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Katy Keim, CMO, Lithium Technologies &Klout, spells out the perils faced by the traditional retail banking industry of ignoring the burgeoning millennial generation.

Traditional banking is missing out on an enormous market – the millennial customer, the first truly digital generation, typically aged between 18 and 33 and as familiar with the online world as a fish is to water. And by doing so, it risks losing those customers forever.

There are an estimated two billion millennial consumers in the world. According to the latest figures, 80 million are in the US, they make up a quarter of the UK population and are predicted to hit 17 million by 2019, and account for approximately 27 per cent of the adult population in the European Union.

It’s a huge market and one that, by and large, traditional retail banking is simply ignoring. Perhaps there’s a sense among banks that, as they have a significant online presence, internet banking is well established and they’ve adapted so well to digital challenges, including cyber threats, that there’s little more to do other than keep abreast of new digital developments.

Big beast

But this would be a mistake. And it’s easy to see why. Banking is a ‘big beast’ industry, long established and built on the foundations of conservatism and tradition. This view on customers is informed by practices that stretch back over 100 years and more and is based on an unwritten assumption that customers will simply come to them. And when they do, they will remain loyal.

But this is analogue thinking. Millennials are children of the digital age, shaped and influenced by rapid technology development and consequently, with their own set of values and expectations. They simply don’t follow the traditional model.Research shows they aren’t influenced by traditional advertising.They review blogs before making a purchase, value authenticity over content, want to engage with brands on social media, use multiple tech devices and they expect brands to give back to society.


Drilling down into this, a recent Facebook IQ survey reveals 44 per cent of millennials feel like their banks don’t understand them, and 36 per cent “describe their current bank in unflattering terms.”

In turn, our own research illustrates that customer brand expectations are changing as digital technologies become increasingly embedded into daily life which, in turn, is influencing behaviour. Unsurprisingly, this is particularly marked among millennials.

Accenture’s annual consumer banking survey also pointed out that millennials switch banks at nearly double the rate of other age groups, approximately 18 percent of people over a 12-month period. They also do a lot more research before making a final decision, with 81 percent of those surveyed saying they evaluate prices and read reviews before landing on their bank of choice.

Given the size of the millennial market, banks would do well to take heed of these dynamics, if they’re not already doing so and endeavour to capture the loyalty of the millennial demographic. It’s true that millennial customers do expect more from any brand, not just banks, that they do business with. But this doesn’t mean they aren’t loyal. In fact, those businesses that capture their attention can expect to earn long-term trust and loyalty.


The rise of new technologies and increasing customer expectations is causing a huge shake up in the financial world, with new challenger banks and non-traditional financial institutions and services proving an attractive alternative for digitally-savvy customers fed up with slow-moving traditional banks.

It’s fair to say that challenger banks have the advantage of services that easily integrate with software developed for the Internet of Things and mobile applications. Yet, despite having modern systems, this does not automatically translate to modern, responsive customer service experiences. To engage digital-savvy customers, banking institutions need to adapt their marketing and customer care strategies in line with this group’s demand for fast, meaningful responses.

Hooking into the zeitgeist

A really good example of how a new entrant bank has engaged with the millennial generation and hooked into the zeitgeist is Tesco Bank. It understands that today’s generation wants to engage in a less structured or formal way and on their own terms, and has adapted its tactics accordingly.The company has recently built a digital hub where customers can meet, find advice and talk to one another, which has helped them to foster a community of people who identify themselves as fans of the brand.

The bank launched in 2015, and expects to double its monthly users this year. Conversations between community users have even influenced the bank’s business priorities, bringing the introduction of Apple Pay to the top of their agenda in response to customer demand.

Wake up call

Much of the groundwork required to engage the millennium generation requires marketing and customer care strategies that really reflect self service, trouble-free banking expectations.

Perhaps, what is most striking about the millennial generation is their almost innate preference for the big beasts of the digital world. For instance, The Millennium Disruption Index recently flagged banking as the industry most likely to be impacted by the millennial generation and said 73 percent of millennials would be more excited about a new financial offering from Google, Amazon or Apple than from their own bank.

Lets put that in perspective.A search engine, a computer manufacturer and a company that started out as a bookseller are preferred over a long established bank. That shows you the seismic shifts that have taken place, and should act as awake up call to the banking industry. And keep in mind that right behind the millennial generation is another even more digitally native demographic, one that has grown up playing with smartphones as toddlers. The implications are profound.