The baby boomer generation is sitting on a disproportionate amount of global wealth. Now aged 50 to 70, they benefited enormously from years of rising house prices and share prices, and generous company pensions. Today, more than two-thirds of wealth managers’ clients globally are over the age of 60.
As the boomers age, the financial services companies that serve them are thinking about what will happen to their wealth. They know that competition for it will be fierce, and they will have to charm the next wave of borrowers, savers and investors: Millennials, also called Generation Y.
What do we know about Millennials?
The exact definition of a Millennial is a little loose, but they are generally understood to be those born between the early 1980s and the early 2000s.
They are not a homogenous group. A Millennial can be an 18-year old thinking about university, or a parent in their mid-30s, and each will have very different financial priorities. They also have different levels of technological engagement – older Millennials can remember a time pre-internet, while younger ones are true digital natives who have known nothing else but a digitally connected life.
Many are financially squeezed and have had to put traditional life goals such as buying a house, getting married or having children on hold because they are saddled with student debt or on low incomes. But they are entrepreneurial – 54% of Millennials in developed countries have started or plan to start their own business, Deloitte research shows, and some may be launching ventures today that will make them rich tomorrow.
Crucially, they are also set to inherit the wealth amassed by their baby boomer parents in the next three or four decades, as much as $30 trillion in the US alone. This makes them a prime target for financial marketers.
The problem is, research suggests Millennials are not engaged with the financial services industry, and they lack brand loyalty in general. This means that, if you want to sell to Millennials, you need to stand out. The prestige boasted by a stuffy old financial institution doesn’t matter to Gen Y, they are more interested in innovation, great user experience and ‘human’ brands which speak to them in plain English – Airbnb often comes top of the list for this.
There is also the issue of trust, or lack of it. Millennials may well have seen their parents (or perhaps themselves) lose money during the financial crisis, which has compounded their mistrust of financial brands. Research from Accenture found that Gen Y is more likely to consider giving its money to brands its knows from other sectors, such as Apple, Amazon, Facebook and Google, that may offer more alternative financial services in the future.
Millennials are also known to have a social conscience – two-thirds say they are concerned with the state of the world and feel obliged to change it. Because of this, they tend to be interested in things like ethical banking, impact investing, and working for and giving their business to socially responsible companies. They want brands to be ‘authentic’, which means marketers should emphasise openness and transparency in their messaging.
They are willing to share their data, but they understand its value and will want something in return. The Accenture survey pointed to ‘data as currency’ as a major trend, with 67% of Millennials globally saying they would be willing to share more data with banks and investment firms in exchange for tangible benefits. As the era of Open Banking begins, Millennials may be leading the way in taking back control of their personal data and using it to get a better deal.
Millennials live their lives on their smartphones, and they use social media to gather and share information and about products and services. The importance of peer reviews to their decision-making cannot be understated, so marketers can try to leverage this influence with testimonials, brand advocates, and user-generated content. But they will have to think creatively: Millennials like to consume mobile video content, which take a lot more work than just firing out a few clever tweets. And the messaging has to be right – you can do more damage trying to look cool and failing in front of a young audience.
Anatomy of a great Millennial brand
So what are financial brands doing to connect with Gen Y? One that stands out for me is Monzo, a British challenger bank. Its messaging is on point considering what we know Millennials care about. Its mission statement is: “It’s time for a bank that makes life easier not harder. A bank that belongs on our smartphone, not on the high street.A bank that keeps us informed and in control, rather than trying to catch us out with fees and charges.”
It has Twitter feedback from users scrolling on its cleanly designed homepage, and it responds to users’ comments personally on its Facebook page. It engages customers using its bank card in their daily lives by asking what was the last thing they bought, for example. It features a ‘transparency dashboard’ on its website, a regularly updated blog, and a community section where it organises social events. On its YouTube channel it has short, clear user guides, as well as ‘behind the scenes’ videos, live streams, and even links to relevant TED Talks. Monzo is a great example of how to talk to Millennials. It says that last year it grew its customer base from 100,000 to half a million, suggesting its strategy is paying off.