Marketing to the Millennial India- Perspectives and Challenges for Bankers
INTRODUCTION
Gen-Y or Next-Gen or “ Millennials” as they are popularly known, are the generation born between early 1980’s and early 2000’s. This generation will be the highest-earning generation in ten years and banks need to develop strategies for appealing to these digital natives. To market their products/ services to this generation, it is vital to understand the way they live and what marketing concepts do they accept and what they consider as important. This is in fact the first generation to grow up completely online and as a result, the marketing mix needed to target them have to be evolved. The better we understand the Millennials and their generational trends, the quicker we can position our brand for future success as the next generation beyond them will, in all probability, have similar tendencies. Gen-Y is so different from their predecessors that banks must understand their needs, if they want them as their customers. In other words, banks need to use an approach distinctly different from anything that they have been accustomed to in the past.
CHARACTERISTICS
Gen-Y are quite different in their values and characteristics from their parents of the Baby Boomers generation. They have a strong trust in their social network and are a peer-oriented population. Due to the multiplicity of opportunities available to them Gen-Yers are mobile, unlike their brand-loyal predecessors. Their choices are informed and motivated by their own experience and that of their peers. They are highly educated, skilled and far more entrepreneurial than earlier generations. This generation is having a high propensity to spend than the earlier ones. While the earlier generations believed in ‘Save now and spend later’,this generation holds the view ‘ Spend now and Pay later’.
Gen-Y believes in spending and fancies credit cards and loans. This makes them an important segment for banks to explore. Gen-Y continue to look for credit and debit card schemes and loans that are flexible and suits their needs. Saving is not a high priority for Gen-Y as they believe in “living for the day”. This segment is expected to have a higher disposable income than their predecessors. Banks need to begin to engage with them now to reap benefits later. Millennials increasing spending power and influence on older generation’s purchase decisions make Millennials a prime target for building brand loyalty
Another important aspect of Gen-Y is that they are demanding and want the institutions they deal with to have the flexibility to fulfill their multiple needs. “Gen-Y knows they have options. If not satisfied with their treatment, they will go to a competitor”, says Peter Sheahan, author of many best sellers. They use Internet and mobile technologies in their daily lives and demand that these be used for banking as well.
Gen-Y has grown up using two crucial elements in their daily lives – mobile and social media. While the Internet has become an integral part of their lives, one of the most remarkable phenomenon over the past few years has been the growth of the mobile and wireless market.
The following eight Attributes the net generation exhibit as consumers will redefine the way organizations approach marketing targeted at them.
Table-1 The net generation as consumers
| Sl. No. | Attributes | What does it indicate? |
| 1 | Freedom | Give Me Choice and the More the Better |
| 2 | Customization | Make it My Own |
| 3 | Scrutiny | I Will Check It Out Before I Go to the Store |
| 4. | Integrity | Does This Company Deserve My Money? |
| 5 | Collaboration | Let Me Help You Make Your Product or Service Better |
| 6 | Entertainment | Make it Fun |
| 7. | Speed | Serve Me Now |
| 8. | Innovation | Give Me The Latest |
Source: Adapted from Don Tapscott , Grown Up Digital: How the net generation is changing your World- Tata McGraw –Hill Edition 2009
The rise of younger generations will have a profound impact on retail banking, providing the next opportunity for revenue growth. The bank which best addresses the above concerns of the net generation will be winning in the battle for the mind space of these emerging affluent genre of customers. In the words of Mrs. Arundhathi Bhattacharya, chairperson of India’s biggest Commercial Bank “The young Generation is not going to be bound by having to come to a branch in order to do a job. They would like to do it ( transaction) in the bus ,in the train, in the office, at home, wherever on the move”. This highlights the need for bringing much of their products and services under the digital platform. To be successful with younger customers, a new approach to retail banking is required. Younger customers want banks to address their needs using the tools they and their peers have adopted, including mobile devices, video, and social networking—and they are willing to switch to banks that embrace these technologies.
CHALLENGES
Gen-Y are quite different in their values and characteristics from their parents of the Baby Boomers generation. They have a strong trust in their social network and are a peer-oriented population. Due to the multiplicity of opportunities available to them Gen-Yers are mobile, unlike their brand-loyal predecessors. Their choices are informed and motivated by their own experience and that of their peers. They are highly educated, skilled and far more entrepreneurial than earlier generations.
