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Bank to the Future

A global study into 16 to 25 year olds and everyday banking looking at how banks can stay relevant for young people in the face of disruption in the financial services industry.

Bank to the Future

  1. 1. 01. EXECUTIVE SUMMARY 02. MEET THE iGEN 03. BANKING TOUCHPOINTS 04. PAIN POINTS 05. THE BANK OF THE FUTURE 04 12 28 43 58
  2. 2. FOREWORD BY REEVOO BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 3 "What banks need to do is change the general perception that their job is to screw people over and waste their time.” So said one of our panellists, aged 22, in October 2016. The reality is that in today’s connected world, your brand and business is defined, not by a marketing team or agency, but by how people experience it. Given the general sentiment towards banking amongst iGEN (16-25s), a seminal consumer group, is of “meh”, suspicion and verging on animosity, traditional everyday banking faces a significant challenge. There are two concepts in that last statement to address. First of all, the idea that iGEN are a seminal consumer group. Not the traditional view of this demographic segment amongst the traditional institutions, who largely view young people as low margin and too far off wealth to be worth the bother. Well according to this report, this is far from the truth, with the 16-25 age group significantly over-indexing in intention to buy key financial service products in the next six months: Foreign exchange, short-term loans and most critically, premium current accounts. But aside from the immediate financial opportunity, this consumer group is the customer of the future and by understanding their attitudes, behaviours and pain points, banks (both new-gen and traditional) have the best possible lens on where the sector is likely to head. If, that is, human- centred design is taken as a given for delivering success in a consumer-centric world. Secondly, the idea that traditional banking is facing a significant challenge. Unlike the last, this statement is not likely to be widely disputed. As investment in FinTech products has exploded over the last 3-years, we know there are young upstarts waiting in the wings to meet the needs of new and underserved consumer groups. Not just the unbanked, but also those who demonstrate a restlessness with the way traditional institutions fail to meet their needs and expectations. This report provides invaluable pointers to anyone who dares to take note, of the challenges from consumers that are not just around the corner, but here and very real today. At Reevoo, we help some of the world’s smartest companies talk, listen to and learn from their customers with reviews, feedback and user- generated content. It is a natural extension of our commitment to helping our financial services clients get closer to their customer than they ever thought possible, to seek out the best market intelligence and data-driven insight on a significant scale; to help us all understand our audience better. To that end, this year we have partnered with Good Rebels to deliver this latest research project focused entirely on the next generation of everyday banking consumers. After reading this report, we think you’ll agree that it’s time for a significant reimagining of everyday banking. We hope this report will provide some provocative thought starters on where your business should be heading.
  3. 3. 01. EXEC SUMMARY ‘Meh’, suspicion, animosity and what banks should do about it.
  4. 4. EXECUTIVE SUMMARY MILLENNIALS SCHMILLENNIALS BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 5 iGEN are like the forgotten generation. Sandwiched uncomfortably between the older Millennnials who have come of age, stolen the limelight and are worth something to traditional banks; and generation Z who are still in nappies or primary school. Our study demonstrates that 16-25s are radically underestimated by traditional institutions as a consumer group. Not only in terms of immediate intentions to buy a vast range of financial services products, but also because their attitudes and behaviours provide the clearest perspective yet, from the consumer point of view, on where banking is headed. The eldest members of the iGEN (now 25 years old) were 10 when the first iPod was released. The whole iGEN cohort has grown up in the Steve Jobs era, surrounded by iPods, iPhones and iPads as standard. This has radically impacted their expectations as a consumer group. Get it right for this group and you’re the closest you will come to getting it right for everyone else. The reality is far from the materialistic view of brand obsessed Millennials, iGEN value experiences over things above all else. This means ownership is becoming increasingly less important to the group. Whilst access to all the things that make life easy and enjoyable is top of the list. All-I- can-eat entertainment through my Netflix subscription: tick; living like a local with Airbnb: tick; wrestling with my bank’s crap mobile app for the next 15 minutes as my data is swallowed up: big thumbs down… In the study we’ve found that the key attributes that set this group apart from other generations are not mearly demgraphic but psychographic. Their mindset is likely to be a key indicator of stage in the purchase cycle for everyday banking products. We identified 5 distinct segments in 16-25 year old iGENs. 1. Dependents This group still rely heavily on their parents and guardians and haven’t yet got an independent hold on their finances. This reliance doesn’t just take the form of money (although this is often the case) but can also be advice on money management. 2. Hacknophobes This group have an inherent distrust of modern banking procedures and the security behind them including mobile banking and contactless payments for example. They aren’t necessarily tech-averse but smart enough to be remain cautious when it comes to these new technologies and methods. 3. Adults in training This is a group that a large portion of the iGEN will identify with, ascending into adulthood all of the challenges that come with that. Faced with the likes of savings, investments, joint accounts and loans; this group are on a big learning curve and tackling those issues head on. 4. Superusers This group make it their job to know the system and use it to their advantage. They’re likely to hold multiple accounts with different banks in order to make the most of the advantages available to them with different providers. They’re also the most tech savvy of the iGEN and are the first to break into new technologies like mobile payments. 5. Checked out They came, they saw, they became completely dejected. This group are unimpressed by what their financial future holds and have decided to live in the moment instead. Often misread as complete ignorance, this group have found time and time again that the financial odds are stacked against them, now making a conscious choice to live in their overdraft and worry about tomorrow when it comes.
