The Cisco Internet Business Solutions Group (IBSG), the company’s global consultancy, recently conducted a study with 1055 respondents to explore consumers’ evolving financial priorities, service expectations from banks, and interaction preferences. While consumers have faced significant financial strains in view of a deteriorating jobs outlook and dwindling asset values, they have at the same time embraced new technologies, such as video, and adopted online behaviors at an astonishing rate. These trends are particularly true for Gen Y, also known as “Millennials” and Gen X consumers.
The Top 10 findings follow:
1. Top concerns of Gen Y: Debt reduction, expense management, and financial education are key priorities for younger consumers in post-crisis era.
2. Post-crisis, Gen Y need help managing their finances: More than one-third of Gen Y and Gen X consumers believe they need assistance managing their financial affairs, while less than one-fifth of boomers and silvers
3. Gen Y receive financial advice from friends and family, not just banks: Gen Y consumers value the advice of friends and family four times more than boomers.
4. However Gen Y truly value advice from professional advisors: Over a third of Gen Y consider professional advisors as their preferred channel for receiving advice, ahead of peers, personal research or automated tools.
5. Banks are well-positioned: 85 percent of Gen Y are satisfied or very satisfied with their current financial services provider.
6. Gen Y are active users of new technology: Gen Y and Gen X have exhibited substantially higher adoption of new online tools and channels relevant to the provision of financial advice. Over 50 percent own a webcam compared to less than a third of the boomers, 20 percent of Gen Y visit YouTube multiple times a day (5 times more than older generations) and 97 percent of Gen Y use mobile phones
7. Gen Y are interested in advice in an automated fashion: 40 percent of Gen Y consumers use Personal Finance Management (PFM) tools (primarily those offered by their banks) to manage expenses, reduce debt, and maximize long-term savings.
8. Video interaction is compelling: Nearly 40 percent of Gen Y consumers are interested in interacting with an advisor via video as compared to seventeen for boomers.
9. A virtual financial services community is important: Gen Y consumers are four times as likely as boomers and six times more likely as silvers to have posted a question about financial matters to a blog or online forum.
10. What’s at stake: 26 percent of Gen Y are generally satisfied with their current bank, however they would be willing to switch banks compared to 13 percent of boomers.
The young consumer segment is a new and very important growth opportunity for the proactive bank. What do you think, what is most important to you when it comes to choosing a bank? Do you prefer online banking to brick-and-mortar banking? Do you agree with these findings?
Cisco IBSG Overview
Cisco Internet Business Solutions Group (IBSG), the company’s global consultancy, helps CXOs from the world’s largest public and private organizations solve critical business challenges. By connecting strategy, process, and technology, Cisco IBSG industry experts enable customers to turn visionary ideas into value.
Philip Farah, Director, Financial Services Practice, Internet Business Solutions Group
Farah brings a blend of Financial Services industry, management consulting and IT strategy experience to IBSG. Prior to joining Cisco, he headed an analytics function at Capital One Financial focused on the development of new products and strategies. Prior to Capital One, he was a consultant with McKinsey and Co where he served leading Financial Services companies on global strategy engagements with a focus on the retail banking and insurance verticals. Earlier in his career, he managed the IT infrastructure department of a retail bank.
Jorgen Ericsson, Senior Director, European Markets Lead, Cisco Internet Business Solutions Group
Jorgen brings a mix of solid management consulting and CEO-level experience to Cisco, including six years of international experience at McKinsey & Company in Stockholm, where he developed the E-business Practice and was one of the key drivers of the TIME Practice in Europe. As CEO of the publicly traded IT / e-business company Adera (650 employees in seven countries), Jorgen led the successful restructuring of the organization. Jorgen was also responsible for the Nordic Communications & High Tech Practice at A.T. Kearney, which represented 50 percent of that firm’s revenues in the Nordic countries.