A US global consumer trends analyst has suggested the Australian financial services sector increase its focus on innovation and the digital generation, claiming “Gen Y have zero interest in spending their time with financial institutions”.
In the lead-up to the national ThoughtWorks strategy and technology roundtables, to be held next week, global consumer trends analyst Babs Ryan said the problem with Australian financial services providers is that “[they] haven’t had to differentiate much or change frequently and rapidly to keep customers”.
“That time of comfort is over as the digital generation leaves university and starts families,” Ms Ryan said.
“A paltry 5 per cent of Australia’s Gen Y have a financial planner, 84 per cent do not think they need one and a Nielsen global study of developed nations shows Australians are most self-dependent when making financial decisions,” software provider ThoughtWorks said in a statement to Risk Adviser’s sister publication ifa.
Ms Ryan said the challenge for traditional banks and financial services providers is huge, adding that fintech players such as GoFundMe, investment app Acorn and P2P lender RateSetter are already threatening market share.
“In an environment of persistently low interest rates and a lack of global growth, Millennials won’t be won over on price point but by how effortless it is to interact with a financial services provider and the lifestyle experiences they can provide access to,” Ms Ryan said.
“Financial institutions need to stop believing that customers must go to them. It’s time to reverse the distribution model and go to users in a contextual way that uniquely addresses their interests and passions.
“It’s a complete shift in mindset. For example, a 30-year-old on the birth of their first child rarely wants to buy life insurance. They will, however, need help getting a car seat safely attached in their car, for example, so see if you can tap into that. Or help them connect with paediatricians, babysitters, schools. Experiences matter more than things to this generation.”
Ms Ryan said time is of the essence.
“Millennials won’t wait nine months for new mobile app features or another financial education tool. The trick is to be unique, build small, test quick, learn from live feedback, and pivot.”