  5. 5. EXECUTIVE SUMMARY MEH, SUSPICION AND ANIMOSITY BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 6 iGEN are restless, not just in life, but in their experience of everyday banking. During countless focus groups and online panels, their frustration was palpable. Not just from a user experience perspective but in their entire perception and experience of the banking industry. We worked hard with our panel to get under-the-skin of what the survey data told us; to understand the real pain points iGEN’s experience in everyday banking not just in terms of products and services but also in terms of a very real human reaction to to an industry that they feel completely disenfranchised from. Our study takes us beyond the rational, to the emotional and its these nascent sentiments that provide the strongest indication yet of where banking might go in the future. The bank that can resolve these pain points will surely be 80% there to winning the next generation over. 1. You don’t speak my language The language of banking is something they are forced to learn rather than instantly connect with. 2. I’m just a number to you Over time, instead of building a stronger connection with their banks many iGEN consumers feel undervalued and forgotten as their bank chases new customers. 3. I feel like you’re out to get me Many of the iGEN consumers we spoke to felt that banks were working solely to serve their own interests rather than protect those of their customers. They feel that many banks today have been designed to trip up the vulnerable, and lead them into financial traps that are difficult to get out of. 4. Your technology is so limited To iGEN great user experience facilitated by great use of technology is not a differentiator, it’s a hygiene factor. 5. You don’t trust me do you Throughout this study we highlight a general lack of trust amongst iGEN toward banks and financial institutions. This is probably not a shocking insight to read. But what is interesting is that this sense of distrust swings both ways. Not only do iGEN not trust banks, but they feel that banks do not trust them. 6. I have to jump through so many hoops Study participants talked about the friction and long waiting times to solve problems that in their minds should be fast and easy to fix, blaming old- fashioned systems and clunky practises that aren’t suited to modern banking.
  6. 6. EXECUTIVE SUMMARY BANK TO THE FUTURE BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 7 OK, OK, so as Henry Ford once said “If I’d asked people what they wanted they’d have said faster horses”. This study isn’t designed to ask the iGEN consumer what they want from banking. Unsurprisingly they don’t’ use words like ‘fintech’, ‘blockchain’ or ‘mobile wallet’. Instead we’ve focused on understanding what their current experience tells us about the key elements the bank of the future might have from a human-centred perspective. Our panellists think about the bank of the future in terms of the outcome and improvements a dynamic financial service ecosystem will make to their lives. This concept is not new, and is very simple, and yet start-ups and traditional institutions would do well to refocus their efforts on consumer outcomes. So the conclusions in this report are not earth shattering but they are designed to bring you, the financial services industry, back down to earth. Amongst the fintech fervour, above else, use this report to put your focus firmly back on the end consumer and ideally not just the consumer of today but also the consumer of tomorrow. So what magic potion to we recommend for developing a proposition and product suite that appeals to the the iGEN? CONVENIENT I don’t even have to think about it. This bank makes it really easy and a pleasure to do business with them. SMART This bank understands my unique situation. I’m happy to share my personal data because I get smart, tailored recommendations in return. TRANSPARENT I trust this bank – as a customer I feel it has my best interests at heart. For the first time I don’t feel like my bank is out to get me! SUPPORTIVE Finally! A bank that speaks my language and helps me manage my money responsibly. From the perspective of the key findings in this report, Open Banking represents a significant step forward in addressing the pain points, hopes and desires of the iGEN consumer. In section 4 of this report you’ll find extraordinary synergies between our iGEN findings and the Open Baking movement which point to a direction of travel for fintechs and traditional banks alike.
