Without more creative engagement, financial organisations could risk losing what is set to be one of the largest generations on earth says Rodney Hassard, Global Director of Product Managment, Genesys
To banks, the millennials must seem a fickle bunch. Also known as Generation Y, millennials are the generation born throughout the 80s and 90s and are said to lack two major factors that previous generations have demonstrated; they are bereft of brand loyalty and have incredibly short attention spans.
According to one recent report from KPMG, the UK is home to around 13.8 million millennials. Building engagement with this expansive generation is a significant challenge. Compared to their predecessors, millennials are more open-minded in their attitudes and lifestyle choices and less aligned with anything that has the slightest whiff of a faceless corporation. Banks and insurers, along with a host of major brands, often fall into that category —and millennials aren’t shy about shifting their loyalties without a second thought.
Millennials are soon to move into their prime spending years as one of the largest generational groupings in history. Their lack of loyalty and diminutive attention span makes building sustained engagement with them a real challenge, yet despite all of this, the financial world can connect with them. To do so, it must inject some creativity into its engagement.
An alternative view of personal banking
The impact of this generation will be immense – particularly in the financial sector. Millennials use banks for traditional services, such as credit cards and even lending. But loyalty is a different game, and there are plenty of technology companies out there chipping away at market share and steadily gaining greater acceptance among adults between the ages of 22 and 37.
According to Bain, a global management consultancy, consumers in the US and UK ranked PayPal and Amazon nearly as high as banks for trust with their money. Millennials think of finance in terms of crowdfunding, virtual currencies and online payment platforms as much as the local branch with an ATM in the wall.
Already we see that large tech companies offering core banking functions pose the greatest threat to established financial institutions. Amazon Cash has 10,000 retail locations and Alibaba has issued $96 billion in loans in five years. Apple Pay, Google, Snapchat and WhatsApp all have strategies that address millennial expectations, providing an experience that’s convenient, multi-functional and requires a few swipes on a mobile device to complete an interaction.
In the Bain research, only a quarter (25 per cent) of UK consumers feel that the banks’ digital channels allow them to do all they need – an indicator of changing attitudes and expectations. Some banks have responded wisely to these requirements by launching new websites, apps, Alexa skills and more. The problem is however, that the mega-tech companies continue evolving with services that attract millennials and build better relationships with them. What, then, can traditional banks do?
Leading in innovation
Leveraging artificial intelligence (AI) across voice, web and mobile interactions is one way traditional banks can lead with innovation. In addition, banks have a wealth of data they can use proactively to provide advice to customers about their outgoings or interest rate changes that will save them money. When customers want to know more, banks can seamlessly connect them with their own financial advisor. And robotic advisor algorithms can be accessible through voice commands to take smart data-management beyond purely human interactions.
Banks can invest in these capabilities now, because omni-channel customer experience platforms are already available to support these deeper customer relationships and shape them into the future.
Shifting focus from the product to the customer
While digital engagement is critical, traditional banks must also ensure there is a personal element whenever possible. For years, banks have tried to cross-sell and upsell by focusing chiefly on the product, rather than the customer(“for current accounts press 1, for savings press 2”). Shifting to customer-centered selling means weaving in sales and marketing at relevant moments in the customer journey. This level of personalisation requires predictive engagement that uses real-time data to anticipate needs.
If financial institutions are to make real inroads and bond with their millennial customers, they have to get creative and engage early. As millennials grew up, many banks initially underestimated the demands, financial power, and impact of this generation. Generation Z is next, and no bank can afford to risk making the same mistake twice.
Prepare for more disruption courtesy of Gen Z
Gen Z is different, too. They have shorter attention spans but are no less complex or demanding. They expect even more out of technology and they have a lower tolerance for error in the digital domain. And remember, Gen Z is considered a “throwback generation”. They want to work, save money and avoid the trap of debt. Juggling two jobs as a full-time student, musician, and over-achiever can be typical.
This all means banks need to get creative now. To capture Gen Z and keep them as customers, institutions need to weave themselves seamlessly and creatively into the lives of these young people, to integrate technology with humanity, and to connect moments that deliver relevant and instant value through engagement with bots and humans.
Today, it is unreasonable to expect that customers will find single blocks of time to solve the problems they face, or to investigate important purchases. Within messaging apps, customers can communicate with a company during short moments of found time (for example, while on the train or walking the dog). Connecting with customers in this way dramatically reduces the level of effort required of them. And it enables continuous conversations that can span hours, months or even years.
Inspiring interaction with the right technology
To be constantly in touch with the millennial and Gen Z generations takes technology that brings all marketing, sales and service channels into a single platform with persistent context, giving customers the convenience of using messaging apps such as Apple Business Chat. By meeting customers in the messaging app of their choice, a company executes its business around the customer, allowing each one to get on with his or her life.
Right across the financial sector, organisations must come to terms with these two generations. The millennials and their younger Gen Z counterparts are vast and diverse markets with massive purchasing power. And like all generations, they need banking services. The difference is that they demand banking that fits in with the way they live. The delivery of that perfect connection requires innovative thinking and foundational technology that is both reliable and adaptable.
