Gen Y to reshape retail finance - Cisco
23 February 2010 | 2011 views | 0
Cisco (NASDAQ: CSCO) today announced the findings of a retail banking study that suggests banks have an opportunity to increase revenues up to 10 percent by embracing Generation Y consumers.
Conducted by the Cisco Internet Business Solutions Group (IBSG), Cisco's global consultancy, the study surveyed 1,055 U.S. consumers to better understand their financial priorities, service expectations from banks, video adoption, and interaction preferences. The study's results are wide-reaching, revealing that Gen Y consumers trust their banks and, despite recent financial setbacks, are seeking their help in making important financial decisions.
Gen Y Will Transform Retail Banking
Young consumers are embracing new communications technologies such as video, and are adopting online behaviors at an astonishing rate. Survey results indicate the rise of Gen Y will have a profound impact on retail banking, providing the next opportunity for substantial revenue growth. Debt reduction, expense management, and financial education are key priorities for younger consumers. Findings included the following highlights:
Gen Y Wants Financial Advice Delivered via Video and Mobile Phones
* More than 50 percent of Gen Y own a webcam, compared to less than one-third of boomers and silvers.
* 20 percent of Gen Y visit YouTube multiple times a day (five times more than boomers and silvers).
* 97 percent of Gen Y use mobile phones.
Gen Y Favors Automated Video- and Virtual Community-Based Financial Advice
* Nearly 40 percent of Gen Y consumers are interested in interacting with an adviser via video, compared to 17 percent for boomers and silvers.
* Gen Y consumers are four times more likely than boomers and silvers to have posted a question about financial matters to a blog or online forum.
* 40 percent of Gen Y customers use web-based personal financial management (PFM) tools (primarily those offered by their banks) to manage expenses, reduce debt, and maximize long-term savings.
Gen Y Wants Financial Advice Delivered from Their Banks
* More than 33 percent of Gen Y consider banks to be their preferred channel to receive professional advisory seessiona seessional advisory services.
* 85 percent of Gen Y are satisfied or very satisfied with their current financial services providers.
Gen Y Needs Help Making Financial Decisions
* More than one-third of Gen Y consumers believe they need assistance managing their financial affairs, while less than one-fifth of baby boomers and "silvers" feel the same way.
* Gen Y consumers value the financial advice of friends and family three times more than boomers and silvers.
Innovative Retail Banks Will Have a Significant First-Mover Advantage with Gen Y
While Gen Y customers are generally satisfied with their banks, 26 percent would consider switching if they found a better value. To capitalize on this opportunity, Cisco IBSG recommends that banks create an integrated value proposition that meets the stated needs of Gen Y to help manage their finances, debt, and spending by offering professional advice in an automated fashion. Banks must address three key areas to develop this new approach:
1. Build or Acquire Personal Financial Management (PFM) Capabilities To Help Customers Gain Control: Build capabilities to personalize advice on an Internet platform. Provide PFM functionality on a mobile platform that enables real-time alerts, reviews, and decision making.
2. Improve Consumer Intimacy Enabled by High-Definition Video Capabilities: Introduce the opportunity to interact with centrally located financial services experts over video in priority branches. Prioritize branches that have a significant high-net-worth (HNW) consumer population and / or an opportunity to serve small and medium-sized businesses. Expand video-enabled advice to consumers' homes and mobile devices when technology becomes more prevalent and adoption rates increase.
3. Develop a Financial Services Online Community: This should comprise a customer's family, friends, and peers enabling Gen Y to access the financial advice they value from their personal network, along with the trusted professional advice they want from their banks.
The Cisco IBSG study surveyed 1,055 U.S. consumers aged 18 and older. The survey's 75 questions focused on the different generations -- Gen Y (consumers born roughly between 1980 and 1992), Gen X (people born between 1960 and 1979), boomers/silvers (those born before 1960) -- to achieve an accurate depiction of generational preferences and trends in retail financial services. The study was conducted by the Cisco IBSG Economics practice, which provides research on trends, innovation, and game-changing business practices across 10 vertical markets.