  7. 7. EXECUTIVE SUMMARY ABOUT ABOUT GOOD REBELS In today’s connected world your brand is defined, not by a marketing team or agency, but by how people experience it. We are Good Rebels, an experience design and innovation company. We create experiences that matter. Good Rebels is a powerful network of creative, digital, strategy and innovation talent numbering 130 people and 6 offices in the UK, Europe and South America. Together we deliver projects across 5 continents in over 28 languages for clients including: Ikea, GlaxoSmithKline, Lexus, L’Oréal, Santander, Spotify, Telefonica and Toyota. ABOUT REEVOO Millions of shoppers use Reevoo to make better buying decisions in their everyday lives. Hundreds of brands all over the world use our solutions to get a better idea of what makes their customers tick. It’s our transparent and independent approach that makes the difference – we believe honest communication between brand and shopper is better for both. Reevoo was started by Richard Anson, Ben Griffiths and Guy Logan in 2005 to help customers choose what to buy – not just where or when. Today, Reevoo is seen in more than 60 countries and in 30 different languages. We’re relied on by customers around the world to make better decisions, and by brands to connect with their customers. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 8
  8. 8. EXECUTIVE SUMMARY METHODOLOGY BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 9 QUAL QUANT OFFLINE ONLINE At Good Rebels, we have a three-pronged approach to our consumer research. We start with immersive techniques to develop empathy with the consumer and to provide inspiration. Then we use large quantitative data sources to tell us the what. Finally we use deep dive qualitative techniques to fully understand the why. 01. EMPATHETIC INSPIRATION These techniques allow us to immerse ourselves into the lives of your consumers. We draw inspiration from understanding the hopes, desires, aspirations and pain points of the people we’re designing experiences for. Group workshops & interviews. 02. BEHAVIOUR AT SCALE Survey data allows us to understand the behaviour of our audience and spot patterns. We use large quantitative data sources to tell us what is happening. Survey-based audience profiling (GlobalWebIndex). 03. DEEP DIVE QUAL These techniques are used to understand why certain behaviour is happening. We unlock the emotion behind specific experiences and capture the real feelings of consumers. Online consumer panel (Hark). 01 Group workshops & interviews 02 Survey-based audience profiling 03 Online consumer panel (Hark)
  9. 9. EXECUTIVE SUMMARY METHODOLOGY 01. EMPATHETIC INSPIRATION Focus groups and interviews. 16-25 year old participants = 32. 02. BEHAVIOUR AT SCALE Survey data analysis. Data source = GlobalWebIndex. Full sample sizes: 16-25 year old participants = 21,240 26-35 year old participants = 25,071 36-51 year old participants = 38,530 52-64 year old participants = 25,533 Q3 2016 sample sizes: iGEN = 1,484. Older Millennials = 1,677 Gen X = 2,634 Boomers = 1,744 03. DEEP DIVE QUAL Hark online research panel. 16-25 year old participants = 67. SEGMENT AGE DEFINITIONS iGEN = 16-25 Older Millennials = 26-35 Gen X = 36-51 Boomers = 52-64 About GlobalWebIndex GlobalWebIndex (GWI) is the world's largest study on the digital consumer. GWI surveys 34 countries and 476 local regions, representing 89% of the global internet audience. It is conducted from a panel of more than 12 million connected consumers, leveraged for analytics and insights. GWI uses stratified sampling techniques to ensure that samples are representative of the internet population aged 16 to 64 in each country that is researched. To do this, they conduct thorough research into the latest official figures from the International Telecommunications Union, Eurostat, Federal Communications Commission (FCC), and relevant national statistics sources. About Hark Hark is Good Rebels’ own proprietary insight and co- creation community platform, used to gather deep human insight at scale. Our UK iGEN panel contained a series of online activities designed to uncover the meaning and emotion behind the 16-25 year old consumer’s experience of everyday banking. Activities were supported by lively forum discussions that are fully managed and moderated by Good Rebels. The tasks we set are intentionally creative and thought- provoking to encourage consumers to think sincerely about their responses. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 10
