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33 percent of millennials don’t think they need a bank

According to the Future of Finance report by Goldman Sachs, 33% of millennials do not think they will need a bank in the next five years[1]. In fact, according to the Millennial Disruption Index, 73% of millennials are more excited about new offerings in the financial services space from the likes of Google, Apple and Amazon. Moreover, 71% would rather go to the dentist than listen to what banks have to say[2]. So how do banks convince, engage and make themselves relevant to this unbanked population? And why is it important for them to do so?

By 2020, millennials, one of the largest generations in history, will be dominating the workforce, moving into their prime spending years and reshaping consumerism - forcing companies to rethink the way they do business. One problem facing banks is that millennials view brand loyalty differently. This group is concerned with convenience, simplicity and innovation. Also, in recent years, we have seen non-financial institutions such as tech giants and start-ups challenging the status quo and tapping in to this unbanked populatione.g. through Apple Pay, Snapcash etc.

Tech companies have benefited from gamifying the product and user experience. After all, gamification has been used by schools and parents alike for centuries as a tool to educate young people. Quizzes, riddles, crosswords and puzzles make learning more interesting. But what is gamification in the digital sense? It requires using game thinking and game mechanics in non-game contexts to engage users in solving problems in order to encourage contribution and participation.

Ipads and tablets have given rise to a new type of gamification. For example, E.ON energy have developed a gamification based programme which allows young people aged 5-16 to make virtual decisions throughout the various stages of energy production including about distribution and consumption so that they can see the effects of the decisions they make[3].

Gamification can also work for banking to help them engage and interact with the millennial generation.

  1. Applying game mechanics to real life scenarios - allowing virtual decision making in order for participants to see the effects of the decisions on financial wellbeing.
  2. Designing simple and easy games tailored for particular age groups to foster an appreciation of the value of money, importance of saving, planning and budgeting.
  3. Creating practical financial products that can be used alongside gamification to create real engagement and promote hands-on experience

To me, gamification is a new way to entice both interested and non-interested millenials in banking, as it makes financial education fun. Gamification does not rely on internal motivation, but rather on providing instantaneous feedback and incentives, and rewarding tiny steps of progress, which in turn ramps up engagement with users. Financial education no longer needs to be a boring classroom activity, but a virtual reality experience.

By Akshay Ketkar, Manager at iBe

You can read the first blog in this series by clicking here.

[1] http://uk.businessinsider.com/millennials-dont-think-they-will-need-a-bank-2015-3

[2] http://www.millennialdisruptionindex.com/wp-content/uploads/2014/02/MDI_Final.pdf

[3] http://www.eonenergy.com/About-eon/EnergyExperience/658

 

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Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 30 March, 2015, 16:33Be the first to give this comment the thumbs up 0 likes

Apple Puts Banks Squarely At The Center Of Mobile Payments, it can only be used by people who already have a credit / debit card - and are banked - and uses existing banking rails. I totally fail to understand how Apple Pay is "challenging the status quo and tapping" into unbanked population.

Not sure how an example of EON from the energy industry is relevant when a little research would've surfaced many lighthouse implementations of gamification within the banking industry viz. ICICI iWish and Payback.

For reasons highlighted in Are Banks Losing Customers Or Shedding Customers?, I won't be surprised if 33 or an even a higher % banks think they don't need a Millennial customer. 

A Finextra member
A Finextra member 30 March, 2015, 18:01Be the first to give this comment the thumbs up 0 likes

Thanks for your comment. The likes of Apple Pay, Google Wallet, Snapcash etc have just made it easier for people to pay for services something that banks have not been able to do. 

I think you mis-read my post, the point of it was to use gamification to "teach" financial services to the unbanked population especially 7-17 year olds. The millennial generation is one of the biggest generations ever in history and if banks dont want them as customers, then in a couple of decades there will be no customers left to service. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 31 March, 2015, 08:39Be the first to give this comment the thumbs up 0 likes

I don't get how Apple Pay et al have made it easier for people to pay for services but even taking that statement at face value, by doing so they have actually contributed to higher card usage by consumers and, therefore, greater interchange revenues for banks. To me, that sounds like the perfect partnership and not "challenging the status quo".

Much as I use gamification in various areas myself, the notion that a Millennial remains unbanked because banks didn't gamify the banking experience for them is laughable since Millennials are digital natives and are able to access information on their own from social media, mobile, Google, etc. According to me, for reasons given in my earlier blog posts Are Banks Losing Customers Or Shedding Customers? and Calling B.S On Banking The Unbanked, people are unbanked because they can't / won't bear the fees charged by banks (e.g. USA) or don't have enough money (e.g. India).

For every study that claims that GenY is unique, there's another study that says that they're not very different from how Boomers and GenX were when they were at the current age of GenY and, per contra, that GenY won't be very different from Boomers and GenX in a couple of decades when they'd reach the current age of Boomers and GenX. So, banks will be fine in a couple of decades even if they're choosy about GenY now. In any case, do you think Millennials have borrowed US$ 2T in student loans from SnapCash / Apple Pay / Prosper?