The Cisco IBSG study surveyed 1,055 US customers aged 18 and older. The survey’s 75 questions focused on the different generations Gen Y (customers born roughly between 1980 and 1992), Gen X (people born between 1960 and 1979), boomers/ silvers (those born before 1960) to achieve an accurate depiction of generational preferences and trends in retail financial services.
The study revealed that young customers are embracing new communications technologies such as video and are adopting online behaviors at an astonishing rate. Survey results indicated the rise of Gen Y’s profound impact on retail banking, providing the next opportunity for substantial revenue growth. Debt reduction, expense management and financial education are key priorities for younger customers.
According to the study, Gen Y customers are generally satisfied with their banks, however, 26% would consider switching if they found a better value. To capitalize on this opportunity, Cisco IBSG recommended that banks create an integrated value proposition to meet the stated needs of Gen Y to help manage their finances, debt and spending by offering professional advice in an automated fashion.
To address their needs banks must build or acquire personal financial management (PFM) capabilities to help customers gain control, improve consumer intimacy enabled by high-definition video capabilities and develop a financial services online community.
Jorgen Ericsson, global lead of Cisco IBSG, said: “Retail banks have a great opportunity to capture first-mover advantages. Gen Y wants financial advice from trusted sources and will turn to the banks that offer these services in the most compelling and tailored way. Banks that cater to the needs of Gen Y have the potential for significant revenue growth.”
Philip Farah, director of Cisco IBSG, said: “The recent economic crisis has accelerated the rise of Gen Y as a major segment for the US economy while the decline of boomers’ influence is happening faster than anticipated. This will have a profound impact on retail banking, as banks’ current value propositions are mainly designed around the needs of older generations. Banks now have a window of opportunity to embrace Gen Y through the appropriate utilization of technology and a shift in current business approaches.”
