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Technology is not a differentiator for young generations.
This week we were in Stockholm Sweden to present on an insurance and banking conference. So what did we present about? Building on our experience in working with financial institutions, we shared our concern: technology will not help you stand out of the competition, especially not on the long term. Why? Technology is not a differentiating factor anymore, it becomes pure hygiene. We believe financial institutions should focus less on becoming mobile-first more on human needs.

Stating that tech is not a differentiator might sound like a provocative statement, but bear with us. We are not saying technology is not important. The Economist just published their special report on banking: a bank in your pocket. It describes “tech’s raid on the banks.” Inspired or threatened by outsiders like Amazon and Apple or start-ups from within the industry, especially from Asia, many banks are catching up to become part of smartphone age. The biggest four American banks are spending over $25bn a year on perfecting better customer apps and capitalizing on customer data. Venture-capital firms invested $37bn in upstart financial firms last year. Moving banks to the cloud and digitalizing the customer experience helps to cut costs and close branches. Traditional banks need to earn four times as much as mobile only banks on their customers to break even. Research by McKinsey, shared in the same Economist, shows that in our country (the Netherlands) and Sweden (where we are presenting, the willingness to purchase a digital product is around 80% (compared to 60% in Britain and 45% in the US). And 15% of British 18- to 23-year-olds use a ‘neobanks’; mobile only banks (Economist, 2019).

Our educated guess would be these figures are quite the same around Western and Northern Europe. Now these findings and figures from the economist report all point in the digital direction. However, we would like to take the liberty to continue where the Economist leaves us with a conclusion “put customers’ needs first’. Thank you very much Economist (honestly, no sarcasm intended here), now let’s focus on why younger generations use technology, besides the fact that it is their second nature.

Looking at younger generations one might feel inclined to become all digital, however for Generation Z and Millennials having a digital experience from a brand is a hygiene factor. Sure, Swedes under 25 spend as much as three hours a day online, and yes they are constantly on their smartphone, and yes they use youtube and instagram etc. And yes that happens all around the world. It is a no-brainer to state your brand should go where the customer is going. But to truly stand out for digital and mobile natives you should provide more than just a digital service. And while every financial is living up to the new standards, focusing on the long term means they should focus more on what is driving consumer decisions. So let’s focus on these two generations and see which deep human drivers should inspire your (digital) experience.

Generation Z and their long term mindset. 
Gen Z is growing up in a world that feels uncertain. Academics like Steven Pinker and Hans Rosling already pointed out that, although facts show we live in the best times ever, people tend to think and feel much more negative about it. Noteworthy, we are of course not denying UN’s First Global Assessment Report on Biodiversity, with its alarming findings. And yes, we do support all these European students of Generation Z who have been marching for a better climate, even if they eat at McDonalds every now and then. In general people have a lack of trust. Being part of generation Z means that your parents tell you the world is a bad place, your teacher tells you algorithms and robots might destroy your chances and world leaders tell you that the world is coming to an end. While understanding this human context, it is evident that our research shows that Generation Z is much more realistic about today, and especially about the future. In other words, they are cautious. This is for example manifested in their drinking behavior. They drink less, and the reason they state is because it makes them less productive. That’s pretty serious for a teenager. And much less YOLO than Millennials. Generation Z follows, buys, recommends and likes sustainable and purposeful brands. Meaning that a bank has a huge insight to inspire its (digital) experience: cater to the realistic mindset of Generation-Z.

One great example comes from Colombia (this is the bonus material we promised our audience in Sweden), you can check the full experience here. Check it, lovey design! In Colombia climate change has recently gained more attention. To engage in a purposeful action, the bank decided to create a wonderful interactive experience. The objective was to enhance Colombian’s awareness for climate change and at the same time show they are serious about climate change. If targeting Generation Z, be sure to be more than just digital. They wonder, what are you doing to contribute to their future?

Millennials don’t want robots, they want your advisors (back).
We all know banks that fired their financial advisors because the future will be digital. Sure, transferring money, splitting bills, opening an account are convenience driven decisions that call for a speedy and seamless digital experience. But let’s consider mortgages, or investments. The ‘high-uncertainty’ decisions. These call for ‘slow’ offline experiences. That is not just for millennials, but especially for millennials? Why? Well, chances are high it is the first time they engage in getting a mortgage or start investing. That is a major decision. Relying on some algorithmic robo advice just doesn’t feel right. Besides, and this is where generational differences come in, Millennials have been raised in a ‘negotiation household’. Their world is one big stage of reality shows, online influencers, and talent programs on TV which have made millennials naturally engage in self-expression.

They want to negotiate to get stuff personalized. Now big-data can help a lot in doing so. But they have a stronger need for a financial adviser who truly listens to them and negotiates around their specific individual needs. An advisor that gives them the stage to share their dreams and ambitions, to tell about their #lifegoals and then offers a financial solution. The take-away here is that banks should not just focus on digital and AI, but to cater to millennials needs, or better, combine the two, like this brand is successfully doing https://forwardyou.com/en. Banks might call back their advisers. But please, leave the old fashion suit at home.

Over the last couple of years we have used our trendmodel to add context to a wide variety of challenges for several financial institutions, providing them with a unique perspective to get things right and stay relevant. Just to sum a few: we designed ‘guiding principles’ for several banks to (re)connect with their target groups, whether it’s gen z, millennials, gen x, babyboomers or all of them; successfully repositioned the nr. 1 financial comparison site of the Netherlands; developed the go-to-market strategy and proposition for a major insurer to enter the health market; inspired the communication directors of multiple European insurers to validate their marketing strategies and campaigns; and provided a few insurers with insights to manage the unmanageable; younger generations.

As such we consider ourselves quite an expert in the field of finance. What surprises us time and time again is they amount of money invested in idea creation, in designing digital experiences, without having the right insights. Technology is important. Mobile banking will continue to grow. But to stand out from fintechs and big techs, banks should focus more on human needs than technology.

Economist, 2019 https://www.economist.com/special-report/2019/05/02/young-people-and-their-phones-are-shaking-up-banking



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