  10. 10. EXECUTIVE SUMMARY A WORD OF WARNING… EXEC SUMMARY BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 11 THE DANGER OF ONLY SEGMENTING BY AGE This report focuses on UK ‘young people’; 16-25 year olds. As you will see from the findings, and particularly some of the charts that compare this age group against older cohorts, we have discovered some major differences in attitudes and behaviour between generations. But we would like to urge you not to stop there; not to stop at demographic segmentation only, and consider psychographic, demographic or attitudinal segmentation on top of this to really speak to the personal drivers of your customers. It is a dangerous game to base your strategy on demographic segmentation alone. 16-24 year olds are not all one ‘type’ with the same personal motivations. So many studies (including our own) have shown big generational trends, and we know that the iGEN are leading the way with some. We also feel it’s incredibly important to understand broad shifts in this nascent and seminal cohort. But we also understand that there is a lot of complexity within each broad demographic or generational segment. Therefore we recommend layering psychographics on top and looking at your customers through attitudinal lenses too. Which is why in this report we also explore psychographic types within the iGEN segment, with regards to their relationship with money. We hope this report serves as a handbook to help you understand this very important banking consumer group further, but that it also acts as a springboard to deeper investigation and further psychographic segmentation.
  11. 11. 02. MEET THE iGEN Defining the banking industry’s next biggest opportunity
  12. 12. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 13 MEET THE iGEN DEFINING THE AUDIENCE WHO IS THE iGEN? So much has been researched and written about the Millennial generation (including by ourselves) over the past five years, and as an agency we’ve seen how brands and industries have been getting to grips with designing for and marketing to Millennials who now in 2016 are aged between 20 and 35. But with all this focus on the Millennial generation, we fear that companies might have lost sight of the next generation of power consumer; those people we used to call ‘young people’ before the Millennial razzle dazzle took hold. We’re talking about the current generation in between Millennials and Generation Z, currently aged between 16 and 25. WHY iGEN? The eldest members of the iGEN (now 25 years old) were 10 when the first iPod was released. The whole iGEN cohort has grown up in the Steve Jobs era, surrounded by iPods, iPhones and iPads as standard. That’s not to say that this generation are all Apple devotees, but that the star of Apple as one of the world’s coolest brands has been shining as long as they can remember.
  13. 13. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 14 MEET THE iGEN PICTURING THE iGEN: WHAT’S IN YOUR BAG?
  14. 14. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 15 MEET THE iGEN PICTURING THE iGEN: CAN YOU JUDGE THE iGEN BY THEIR PHONE HOMESCREENS?
  15. 15. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 16 MEET THE iGEN HOW THE iGEN VIEW THEMSELVES AIMING HIGH The iGEN is ambitious and optimistic, highly over- indexing for always striving to achieve more in life (68% agreed with this statement), and believing it is important to continue to develop new skills throughout life (76% agreed with this). 68% of iGEN respondents said that they like to challenge and push themselves to be the best they can. VALIDATION SEEKERS Peer respect is very important to the iGEN, with 68% agreeing that it is important for them to feel respected by their peers; making them 47% more likely than the UK average consumer to say this. The older age groups progressively care less about what other people think about them, including an increased indifference to what is ‘in’ right now and the tendency to be swayed by other people’s opinion; something 34% of iGEN say agree happens easily to them compared to just 16% of Gen X. But whilst they can be easier swayed by other people’s opinions the iGEN is least likely to want to blend into the crowd, and they really value creativity and looking after their appearance or image. FIGHTING FOR EQUALITY iGEN are passionate about social issues and equality is high up on the agenda. Social media has opened up activism on a global scale to intelligent and considered activism. iGEN is 31% more likely to strongly agree that we should all strive for equality, with 74% agreeing with this statement. 148 147 146 138 131 120 126 120 109 102 79 82 82 89 88 68 59 65 73 89 50 70 90 110 130 150 I always strive to achieve more in life It is important for me to feel respected by my peers I look after my appearance/image Creativity is important to me I think we should all strive for equality Index scores for each audience (100 = UK base, Answer = ‘strongly agree’’) iGen Older Millennial Gen X Boomers Source: GlobalWebIndex, UK, Q3 2016. Criteria for inclusion on chart: we selected statements where the iGEN age group over-indexed most against the UK average for answering ‘strongly agree’, plus scores when combined with ‘agree’ was voted for by over 50% of the iGEN age group.
