Today’s banks need to cater to a new generation of digitally native consumers who have more demanding expectations from brands than any previous generation before them. Understanding these customers is considered to be the holy grail of future business success. But getting to know this new generation of digital wizards is not as easy as it seems.
There’s conflicting evidence. On one hand, research suggests the new generation of customers is more conservative than previous ones. The National Children's Bureau released official figures showing that alcohol and drug use has fallen dramatically among school children in Britain. On the other hand, a well publicised KPMG study revealed a sharp rise in fraud cases committed by young employees.
From sensible youth to a security threat to organizations these young consumers have torn up the rule book of marketing and customer service, and it is becoming increasingly apparent that getting to know them is not as straightforward as it has been with previous generations.
According to one of the leading experts on generational theory, Dr Paul Redmond, the younger generation of millennial consumers don’t really like to be marketed to but expect to engage in one-to-one ‘conversations’ with brands. Moreover, they demand a 24/7 service that is accessible on any device and across any communication channel.
Social media also is becoming more critical than other forms of electronic marketing to engage with this generation. An online survey of children aged 13 to 18 revealed that 25% connect and check emails and messages within five minutes of waking up, and 73% connect within an hour. Today’s teens also share considerably more information about themselves on social media than their parents and are more likely to switch between different social media channels. Personalising interactions with them is key to capturing their attention and keeping them engaged.
"To remain competitive, banks need to digitalize their services and adopt a more customer-centric business model"
Driving such personalized engagement will require banks to become more adaptive to market changes and, most of all, to customers’ needs. However, most banks are burdened by old legacy systems and complex, fragmented IT infrastructure that often holds them back from driving innovation and business agility. This, coupled with the heavy regulatory requirements that financial organisations need to abide by, puts them in an unfavourable position compared to new players in the market such as Amazon, PayPal and even Google, which recently launched a Google Wallet service.
So how can banks adapt to this extremely challenging business environment and find practical ways to attract, service, and retain customers?
To remain competitive, banks need to digitalize their services and adopt a more customer-centric business model that drives better customer engagement across all channels. Recent research suggests that in the next three years only 5 per cent of consumer interaction will be through bank branches with traditional brick and mortar banking declining rapidly due to consumers opting for online channels. By digitalizing core business processes banks will be able to deliver a truly omni-channel customer experience and drive more agile services and product offerings that are tailored to customers’ needs.
Moreover, by adopting flexible technology that drives more efficient business processes banks will be able to become more adaptive to change and drive innovation and personalization of customer service.
In Build for Change: Revolutionizing Customer Engagement through Continuous Digital Innovation, Pegasystems Founder & CEO Alan Trefler shares his insight on what organizations can do to serve the next generation of customers and survive the pending "Customerpocalypse".