Financial Management & Digital Banking: A New Proposition (Part 3)
How do we differentiate ourselves from other competitors?
Previous chapter: Part 2: Millennials’ Needs & Demand
Trend in choosing financial service provider
When asked which platforms (or types of organisations) they trust with personal information, 76% of Millennials nominated banks. This suggests the historical reputation for security and privacy — earned by the industry over generations and embodied by the traditional financial providers — has translated into the digital age. Banks are seen as a safe haven for personal information. In a world of constant threats to privacy, such a reputation is a huge asset for banks (see figure 1).
When it comes to choosing a provider for financial services, trust factors are the most important driver of choice for Millennials. Trust to them means four things:
- trust that finances are secured (critical for 50%);
- trust to keep personal data secure (critical for 49%)
- confidence in the security and privacy of financial interactions (critical for 47%); and
- reputation of the provider for data security (43%)
Despite the importance of these factors to Millennials (irrespective of the country in which they live), less than half are satisfied with the performance of their main financial services provider, paving the way for alternatives (see figure 2).
Reasons for consideration of non-traditional providers
Technology inflates Millennials’ expectations. Millennials report that convenience, customisation and value rather than branding are the primary drivers for using non-traditional providers (see figure 14). Customisation and value are most important for affluent Millennials (see table 2).
However, there is comfort for traditional providers here. The demand for alternative providers is not being driven by some desire to radically change paradigms or to sweep away outdated models. Rather, it is a demand that traditional financial services institutions catch up with the rest of the Millennials’ world that they offer Millennials a better experience and better value equation.
While the consideration of alternative providers is alarming, the unmet needs are not insurmountable — particularly in light of the huge trust asset held by traditional institutions.
Competitors: Digital Banking
- Most of competitors communicate their product as modern, digital banking that simplifies customers’ financial needs by providing reliable transfer feature and an easy opening process for any kind of financial products (deposit accounts, mutual funds, bonds)
- They tend to emphasise on the variety of hard-sell promotions to appeal to millennials’ preference for consumptive lifestyle
- Some of them (Digibank and Jenius) also features financial management as one of their selling point (though this is not their main feature). Their financial management provides services such as spending tracking, 24x7 virtual assistant, easy transfer via chat.
Next Chapter: Part 4: Product Market Fit Strategy