  16. 16. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 17 MEET THE iGEN HOW THE iGEN VIEW THE WORLD GLOBAL EXPLORERS The iGEN are open to new adventures and exploring the world around them. The iGEN is 39% more likely to strongly agree that they want to live and work abroad, with 58% of the age group agreeing with this statement in total. They consider themselves explorers, with a huge 72% agreeing that they like to explore the world around them. This ties in with one of the key trends you will see later about the iGEN valuing experiences over owning things. TRAVELLER NOT A TOURIST This global exploration is coupled be a genuine interest in other cultures and lifestyles. The iGEN is 41% more likely to strongly agree that they like to surround themselves with different people, cultures, ideas and lifestyles, with 67% agreeing to this statement in total. There is a tendency towards travelling to immerse oneself in the local culture and taking away experiences that come from living like a local. The Airbnb approach to travelling to experience the ‘real’ destination is very apparent amongst the iGEN. 141 139 117 114 108 116 113 101 109 108 86 95 94 94 95 68 60 92 87 92 50 70 90 110 130 150 I like to be surrounded by different cultures, ideas and lifestyles I would like to work and live abroad I am interested in other cultures and countries I like to explore the world around me I think it is very important to contribute to the community I live in Index scores for each audience (100 = UK base, Answer = ‘strongly agree’’) iGen Older Millennial Gen X Boomers Source: GlobalWebIndex, UK, Q3 2016. Criteria for inclusion on chart: we selected statements where the iGEN age group over-indexed most against the UK average for answering ‘strongly agree’, plus score when combined with ‘agree’ was voted for by over 50% of the iGEN age group.
  17. 17. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 18 MEET THE iGEN HOW THE iGEN VIEW TECHNOLOGY MY PHONE IS MY WALLET With so much of their lives spent not just online but on their mobile phones, it’s not surprising that 52% of the iGEN say that they feel more insecure without their mobile phone than their wallet. But for those feeling strongly about this statement, they over index against the UK average by 62%. Perhaps this is because they are worried about what personal photos or details may be left vulnerable, but it could also indicate the growing utility of mobile and potentially the lessening importance of cash and cards for payments. ALWAYS ON Somewhat disturbingly, 71% of the iGEN say they are constantly connected online, and 53% say that it’s critical for them to be contactable (online) at all times in terms of their private lives. They are 47% more likely than the UK average to strongly agree that they’re constantly connected. OPEN DATA FOR THE RIGHT REASONS an area where the iGEN under-index is around personal data and privacy. The iGEN is much more open to giving out their personal data to companies, but this comes with a caveat; that they in turn receive some value back in terms of user experience. The iGEN are certainly not on complete lockdown and are the least likely age group to prefer to be anonymous online, but their data provision must offer them value in return. 162 147 130 91 86 126 123 127 95 104 76 91 90 100 97 53 48 61 112 113 40 60 80 100 120 140 160 I feel more insecure without my mobile phone than my wallet I am constantly connected online The internet makes me feel closer to people I worry about how my personal data is being used by companies I prefer to be anonymous when using the internet Index scores for each audience (100 = UK base, Answer = ‘strongly agree’’) iGen Older Millennial Gen X Boomers Source: GlobalWebIndex, UK, Q3 2016. Criteria for inclusion on chart: we selected statements where the iGEN age group over-indexed most against the UK average for answering ‘strongly agree’, plus score when combined with ‘agree’ was voted for by over 50% of the iGEN age group.