ECB launches small climate-change unit to lead Lagarde’s green push
FRANKFURT (Reuters) – The European Central Bank is setting up a small team dedicated to climate change to spearhead its efforts to help the transition to a greener economy in the euro zone, ECB President Christine Lagarde said on Monday.
Lagarde has made the environment a priority since taking the helm at the ECB, taking a number of steps to include climate considerations in the central bank’s work as the euro zone’s banking watchdog and main financial institution.
She is now creating a team of around 10 ECB employees, reporting directly to her, to set the central bank’s agenda on climate-related topics.
“The climate change centre provides the structure we need to tackle the issue with the urgency and determination that it deserves,” Lagarde said in a speech.
She said that climate change belonged in the ECB’s remit as it could affect inflation and obstruct the flow of credit to the economy.
The ECB said earlier on Monday it would invest some of its own funds, which total 20.8 billion euros ($25.3 billion) and include capital paid in by euro zone countries, reserves and provisions, in a green bond fund run by the Bank for International Settlement.
More significantly, ECB policymakers are also debating what role climate considerations should play in the institution’s multi-trillion euro bond-buying programme.
So far the ECB has bought corporate bonds based on their outstanding amounts but Lagarde has said the bank might have to consider a more active approach to correct the market’s failure to price in climate risk.
“Our strategy review enables us to consider more deeply how we can continue to protect our mandate in the face of (climate) risks and, at the same time, strengthen the resilience of monetary policy and our balance sheet,” Lagarde said.
(Reporting by Balazs Koranyi; Editing by Francesco Canepa and Emelia Sithole-Matarise)
What to expect in 2021: Top trends shaping the future of transportation
By Lee Jones, Director of Sales – Grocery, QSR and Selected Accounts for Northern Europe at Ingenico, a Worldline brand
The pandemic has reinforced the need for businesses to undergo digital transformation, which is pivotal in the digital economy. In 2020, we saw the shift to online and cashless payments accelerated as a result of increased social distancing and nationwide restrictions.
The biggest challenge on all businesses into 2021 will be how they continue to adapt and react to the ever changing new normal we are all experiencing. In this context, what should we expect this year and beyond, in terms of developments across key sectors, including transport, parking and electric vehicle (EV) charging?
Mobility as a service (MaaS) and the future of transportation
Social distancing and lockdown measures have brought about a real change in public habits when it comes to transportation. In the last three months alone, we have seen commuter journeys across the globe reduce by at least 70%, while longer-distance travel has fallen by up to 90%. With it, cash withdrawals for payment has drastically reduced by 60%.
Technological advancements, alongside open payments, have unlocked new possibilities across multiple industries and will continue to have a strong impact. Furthermore, travellers are expecting more as part of their basic service. Tap and pay is one of the biggest evolutions in consumer payments. Bringing ease and simplicity to everyday tasks, consumers have welcomed this development to the transport journey. In-app payments are also on the rise, offering customers the ability to plan ahead and remain assured that they have everything they need, in one place, for every leg of their journey. Many local transport networks now have their own apps with integrated timetables, payments, and ticket download capabilities. These capabilities are being enabled by smaller more portable terminals for transport staff, and self-scanning ticketing devices are streamlining the process even further.
Ultimately, the end goal for many transport providers is MaaS – providing an easy and frictionless all-encompassing transport system that guides consumers through the whole journey, no matter what mode of travel they choose. Additionally, payment will remain the key orchestrator that will drive further developments in the transportation and MaaS ecosystems in 2021. What remains critical is balancing the need for a fast and convenient payment with safety and data privacy in order to deliver superior customer experiences.
The EV charging market and the accelerating pace of change
The EV charging market is moving quickly and represents a large opportunity for payments in the future. EVs are gradually becoming more popular, with registrations for EVs overtaking those of their diesel counterparts for the first time in European history this year. What’s more, forecasts indicate that by 2030, there will be almost 42 million public charging points deployed worldwide, as compared with 520,000 registered in 2019.
Our experience and expertise in this industry have enabled us to better understand but also address the challenges and complexities of fuel and EV payments. The current alternating current (AC) based chargers are set to be replaced by their direct charging (DC) counterparts, but merchants must still be able to guarantee payment for the charging provider. Power always needs to be converted from AC to DC when charging an electric vehicle, the technical difference between AC charging and DC charging is whether the power gets converted outside or inside the vehicle.
By offering innovative payment solutions to this market segment, we enable service operators to incorporate payments smoothly into their omnichannel customer experience that also allows businesses to easily develop acceptance and provide a unique omnichannel strategy for EV charging payments. From proximity to online payments, it will support businesses by offering a unique hardware solution optimized for PSD2 and SCA. It will manage both near field communication (NFC) cards and payments from cards/smartphones, as well as a single interface to manage all payments, after sales support and receipt with both ePortal and eReceipts.
