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Game Changers for Next Gen Banking

If personal is the name of the next gen banking game..

Financial marketers must reach out now or their window of opportunity will slam shut forever. All strategic players have come to the realization that next gen banking customers are their primary profit pool as of 2025. PWC research foresees a 42% increase of cashless payments towards 2025. The same research expects that 90% of bank’s useful consumer data comes from payments. Moreover, the industry’s role in fostering inclusion becomes a significant priority. Financial inclusion of woman, farmers and small businesses are transforming credit decision making while new data and AI open massive opportunities. This all has made the battle on the next gen banking customer very intense.

Next gen customer needs are therefore in high-speed transforming service delivery in banking. Digitalization is no longer a novelty in the financial services sector as technological disruption, stiff competition from fintech challengers and the Coronavirus have forced industry incumbents to modernize or fall behind.  

Making things personal is the name of the next gen banking game. Tailoring products and services to next gen demands is what I call a data-tech long game. Consumer expectations for personal, bespoke, and innovative products mean next gen banks are doubling down on data analytics tool. Making things personal requires deep understanding of and responding to the societal & behavioral context in which these generations live, and their preferences are shaped. A few examples:

DIY, (do-it-yourselves), is how these generations grew up. From purchasing products on-line, to pumping gasoline, to tailoring their Nike shoes, to googling answers. FYI, (for-your-information), is another acronym for how these generations live. Generation Z is all about this: sending and receiving more data than any generation before. They’ve never known a day without social media. They no longer need adults to get information. What’s scary is—much of the information is fake, damaging or outright lies. But, alas, information rules the day. FOMO and FOLO are two other contextual drivers of next gen behavior. These terms have become popular over the last 5-7 years: Fear Of Missing Out and Fear Of Living Off-line.

Next gen financial service providers make things personal and help their customers to live like the next gen Nike when it comes to their financial decisions and actions: “Just do it, but do it smartly!” Next gen banks help them with relevant smart actions, insights and tools to improve their financial situations continually and increase financial inclusion.

 And next generations are anxious about climate change & sustainability…

But there is more! All smart actions, insights and tools not only need to be relevant, they also need to lead to a better world! Pew research for example shows that almost 70% of Gen Z and Millennials feel anxious about the global impact of climate change. The increase in floods, fires and hurricanes globally frighten them. Anxiety about the future also is a predominant emotional reaction to climate change content among those who are most engaged with the issue on social platforms. Majorities of these climate-engaged social media users report feeling angry that not enough is being done when encountering climate change content online. Nevertheless, large shares also say they feel motivated to learn more and are confident in their ability to reduce the effects of climate change. Pew research shows that 35% of Gen Z and Millennials is already taking actions in their own lives that improve a sustainable way of living. The DIY generation at best!

Next gen banks that are able to make things personal while boldly embracing new sustainable business models will prevail. Sustainable new business models balancing profitability with sustainability by being carbon-neutral fast, making a difference in financial inclusion or one of the other sustainable development goals will generate customer preference. We have entered the era of purpose driven business models that are really having impact on a better world as a prerequisite for next gen preference. 

Firms need to mentally transform

However, reducing climate change and improving sustainability is not an obvious and easy thing to do! Many multi-national firms are built in the post-world-war framework that defines profit as the overarching success metric. For the last two decades customer satisfaction, often measured with the net promotor score, was added to the framework of success. Therefore, we saw true customer centric business models prevail. The upcoming years purpose and personalization are being added to the business model framework. But it’s easier said than done! The recently published Innovation Monitor of the University of Amsterdam for example shows that 55% of Dutch companies is having plans to be climate neutral in 2030. However, and that is shocking, 22% of firms will not at all support climate impact reduction & sustainability strategies this century! https://www.dutchnews.nl/news/2021/10/185852/ It shows how hard the mental transformation is from a profit central business model into a purposeful customer centric business model. And then the pre-requisite of making things personal will even add more complexities to the business transformations. All in all, leaders need to be brave and bold to break through their cultural borders if they want to successfully reach and engage with next gen customer segments.

And the winner is…you?

Google, Amazon, Apple, and other big tech companies seem to be winners in making things personal in the short run. They successfully have launched behavioral data-generation tools in all aspects of our lives and are embedding personal finance to that. Access to all this data will give them a huge advantage in applying AI for personal services and offers at scale. The question now however is if they also respond well to the societal & purposeful context of the next generations.  Yes, their services resonate when it comes to DIY, FYI, FOMO and FOLO. Yes, their services resonate when it comes to mobile access as they own world’s leading mobile browsers. But are they also able to truly respond to the anxiety of the next generations when it comes to climate change and sustainability? Fintechs combine purpose and personalization much better, but often need to be embedded by big tech or big banks to get access to a vast amount of data. So, what an immense opportunity this is for incumbents to grab. Championing net zero, financial inclusion and other sustainable development goals and integrating that with best-in-class personal digital finance is a fantastic way forward. In the upcoming weeks I will therefore publish several blogs based on my own experience as sustainable data tech entrepreneur, visiting professor in advanced risk & marketing analytics and investor in sustainable data-tech on how new purposeful business models are solidly being built with alternative data and AI. I will look into different scalable game changing use cases powered by big data sources ranging from payment data to psychometrics and internet data to mobile data. New mindsets are required to change the banking game into a purposeful and personal one. New competences are needed to have impact in this direction. It’s a combination of art and science to help your customers to “just do things smartly!” I hope my blogs will inspire leaders to do the same!

 

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Diederick Van Thiel

Diederick Van Thiel

Chairman & CEO

E-cology Innovations / AdviceRobo

Member since

06 Jan 2016

Location

London / Amsterdam

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19

This post is from a series of posts in the group:

Digital Bank Transformation

This is a blog group for all topics related to Digital Bank Transformation, from incumbents to start-ups, to Wholesale and Investment banking. Technology is advancing like never before...this is a group for ensuring best practice is celebrated and shared.


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