Banks need to begin to engage with them now to reap benefits later. Their increasing spending power and influence on older generation’s purchase decisions make Millennials a prime target for building brand loyalty
STRATEGIES
Generation-Y uses technology to connect with the world around them in more diverse ways and in greater numbers than any other age group. So any marketer who is serious about reaching to them, should use the communication channels of their choice. Social media is in the top of the agenda for this technology immersed generation and anyone who wants to get the attention for their brand should immediately make their social media presence ensured without any loss of time. We have to be where our customers are. Consider the places they go for information and the way they behave. They are logging into their face book accounts 3-10 times each day, sending instant messages to friends and uploading their videos to You tube. Many businesses are failing today because they are not listening to the conversations that the Millennials are having about their products or their company. Create accounts in Face Book, Twitter and launch a You tube channel and go for a two way dialogue with the audience. Give them an opportunity to talk to the bank. whatever be the media used, focus on consistent messaging. Invest time in reading what they have to tell and get to engage in an online conversation, and your return will be the knowledge of how to market to them.
Today’s youth love experiences. Promotional stunts, product placements and rollouts in a strategically placed venue attract the young urban buyer. They thrive on word-of- mouth marketing, and street marketing is one of the best ways to create buzz for the young consumer. The rise of younger generations will have a profound impact on retail banking, providing the next big opportunity for revenue growth. India has favorable demographics in terms of what is being seen as India’s ‘demographic dividend’. India is home to the world’s largest youth population. More than 50% of India’s current population is below the age of 25 and over 65% below the age of 35. With the mean age of the population at 27, India is one of the youngest Nations in the world.
Next decade of Indian banking will be won by those who can capture the Next-gen consumers. We need to prepare ourselves for meeting the banking needs of these financial novices. The number of Gen-Y customers coming to the banking sector in the next 5-10 years is estimated to be around 350 Million. Millennial customers are set to dominate the financial mainstream and we have to establish strong relationship with them. Banks future growth will depend on their ability to attract and retain customers from this generation.
The current educational loan borrowers are the captive clients of this generation and banks have to launch a targeted campaign for continuous engagement with them. There is a dire need to deepen the relationship with this target group so that they can transform the relationship into cross selling and up-selling opportunities. Every year large number of students turn into earning members/HNIs. Students because of their young age are likely to have a long standing relationship with the bank. At present, beyond giving the loans for their studies banks are not taking this group seriously. No dedicated engagement plans are in place and thus the whereabouts of most of the students are not available once they complete their studies. This underlines the need for a dedicated engagement strategy for their educational loan borrowers, which in turn make them loyal to the bank. Once they command their loyalty, apart from seeking referrals banks can sell their other products and services to them as per their requirement during various life cycle stages.
Frequenting malls, multiplexes, etc. is in their regular routine. Creating e-lounges and e-kiosks in these locations will enable banks to project a younger look which these generation will be able to connect with. Apart from the self service advantage, it will improve the visibility as well as a base for launching various street marketing activities targeted at the young generation.
Generation Y is incredibly conscious about social causes including the environment, human and animal rights, and world hunger. They will be more than happy to do business with an organization that has aligned with a cause that creates an emotional connection with them.
CONCLUSION
Gen-Y customers are defining new trends in banking. They demand banks to focus on their needs and behavior pattern to engage with them. The ability of the bank to mop up sizeable amount of business of these generation depends on the willingness of the bank to provide quality customer service and right solutions to their needs. Products need to be designed keeping in mind their traits, attitudes and lifestyle and should enable personalization /customization
In short, to earn the loyalty of this generation, banks have to:
- Pay attention to them and their needs and come out with products and services that cater to their exact needs
- Identifying the triggers and events in their life stages through constant engagement with them and offering them products and services at every stage in life cycle that will help them achieve their financial goals.
- Allow their technology preferences to dictate the channels in which banks will communicate with them and keep them connected with us.
So the key to focus on these customers is to promote the right types of services in the early years of the Gen-Y relationship. Online and mobile banking present the best opportunities for wooing these techno driven generation . As Gen-Yers grow into their huge financial potential, they will be into a relationship with the bank and they will be able to offer their products and services to them at the next life stage.
To generate significant revenue in the future, banks will have to reach out to the population that love spending, prefer credit and loans and are projected to be at peak of their earnings in 10 years from now – the Gen-Y. Winning Gen-Yers loyalty will ensure a mutually beneficial and committed relationship for both the bank and the customer.
I K Venugopalan
Chief Manager (Faculty)
Union Bank of India Staff College
Kalkere, Bengaluru.
About the Author
Author is a Senior Faculty in the Union Bank of India Staff College at Bangalore. He has got about 27years of experience in various facets of banking. He is a Post graduate in Fishery Science and his other academic qualifications include a MBA in Marketing , CAIIB and various other Diplomas and Certifications from Indian Institute of Banking and Finance.