Cashless options for parking payments
The ‘new normal’ is now partly defined by a shift in consumer preference for cashless, contactless and mobile or embedded payments. These are now the preferred payment choices when it comes to completing the check-in and check-out process. They are a time-saver and a more seamless way to pay.
Drivers are more self-reliant and empowered than ever before, having adopted technologies that work to make their life increasingly efficient. COVID-19 has given rise to both ePayment and omnichannel solutions gaining in popularity. This has been due to ticketless access control based on license plate recognition or the tap-in/tap-out experience, as well as embedded payments or mobile solutions for street parking.
These smart solutions help consider parking services more broadly as a part of overall mobility or shopping experience. Therefore, operators must rapidly adapt and scale new operational practices; accept electronic payment, update new contactless limits, introduce additional payments means, refund the user or even to reflect changing customer expectations to keep pace.
2021: the journey ahead
This year, we expect to see an even greater shift towards a cashless society across these key sectors, making the buying experience quicker and more convenient overall.
As a result, merchants and operators must make the consumer experience their top priority as trends shift towards simplicity and convenience, ensuring online and mobile payments processes are as secure as possible.
Opportunities and challenges facing financial services firms in 2021
By Paul McCreadie, Partner at ECI Partners, the leading growth-focused mid-market private equity firm
Despite 2020 being an enormously disruptive year for businesses, our latest Growth Index research reveals that almost three quarters (74%) of mid-market financial services companies remained resilient throughout the pandemic.
This is positive news, especially when taking into account the economic disruption that financial services firms have had to go through since the crisis began. No doubt 2021 will also hold its own challenges – as well as opportunities – for firms in this sector.
Unsurprisingly, the biggest short-term concern for financial firms for the year ahead involved changing pandemic guidance, with 42% citing this as a top concern. With the UK currently experiencing a third lockdown many financial services businesses will have already had to adapt to rapidly changing guidance, even since being surveyed.
Businesses will also be considering the need to invest in working from home operations, and there may be uncertainty over re-opening offices on a permanent basis. According to the research 30% of financial services firms are planning to adopt remote working on a permanent basis, so decisions need to be made now about whether they invest more in enabling staff to do this, or in their current office premises.
Due to Brexit, UK financial services firms are no longer able to passport their services into Europe, which may cause problems, particularly in the next 12 months as the Brexit deal is ironed out and the agreement is put into practice. Despite this, Brexit was only cited by 24% of financial firms as a short-term concern. While it’s comforting to see that UK financial firms aren’t hugely concerned about Brexit at this juncture, it is going to be vital for the ongoing success of the industry that the UK is able to get straightforward access to Europe and operate there without issue, otherwise we may see these concern levels rise.
Looking ahead to longer-term concerns for financial services businesses, the top concern was global economic downturn, of which 40% of firms cited this as a worry when looking beyond 2021.
Investing and adopting tech
Traditionally, the financial services sector has been slow to adopt digital transformation. Issues with legacy systems, coupled with often large amounts of data and a reluctance to undertake potentially risky change processes, have meant many firms are behind the curve when it comes to technology adoption. It’s therefore promising to see that so much has changed over the last year, with 45% of financial services firms having invested in AI and machine learning technology – making it the top sector to have invested in this space over the last 12 months.
One business that exemplifies the benefits of investing in machine learning is Avantia, the technology-enabled insurance provider behind HomeProtect. The business has undergone a large tech transformation in the last few years, investing in an underlying machine learning platform and an in-house data science team, which provides them with capabilities to return a quote to over 98% of applicants in under one second. This tech investment has allowed them to become more scalable, provide a more stable platform, improve customer service and consequently, grow significantly.
This demonstrates how this kind of tech can help businesses to leverage tech in order to offer a better customer experience, and retain and grow market share through winning new customers. This resilience should combat some of the concerns that firms will face in the next year.
Additionally, half (51%) of financial services firms have invested in cybersecurity tech over the last year, which allows them to protect the platforms on which they operate and ensure ongoing provision of solutions to their customers.
Clearly, there is a benefit of international revenues and profits on business resilience. In practice, this meant that businesses that weren’t internationally diversified in 2020 struggled more during the pandemic. In fact, the businesses considered to be the least resilient through the 2020 crisis were three times more likely to only operate domestically.
Perhaps an attribute towards financial services firms’ resilience in 2020, therefore, was the fact that 53% already had a presence in Europe throughout 2020 and 38% had a presence in North America. This internationalisation gave them an advantage that allowed them to weather the many storms of 2020.
Looking at how to capitalise on this throughout the rest of 2021, half (51%) of are planning overseas growth in Europe over the next 12 months, and 43% in North America. Further plans to expand internationally is not only a good sign for growth, but should further increase resilience within the sector.
While there are many concerns, the fact that financial services businesses are investing in technology like AI and machine learning, as well as still planning to grow internationally, means that they are providing themselves with the best chances of dealing with any upcoming challenges effectively.
In order to maintain their growth and resilience throughout the next 12 months, it’s imperative that they continue to put their customers first, invest in technology and remain on the front foot of digital change.
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