For millennials, banking technology should make money management easy, not to mention socially and financially rewarding. In order to convert buzz to customer retention, banks need to capitalize on millennials’ instinct for social consciousness.
Banks sit at the nexus of the millennial paradox: millennials lack expendable income, yet collectively, they have $200 billion in annual purchasing power. This spells a great opportunity for the financial sector yet for various reasons, one in five millennials say they’ll never open a bank account and are twice as likely to switch banks at least once in a given year. Meanwhile, investors are counting on technology to save the industry, but so far, the digitization of banking has been skin deep. What millennials really want is socially conscious banking system.
According to Viacom’s Millennial Disruption Index, all four of the country’s leading banks are on the list of millennials’ least loved brands. This creates both a challenge and an opportunity for companies in the financial space. Banking alternatives like Simple and Moven are attempting to fill the millennial trust gap with functionalities that make financial responsibility more manageable such as automatic budgeting or credit limit alerts. Meanwhile, traditional banks are closing in with personal experience-driven mobile capabilities (as seen in TD Bank’s ‘Bank Human’ campaign). Banks, it seems, are relying on technology to humanize and simplify the unwieldy world of finance in the hopes of long-term commitment.
But it’s not enough.
When your strategy relies solely on technological bells and whistles, someone somewhere can always out-innovate you. Digitization and social banking should mean more than swiping left and right or even real-time person-to-person connectivity. Millennials are socially conscious individuals. Seven in 10 consider themselves social activists, and three in four expect businesses to create value for society. To retain millennial loyalty, banks should provide financial and social value. This means looking at banking not just as a tool to manage finances, but also as a conduit for social good.
Technology has the ability to empower banking’s force for social value creation. Instead of personal rewards like cashback or points, banks could link customer transactions to a socially conscious reward. That’s the idea behind GlobeOne’s unique SocialBoost™ program; the innovative, community-based model redirects interest from networks of socially-minded banking partners into the accounts of members around the world – a potentially significant second revenue stream for many. This means every time a line of credit is used, it delivers additional income for those who need it. For a small business owner, this accumulation could ultimately translate to work supplies or a microfinance loan. For banks, this creates an entirely new layer in the financial ecosystem.
Think of it as the banking sector’s butterfly effect: when a millennial uses their credit facility, somewhere in the world, a small business owner or an entrepreneur spreads their wings.
It takes more than technology to retain customer loyalty among millennials; it takes social consciousness. Socially conscious banking challenges the notion that managing money in a bank is all about investing in yourself. More importantly, socially conscious banking is a community of banks and people who believe in giving back, impacting the lives of others who need it most. For an industry struggling to find its footing with the millennial generation, this concept is revolutionary.