Going Digital: A Toothache for Banks?
What do banks and the dentist's have in common? Both are experiences we would usually rather forget… But for banks, that doesn't have to be the case. Discover how digital transformation is vital if banks wish to remain relevant to the Millennial generation.
The dentist’s chair has long been an image that triggers much fear and dread. Thoughts of noisy drills, needles and dental chisels can often make visiting the dentist one of the most apprehensive moments of our lives! However, a recently published study has revealed something that people say is even worse than a trip to the dentist! The three-year study of 10,000 individuals from the internet-savvy Millennial Generation (people born between the early 1980s and 2000s) found that a staggering 71% of people would rather visit the dentist than have to listen to a commercial offer from their bank.
And, in a further demonstration of the negative sentiment harboured towards traditional banks, 73% also say they would be more excited about a financial services offering from a technology company like Google, Apple or Amazon, than they would from their own current bank, with a further 33% going on to say they foresee a future where they won’t be needing the services of a bank at all.
The study asked 10,000 Millennials for their views on 73 different companies from across 15 different industries in order to calculate the Millennial Disruption Index (MDI) for the various business categories (as a percentage). A higher value indicated that an industry is more likely to suffer disruption compared to others. The MDI for the financial industry was revealed to be the highest amongst the 15 industries analysed, scoring above 90%.
The results make it clear that the financial services industry is struggling to engage and inspire the Millennial Generation, revealing some of the attitudes that could be the trigger for the beginning of significant change in this sector.
The impact of these results should not be underestimated by the banking industry, and should lead to some deep questions about the industry’s value chains, business models, operational processes, customer needs, communications and products.
The transition to the "digital age" is well underway, and the internet already provides much of the infrastructure on which customer interactions and operational and business processes take place. This transition has caused some significant disruptions and forced change across a wide range of businesses, from entertainment outlets selling music, books and films to health service providers, telecommunications and postal services, to name but a few.
With this wider context in mind, the time has come for the financial industry to face up to the brutal and swift digital transformations that have been happening across industries over the last few years and invest its abundant skills, experience and competencies in adapting to this new operational reality.
This is a challenge, of that there is no doubt. Traditionally, the finance industry is a conservative sector, based on values such as prudence, stability, trust, privacy and security. But the Millennial Generation are proving daily that these pillars are no longer an attractive enough proposition: they live in a new era where availability, immediacy, transparency, speed and simplicity are equally important and, increasingly, taken for granted.
It is therefore essential that the financial industry undertakes a serious examination of these trends and quickly adjusts in order to stay relevant to people’s lives in an increasingly competitive global market.
If the finance industry manages to embrace this challenge, it will continue to be an indispensable partner for generations to come. But, if the industry adopts an "ostrich policy" and closes its eyes to the demands of the Millennial Generation, then it will be at serious risk of losing out to the market’s increasing number of new players who are already adapting the way they do business to meet the demands of the digital age.