Open Banking or FedNow: Where to Start?
September 14, 2023 | 2 min read
In a recent white paper titled The Millennial Generation and the Future of Finance: A Different Kind of Trust, Innotribe shows that when it comes to business interactions, millennials generally favor using technology over going into a branch. Specifically, Innotribe says, “Because millennials trust technology even more than face-to-face relationships and the ‘brick and mortar’ user experience, they are looking for entirely new digital products that are relevant to their daily lives.”
To better meet the needs of millennials, banks and credit unions should seriously consider this insight from Innotribe. After all, the future of banking is digital. Once financial institutions embrace this trend, they will be better prepared to meet the demands of millennials and position themselves as true consumer advocates.
Here are five ways banks and credit unions can make that happen.
Above all, consumers crave convenience. Results from a Stackpole Report show that when asked what is “very important” in choosing a financial institution, consumers most frequently choose convenience. Security and fully insured deposits are a close second, while being locally owned and having a friendly staff are far down the list. The truth is that today's consumers don't care about those latter features nearly as much as they used to. As proof, we found that 71% of consumers say that having a simple and easy digital experience is more important than having a friendly and helpful staff. Millennials want banking that fits in their pocket and is available on the go.
Your account holders don't just compare your products to those offered by other financial institutions. They compare what you offer to popular apps, including Facebook, Netflix and Twitter. How do your digital products compare to the other apps consumers use on a daily basis? How does your sign-on process compare? Is your app at least as stable as other apps on the market? Do your users have a reason to regularly log in? If you find that your app is clearly deficient when compared to the standard apps used by millennials, that's a warning sign that you aren't meeting the needs of your account holders. On the other hand, if your app can compete with standard apps from other industries, chances are you’re doing better than your direct competitors are. That's a good spot to be in, especially since 54% of account holders say they’d be willing to switch financial institutions to get a better digital experience.
Speaking of giving people a reason to sign in regularly, adding a financial advice component to your banking app can be a great way to drive daily engagement. If account holders can see their latest transactions categorized in context with a full range of aggregated accounts (including accounts from competing institutions), they’ll be more likely to have a reason to sign in each day and see where they stand in terms of financial health. Novelty is a major reason people sign in frequently to apps such as Facebook. When there's regularly something new to look at, people want to check it out. Adding a financial management component to a banking app makes that possible.
One way to check the ease and simplicity of your digital experience is to run a series of usability tests. You might offer new millennial members a $50 gift card to visit your branch and test your app for the first time. When they arrive, ask them to complete a series of actions and think out loud as they complete them. Don't interrupt their process, and don't give them pointers on how to do any of the actions. Your job is just to sit back and see if they get hung up while performing any of the required steps. If they do, you’ll know what to fix to make the digital experience more convenient. Note that if you use a digital product from a third-party vendor, you can make sure they run usability tests and can perhaps even attend some of those tests yourself. The main point is that you understand how people really interact with your product. Otherwise, you’re just guessing.
As shown above, most millennials prefer digital channels to face-to-face interactions – primarily because digital is more convenient. That said, there are instances when digital channels simply can't replace human interaction. When this occurs, it's crucial that users have an easy way to directly contact a representative for help. One example of a company that does this particularly well is HubSpot. If I ever have a question about how to use HubSpot's software, I can send an email directly in the app, and a representative will call me in five minutes. I don't have to go through a phone tree to get my question answered. They can track that I submitted the question in their app, and so when they call they already know what I’m asking. Leveraging human help like this makes the digital experience far more powerful.
In the end, consumer advocacy is about one thing: Seeing your products from the perspective of your account holders. If you can truly view the experience from their perspective and be open to where that leads, you’ll be set to thrive in the future. After all, millennials will have more buying power than any other demographic by 2017. Attract them now and get the upper hand in market share.
This article originally appeared on CU Times.
For more info on how to win millennials, check out our webinar 'Gen Z & Millennial Banking Perspectives and 2022 Predictions.'
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