On Monday (2 Sep), Simon-Kucher & Partners, a global strategy and marketing consultancy firm, released the findings from its global customer journey study on the banking behaviour of persons born between 1981 and 1996 – who are identified as millennials – which shows that private banks are not doing enough to attract this lucrative customer base.
The study, which was conducted among high-net-worth millennials worldwide, revealed that 60% of millennials are not happy with their current wealth management services. Meanwhile, 59% of milennials in Singapore expressed the similar sentiments.
The study hinted that the results correspond with the millennials’ lack of loyalty to a single wealth management provider, noting that on a global average, each millennial has more than three private banking relationships. The average recorded in Singapore is three.
“Especially in today’s turbulent market environment, banks need to rethink their offerings to satisfy their future customers,” said Silvio Struebi, Partner and head of banking operations for the APAC region at Simon-Kucher.
“The future survival of private banks will depend on whether they’re able to master the art of winning millennials and keep them as customers,” noted Desi Soetanto, Consultant at Simon-Kucher, who spearheaded the study.
Soetanto went to say that “private banks need to get ahold of this next generation before it’s too late” upon citing from the study that millennials only give banks one chance to impress them.
Millennials are the future – how can banks be future ready to serve them?
The study pointed out that a vast improvement in the current private bank offering is required to attract millennials. Otherwise, this group of customers will shift their wealth to alternative solutions.
The study also highlighted that three out of five participants are not satisfied with traditional wealth managers, with 80% of them considering or already using fintechs to manage their money. In fact, these millennials are planning to allocate 56% of their investable assets into fintechs; hence, private banks can expect to lose a substantial customer group.
After all, Asia is engaging in its largest intergenerational wealth transfer in history, which means that by 2046, the baby-boomer generation will have passed on 30 trillion US dollars to millennials. What’s more, by 2020, millennials will make up 50% of the total global workforce, which means they will be driving the new generation of wealth creation.
Millennials value quality and brand, not necessarily the cheapest price.
“To capture the attention of this high-net-worth generation, private banks have to significantly upgrade their customer experience,” stressed Struebi.
The study later revealed that millennials highly value quality and brand. Thus, banks will need to learn from brands what millennials love, such as Apple or Netflix, by adopting certain practices that these innovative companies are providing. According to Soetanto, in order to successfully upsell and retain clients’ loyalty, private banks need to add the “WOW” factors into the customer experience.
Soetanto has identified a number of extraordinary WOW factors that private banks can offer to hook millennials, including 24/7 access, the option to select their preferred relationship manager, customized recommendations, fee transparency, and comprehensive and exclusive offerings. However, across the board recently, banks are performing rather poorly in addressing these factors.
Surprisingly, price was consistently ranked as the least important factor by millennials when selecting private banking services.
“To win in the race of attracting and retaining customers, private banks need to revamp their customer experience, which includes changing the relationship managers’ sales approach and accelerate the path towards digitalisation to provide customers with tailor-made offerings,” concluded Struebi and Soetanto.