Financial Institutions are Banking on Data to Reach Tomorrow’s Hyper-Connected Customers

 
 

The pace of digital transformation continues to increase, and for many industries the mantra has been “adapt or die” in the face of disruptive technologies over the past few years.

First it was adapt or die for stationary retail, when online shopping platforms disrupted price structures and consumer expectations. Next it was print media and the music industry. Now the hotel business and taxi segment are feeling the burn of digital disruption, courtesy of Airbnb and Uber. And leading economic analysts already know which industry will be next.

The verdict: Financial institutions are next in line for large-scale digital disruption.

According to a recent McKinsey and Company study, only about 10% of retail-banking revenue today is considered “digitally disrupted,” meaning revenue captured via online or mobile channels. But by 2018, disrupted revenue is forecast to be around 50% or more for banks in many major markets, including the UK, Scandinavia, and Western Europe.   

Adapt or die: Banks under pressure

In other words: Revenue streams and financial transactions are increasingly moving to digital channels. This pushes traditional banks in the same arena as Web-native disrupters like crowd-funding platforms (Kickstarter), digital payment systems (PayPal), and peer-to-peer credit lending (LendingClub). Not to forget alternative peer-to-peer currencies such as Bitcoin, a.k.a. the pure personification of evil – at least to the time-honored institution of traditional banks.

Speaking of time-honored institutions: They’re not exactly high priorities for tomorrow’s potential bank customers, the digital-native generations Y and Z (known as “Millennials” and “iGeneration”, respectively). In the long run, adapting to their needs will be crucial for banks, and far more challenging than it may sound.

With their radically different attitudes towards material wealth, property ownership, and financial investing, these generations bring a new set of demands to the bank counter, all the way to questioning whether or not they even need a bank in their life.

 

According to Microsoft’s “Millennials” study with KRC Research, 22% of Millennials said that they’ll never open a bank account. So it’s no surprise that, under rising pressure to innovate, banks are investing in building relationships with young generations – before they cash out forever.

 

 

What do young consumers really want from their bank?

It’s not all doom and gloom for banks, though: 64% of all Millennials place importance on developing a relationship with their banks or financial institutions, says a cross-generational study by Independent Community Bankers of America (ICBA). And the earlier this relationship starts, the better.

Because as it turns out, there are some things Millennials can still learn from their partner banks: 70% of Millennials in the ICBA study admitted to needing more knowledge and skills when it comes to banking. And 36% of Millennials are considering starting their own business or – if they already did – starting another one.

For innovative banks looking to win the Millennials’ vote of confidence, these findings translate directly into to-do items: Financial counselling? Check. Start-up financing support? Check. And what about mobile banking solutions, requested by 74% of Millennials, and cashless payment systems? Check and check. 

 

Here’s how two forward-thinking banks are connecting to young clients with data-driven marketing, powered by Selligent’s omnichannel customer engagement platform:

Showcase: The smart money is on these innovative banks

 

1. ING: Creating real world relationships, based on customer data

Before joining forces with Selligent, Amsterdam-based global financial institution ING already made a major commitment to young generations: The financial powerhouse with 47 million customers in 40 countries was the first bank to offer free accounts to young people.

But in order to inspire more young people to create free bank accounts, ING wanted to be present – and offer additional value – in places where young people spend time. So for a summer initiative in Belgium, ING set its sights on the country’s highly popular Summer Music Festivals, asking: What do festival-goers need for the perfect experience?

Data from an online survey drafted and executed in Selligent revealed: Young festival attendees were most concerned with storing their personal belongings, charging their mobile phones, and finding free restrooms, as well as free food and tickets for events.

Using this data in the real world, ING created a fully-branded oasis of free services in the midst of a very expensive music festival: free use of lockers, phone chargers, rest rooms, as well as drink and food vouchers were available to registered visitors. Over 30,000 youngsters enjoyed the free services, related online initiatives reached 66,000 viewers, and ING’s likeability increased by over 20%, while brand consideration climbed by 30%.

Throughout the innovative campaign, Selligent’s customizable form capability enabled ING to host surveys and registration forms capturing a wide array of data. Following the event, all data captured was automatically associated to customer profiles available for targeted marketing initiatives to further build the connection with future bank customers.

 

2. FIDOR Bank AG: Peer-to-peer banking, the professional way

In Germany, Selligent powers communication for one of the most innovative banking players on the European financial services scene: Fidor Bank is the first bank to connect its customers via peer-to-peer banking.

Founded in 2009, the bank is committed to introducing the social connectivity of Web 2.0 platforms to the financial services sector. The main focus is on “always-on”, digitally connected consumers, especially the Millennial generation born between the years 1981 and 2000.

Well aware that traditional banks are losing trust among younger generations, Fidor Bank is approaching its growing community of over 280,000 users with personalized service offerings, and segmented communications.

Registered members of the Fidor Community are privy to services such as free checking accounts, mobile phone payments, and smartphone banking apps. They can seamlessly connect their accounts to support projects via crowd funding and crowd investing, while the Community-Karma score measures positive interactions within the community.

And since all these personal and peer-to-peer transactions are happening online through Fidor Bank’s owned platform, the financial services provider is able to use the customers’ data to provide relevant and targeted communications. These include alerts for interesting investment opportunities, crowd-funded projects by like-minded users, or the latest trading insight from Fidor Bank’s own platform brokertainment.de.

So here’s the bottom line: Instead of being backed into a corner by digital disruption, banks like ING – already the Winner of this year’s Selligent Award in the Marketing Innovation category – and Fidor Bank are building profitable relationships with tomorrow’s customers through data-driven marketing and Big Data Banking.    

 

 

Looking for more information on how to utilize data-driven marketing to reach young consumers? Download our free Whitepaper “Z Marks The Spot: Get Your Brand Ready For Generation Z” by clicking here.

 

 

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