NEW YORK--(BUSINESS WIRE)--Corporate Insight, the leading provider of competitive intelligence to the financial services industry, recently released a comprehensive study that analyzes the opportunities and challenges that financial services firms face in serving the Millennial generation. This study, The Millennial Shift: Financial Services and the Digital Generation, explores the attitudes and behaviors of “Generation Y” consumers and highlights the most effective tactics for marketing to and serving this important demographic group.
In the study, Corporate Insight offers a portrait of the unique financial needs of the 80 million member Millennial generation, using in-depth online and mobile user experience research, proprietary consumer survey data, and targeted interviews with Millennial subject matter experts in the financial services, marketing and technology fields. The study analyzes four major industry segments – banking/credit cards, brokerage/investing, insurance and retirement plan services – and provides actionable recommendations for firms operating in each segment, along with examples of best practices from across the industry.
“Generation Y will be a difficult market for the financial services industry to crack,” says James McGovern, Vice President of Consulting Services at Corporate Insight. “This is a diverse generation that’s struggling with serious financial problems like college debt and underemployment. Millennials put a high value on transparency and are wary of financial institutions, particularly when it comes to ambiguous fees or pricing. They also have very high expectations in terms of online and mobile services that many firms do not meet today.”
The study identifies key strategic changes that financial services firms will need to embrace if they want to succeed with the Millennial generation. Some highlights from the research include:
- Banks must evolve if they want real relationships with Millennials: Mobile platforms are becoming the primary means of interaction between consumers and banks, particularly Millennials. To satisfy young consumers, banks will need to ensure cross-channel consistency across all electronic platforms, providing the same fundamental experience to all users regardless of device. The bank branch experience will also need to evolve, shifting its focus from transactions to education/guidance.
- The investment industry faces an uphill battle with Generation Y: Millennials have limited investable assets and low tolerance for market risk. They feel unprepared to manage their finances, which explains their high interest in financial education and in getting help from financial experts. While they want guidance, they are skeptical of the fees that traditional advisors charge. This poses a threat to traditional models of investment advice, while at the same time creating opportunities for “hybrid” brokerage firms and investing start-ups that provide strong online services and low-cost guidance.
- Insurers must combat Millennials’ misconceptions about the cost of their products: Millennials are a financially conservative and risk-averse generation. In theory, this should give insurers a competitive advantage over other industry segments when it comes to penetrating this market. Unfortunately, Millennials significantly overestimate the cost of life insurance, while at the same time ignoring the benefits of renter’s insurance altogether. Insurers must overcome these misconceptions through education, advertising and more prominent and effective quote generation tools.
- Retirement plan providers must increase young participant engagement: Members of Generation Y understand that Social Security won’t be much of a resource to them when they retire, but current financial realities make it difficult for many of them to save for retirement now. To fight this self-defeating behavior, plan providers must engage young participants through education, online planning tools and even mobile platforms, an area where the industry has lagged. At the same time, providers must encourage plan sponsors to embrace features like auto escalation to improve the chances that young participants will meet their long-term financial goals.
“Millennials are struggling to reach financial maturity, but that doesn’t mean financial institutions can afford to ignore them,” says McGovern. “This is the largest generation in the history of the United States, one that could inherit tremendous wealth from their parents and that should begin to hit its economic stride in the next decade. Established financial services firms must invest now if they plan to capitalize on this opportunity.”
For more information, to receive a copy of the report, or to schedule an interview with the study’s authors, please contact:
Stephanie DiIorio, Intermarket Communications
Angela Tu, Intermarket Communications
About Corporate Insight
Corporate Insight provides competitive intelligence and user experience research to the nation’s leading financial institutions. For over 20 years, the firm has tracked technological developments in the financial services industry, identifying best practices in online banking and investing, online insurance, mobile finance, active trading platforms, social media and other emerging areas. Corporate Insight uses live accounts at all of the firms it researches, providing clients with unparalleled, unbiased intelligence on the competition. For additional information on Corporate Insight, please visit www.corporateinsight.com/about-us.