The Financial Brand Unveils Andrea Simon’s Article “What Gen-X And Gen-Y Really Think About Banks”

Andrea-SimonWhat Gen-X And Gen-Y Really Think About Banks,” a groundbreaking article by Andrea Simon, Ph.D., principal and founder of Simon Associates Management Consultants (SAMC), was published today by The Financial Brand. A business anthropologist, Dr. Simon specializes in helping companies that want or need to change. Excerpts from the article are included below.

“What do today’s consumers really want from their financial institution? More technology? More mobile apps? More integrated asset management?,” she asks in the article. Banks and credit unions would love to know, she says, as they scramble around looking for ways to deepen relationships with Gen-X/Y.

Consumers Want All the Sophistication of Big Banks and Their Cool Systems, With All the Warmth and Familiarity of a Local Credit Union

Younger adults are beginning to accrue wealth, either inheriting it from their parents or grandparents, or building their own portfolios. And with today’s new technology channels, these generations that have grown up digital will certainly leverage technology to help with the crucial financial decisions now facing them.

Simon Associates recently conducted ethnographic research with both consumers and banking executives. We found that consumers don’t necessarily want high tech solutions in isolation; just as important, they want support, advice, and more knowledgeable people speaking to them then they currently experience in their banking interactions.

Meanwhile, our colleague Carmen Effron from C.F. Effron worked with bankers at various wealth management divisions. They all assumed that the “high tech” without the “touch” would work great.

Based on the research we recently finished, this is a dangerous path to follow. If financial institutions do not understand how to attract and create the right teams internally, as well as the right technology solutions, Gen-X/Y consumers will take their business to institutions that do. Case in point: This is how banks lost a majority of the baby boomers’ wealth to brokers.

Build Your Own Dream Bank

To better understand how Gen-X and Gen-Y think about their core financial concerns, we worked closely with a dozen middle-income consumers to help us create an imaginary future bank that would best serve them as they begin to accumulate wealth. Everyone in the group had investable liquid assets greater than $500,000.

In a separate session, in contrast, we asked 17 financial executives how they would need to configure an imaginary institution by 2020 to successfully attract emerging Gen-X and Gen-Y investors.

What Did Gen-X and Gen-Y Want?

The theme that kept emerging was that banking is still a people-to-people business, and what was needed most was someone to guide consumers through their life transitions — from earning money to saving it, investing it, inheriting it and enjoying it. They crave the peace of mind that comes when someone they trust is guiding them and helping them watch over their finances.

As they each spoke about their “Better Bank,” it became clear that the challenges of managing money for Gen-X/Y are not getting any easier. This group wants:

  • A way to get back to the kind of bank where they felt they “belonged,” a place that had the knowledge and advice they were looking for.
  • A place that could educate them on how to best protect their assets and use them wisely.
  • A guide that could help them design a sound budget and a workable plan for an uncertain future.

Most bankers would say they do this now. However, consumers don’t agree. In their own words, consumers said they wanted the following:

  • “All the sophistication of the big banks and their cool systems, with all the warmth and familiarity of the local credit union.”
  • “Smart ways to manage the money I am inheriting from my parents.”
  • “A place you can trust.”

It was all about feeling appreciated, not being treated as a number or an account. Conversely, what did bank executives think Gen-X/Y wanted? In bankers’ own words:

  • “Integrated technology for all bank and wealth statements, bill paying, deposits, stock and mutual funds transactions; both self-directed and advised.” For this group, integration meant interconnecting their consumers’ mobile, tablet and Internet devices.
  • Ability to “play” financial games and use social networks to work with peers to compare financial decisions and to give rewards.
  • Creation of an on-line financial community with social media being the substitute for old- fashioned word-of-mouth.

Clearly, there is a gap between what Gen-X/Y say they want and what bankers are focusing on.

How then can banks capture the hearts and wallets of today’s Gen-X and Gen-Y consumers?

If banks are going to capture the wealth that Gen-X and Gen-Y will accumulate in the very near future, they need to figure out how to engage them in very personal ways — ways that bankers maybe thought were no longer relevant.

To read Andrea Simon’s article in its entirety, click here.