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Young Consumers are Transforming Retail Banking

- February 23, 2010 - 25 Comments

In the wake of the recent economic downturn, a retail banking study was undertaken by Cisco IBSG. It looked at a broad cross-section of American consumers, their financial priorities, technology usage, preferences and attitudes towards banks. I found the results surprising.

The study suggests that banks need to embrace the Gen Y population. Interestingly enough, when I looked at Gen Y spending ($62/day), I found that it equaled boomers spending for the first time.  Gen Y differ significantly from the boomers when it comes to the delivery of information and advice. This new generation wants to use video, social networking, mobile phones and web-based personal financial management (PFM) tools.

 

Even though the financial crisis led 54% of Americans to lose trust in financial institutions in general, the findings suggest that consumers still trust banks. 85 percent of Gen Y are satisfied with their current banks, which is fascinating to me considering the economic landscape of the last few years. More than one-third of Gen Y consumers want help managing their financial affairs and they want help to come from their banks. Apparently, due to a void of services from banks, this generation is currently getting  advice from friends and family. Yet, they really would like more professional advice. More than one-third of Gen Y prefer using professional advisers as their source for financial advice, ahead of peers, personal research, or automated tools. And, the point that I found most interesting, nearly 40 percent of Gen Y are interested in interacting with an adviser via video, as compared to 17 percent for boomers/silvers.

This is good news for all of us who would love to use our web cam to talk to a financial representative from the comfort of our home or office at a time that is convenient for us, not between the hours of 9-5, Monday-Friday. Check out the full study at http://www.cisco.com/web/about/ac79/docs/fs/nextgrowthopportunityforbanks.pdf

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25 Comments

  1. I will recommend not to hold off until you earn enough amount of money to buy goods! You can get the loans or financial loan and feel free"

  2. It seems to me another example that these people are not paying enough attention to what is going on.

  3. I think all the companies of the world need to keep up and ahead of the game in order to capitalise on the increased knowledge of today's youth.

  4. I think the retail banking boost is largely because of the growth of the internet. People are more tech-savy now, they know how to get online to do their online transactions etc. Great insights in this article by the way.

  5. Your published is very interested, You are right, young must be to be main focus by bank and giving them more interactive services.

  6. I'm at the end of the Baby Boomers but my son is a Gen Y and your post is right on the mark. Technology will continue to play a large role in the future. Surprisingly, I didn't realize the Gen Y spending now rivals Baby Boomers. That is eye opening and a great opportunity for those willing to take advantage of it. Great info.

  7. Like it or not banks are going to need to up their investment in technologies like this to appeal to the younger generations.

  8. Bob, the online credibility issue is less of an issue these days. I do all my banking online. I can see the benefits of moving my money online only.

  9. I think when it comes right down to it, Gen-Y, X, Z, A etc... will always look to pro. advice in the long run as they mature. Sure, they may be more used to newer tools but business is business.

  10. Seems like it could be a really good idea for more companies to offer face to face"" video call consultations on the internet. There's a massive amount of people that struggle to get into towns and cities to see someone about their finances."

  11. Woow...thatz great infos!can u give me more?Thanks for your information...Nice!

  12. very interesting info. it be very usefull i think and much easier.

  13. Of course banks need to focus on the younger generation, after all, in 30 years they will be the older generation!!!

  14. This research shows that virtual assistance certainly will grow a lot in the next years, and should spread to others areas beyond financial too.

  15. Concerning generation Y spending as much as boomers, it also likely has a lot to do with the fact that my observations about generation Y show them buying new things to replace broken ones far more often than boomers. For example, a generation Y type seems to assume that it's time for a new TV when their TV doesn't work right whereas a baby boomer might try to pay to get it repaired.In some cases, like with a TV, it might cost as much to have it fixed as buy a new one. But with many other things, there's no need to buy a new one when it can be repaired. I see Boomers as more likely to try to repair it themselves or pay to have it repaired than to buy a new one. So that might be part of it as well.

  16. spending ($62/day), this is ammazing i think this is a big amount!

  17. I agree... The study suggests that banks need to embrace the Gen Y population. Interestingly enough, when I looked at Gen Y spending ($62/day), I found that it equaled boomers spending for the first time. Thanks for Sharing It

  18. The research was very comprehensive and applicable not only to banking but to marketing as well. Your findings only confirmed the trend toward more technologically advanced interactions with the clients. Finding and improving different channels to communicate and interact with your market through use of online technology was very clear. I think if one has not started the transition to create or improve these channels, you are already behind. Those that have taken the strides to improve online technology will be the leaders.

  19. 85% of gen y are probably happy with their banks because they only interact with them via ATMs and the Internet.Other generations are dissatisfied because they try to talk to their bank of the phone - never a pleasant experience.

  20. The gap between the 54% distrusting consumers and the 85% bank approval rate for gen-y is unfortunate. It seems to me another example that these people are not paying enough attention to what is going on.

  21. It only proves that our technology nowadays is fast changing. Since our youth now are more techie compared before. That's precisely the reason of the boost in retail banking.

  22. nice post..thanks for share this articel..

  23. i guess im a Gen Y, cause nearly everything i do is online, all my monthly bills are pay online, i haven't experienced support via webcam but it would be a good idea compare to phone support which they make you wait like forever on the line and redirecting you to the correct department.

  24. This is very true! I think that is why you see and more and more businesses using social networking instead of laughing at it. Although at times it has gone a little overboard IMHO. I used to work for a property management company and while looking up a competitor I noticed a follow us on twitter"" link on their landing page. Why would I want to follow a property management company? ""Well today we acquired more B/C rated low income housing which should help diversify our portfolio"". Lol anyways good thoughts Alicia!"

  25. If I were given a choice I would definitely want to meet with a professional financial adviser face to face. I would not want to interact with someone over online video. Maybe it is just me, but I don't know if I can fully trust someone with my financial information unless I am sitting across a table from them discussing this information. I work in the internet/tech support industry, and am fully aware of the likelihood of someone capturing these types of meetings. I'll take a face to face meeting, thank you very much!