Generation Y: How To Connect with the Consumers Of Tomorrow
Consumer habits for young adults born between the early 1980s and mid-1900s are so different from their predecessors that they are now classified into their own generation: Generation Y. Commonly called Gen Y, this group of young adults is more family-focused and financially conscious than their parents. With this demographic the financial industry has seen a decline in the use of credit cards, checks, and traditional banking but an increase in debit cards and online payment services. Financial institutions (FIs) have been finding innovative ways to deal with this shift in consumer behavior and increase their customer base in the process.
There are a few different methods that FIs have been using for customer acquisition for this underbanked demographic; they are responding to the increased use of technology and an on-the-go lifestyle. Banking applications have been implemented that work through mobile phones, the internet, and prepaid cards in addition to all of the traditional methods. Not only have new channels been implemented, they have the ability to be linked to the other channels and provide a seamless transition. For example, banks now have credit applications that can be started online and finished via mobile phone later in the day.
Banking aside, there have also been notable shifts in behavior; this generation is experiencing higher unemployment rates, higher utilization of social media, and an increased inclination to shy away from behaviors and accomplishments that would put them in the category of ‘adult'. Gen Y relies more on family and friend for financial advice, live at home longer, and there is also a delay of wanting to enter adulthood. These are all significant as they influence the banking and financial actions of young adults.
Financial institutions are finding new ways to adapt to this behavior and the propensity of this generation to use technology. Institutions are adopting online banking, banking apps for smartphones, and other processes that allow consumers to manage and originate accounts without ever visiting a branch. While the traditional methods of banking are still relevant and highly utilized, other methods are starting to gain traction in the industry.
Not only do the methods of banking have to be examined, the kinds of accounts available have to be adapted. Gen Y has grown up in a time of economic turmoil and is less likely to use lines of credit and more likely to use prepaid cards for their purchases. Because Gen Y is less likely to use lines of credit, which have traditionally been very profitable for FIs, institutions now have to find ways to make other kinds of accounts profitable. This can be done through improving the customer experience, adding variety to kinds of accounts and products offered, and making the experience more catered to the consumer in every aspect so the consumer will be willing to pay for it.
Financial institutions are finding ways to adapt to the current environment. They are maintaining their traditional frameworks and channels, but they are also offering additional services to help capture some of the younger market. The banking processes are becoming more convenient, can happen faster, and can be accessed at any time. By offering this flexibility, financial institutions are hoping to capture Gen Y consumers.
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