealth managers, insurers and other sector providers. The report offers financial institutions key advice about how they can become the trusted economic partner of tomorrow’s affluent Australians.
“Gen Y professionals expect and want digital pathways and ease of use. They demand diversity and aren’t necessarily going to be loyal to one financial services brand or product,” said Mr Knoll. “For financial institutions, these sorts of attributes will help them shape their products, services and business models to meet millennial needs.”
Another key finding of the study is that more than 50 percent of the participants have either started or are about to start an entrepreneurial pursuit. “Entrepreneurialism is seen as an important way to ‘get ahead’ and solve problems for themselves and their communities. Getting the right innovative (digitised) services and offers in place to support this entrepreneurial focus will be an important differentiator for industry players,” said Mr Knoll.
Emphasising this demand imperative, the KPMG Report also shows the trend amongst Gen Y professionals to ‘cherry pick’ products was continuing to grow, with the tendency to hold financial products at multiple financial institutions increasing. A key result, 28 percent of Gen Y professionals surveyed hold financial products with three or more financial institutions compared to 11 percent in 2015.
The Banking on the Future Report research identifies eight dominant forces shaping the way Gen Y professionals want to bank, and what they demand as customers. “These eight trends show there is no single route to capturing and retaining Gen Y professionals. Banks must urgently consider the very high expectations of Gen Y professionals, particularly around digital aptitude and wealth,’ said Mr Knoll.
“All financial institutions must step up their level of delivery to attract them because failing to act will further widen the opportunity for competitors and fintechs to take the prize. Now is the time to realise that when it comes to banking, the Gen Y cohort is sophisticated and demanding. Innovative digital solutions is not a ‘nice to have’ – for them it’s a given.”
He said the fact that Gen Y professionals still wanted to have face-to-face conversations with their banking provider about mortgages was another key areas of opportunity for the financial services sector to consider further digitisation of this service area.
The report concludes by identifying The Gen Y Ten Commandments of Banking:
Head of Communications, KPMG
T: 02 9335 8562 / 0411 110 953
KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.