  18. 18. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 19 MEET THE iGEN HOW THE iGEN VIEW BRANDS AND THEMSELVES AS CONSUMERS ACCESS OVER OWNERSHIP The iGEN have grown up with streaming services and pay monthly models like Netflix, Spotify and car sharing clubs for their entertainment and lifestyles and are 56% more likely to strongly agree that they would rather sign up for a membership to a product or service than pay extra to own it. THE IMPORTANCE OF EXPERT INFLUENCERS Almost half of the iGEN say they always seek expert opinions before buying products and services and are 51% more likely than the UK average to strongly value the opinions of such experts during the buying process. The internet has opened up a whole avenue of sources available to consumers when researching products and services to buy, and the iGEN know where and how to find the kind of impartial, expert advice and recommendations they need to help them with their decisions. BRAND LOYALISTS? The iGEN strongly over-index even against older Millennials for strongly agreeing that once they find a brand they like they tend to stick to it, with 66% in total agreeing with this statement. This demonstrates the importance of getting the consumer experience right, because although they are happy to shop around and try new products and services, if they are happy, they will remain loyal customers. 156 151 149 146 139 113 135 132 116 144 141 116 80 76 76 85 88 92 44 59 75 42 85 40 60 80 100 120 140 160 I'd rather sign up for a membership to a product/service than pay extra to own it When buying products and services, I always like to seek an expert opinion before purchasing Once I find a brand I like I tend to stick to it I am a brand conscious person I regularly inform friends and family on new products/services I would rather spend money on a unique experience than a status brand Index scores for each audience (100 = UK base, Answer = ‘strongly agree’’) iGen Older Millennial Gen X Boomers Source: GlobalWebIndex, UK, Q3 2016.
  19. 19. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 20 MEET THE iGEN HOW THE iGEN VIEW MONEY GLOBAL OUTLOOK The first statistic on this page really surprised us. At first glance it reverses entirely the reality of income and investment levels in society. However there are two very important concepts within this question that can point to the surprising result here. The first is the notion of affluence. 16-25 year olds may not have huge incomes but their disposable incomes may be perceived as much higher than older people’s with mortgages, families, cars, repayments and pensions. Secondly is the context of the question, and where respondents are thinking about when placing themselves against the average. This may be a strong indication of the global outlook of the iGEN and older Millennials who consider themselves more affluent than average in the world, compared to older generations who may be thinking of the UK average. MONEY = SUCCESS? Another interesting finding is the amount the iGEN over-index for agreeing with the statement ‘money is the best measure of success’. But whilst the iGEN are 43% more likely to agree with this statement than the UK average, please note that only 35% of the iGEN group agreed with this statement. Our impression is that this result is more indicative of the iGEN being unsure or undecided about what constitutes success, as 37% disagreed and 28% were neutral. 145 145 143 122 150 142 137 121 68 79 86 97 57 49 46 64 40 60 80 100 120 140 160 I consider myself to be much more affluent than the average I would pay more for sustainable/ecofriendly products Money is the best measure of success I am comfortable borrowing money Index scores for each audience (100 = UK base, Answer = ‘strongly agree’’) iGen Older Millennial Gen X Boomers Source: GlobalWebIndex, UK, Q3 2016.
  20. 20. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 21 MEET THE iGEN iGEN MONEY TYPES iGEN IS NOT A HOMOGENOUS MASS The iGEN is made up of students, undergrads and young adults, and whilst generally the older the participant the more likely they were to take an active interest in their own finances, the 16 to 25 year old age group is not so easily defined and divided. To help outline what we consider to be the five main iGEN attitudes towards finance and everyday banking, we’ve come up with some superhero counterparts, for the dependents, the adults in the training, the technophobes, the financial enthusiasts, and those iGENs who have given up completely. iGENs can fit into one or more of the five categories, and it is important to remember that while age and identity might correlate, not all 16 year olds are Dependents and not all 25 year olds are Adults in training. Dependents This group still rely heavily on their parents and guardians and haven’t yet got an independent hold on their finances. This reliance doesn’t just take the form of money (although this is often the case) but can also be advice on money management. Hacknophobes This group have an inherent distrust of modern banking procedures and the security behind them including mobile banking and contactless payments for example. They aren’t necessarily tech-averse but smart enough to be remain cautious when it comes to these new technologies and methods. Adults in training This is a group that a large portion of the iGEN will identify with, ascending into adulthood all of the challenges that come with that. Faced with the likes of savings, investments, joint accounts and loans; this group are on a big learning curve and tackling those issues head on. Superusers This group make it their job to know the system and use it to their advantage. They’re likely to hold multiple accounts with different banks in order to make the most of the advantages available to them with different providers. They’re also the most tech savvy of the iGEN and are the first to break into new technologies like mobile payments. Checked out They came, they saw, they became completely dejected. This group are unimpressed by what their financial future holds and have decided to live in the moment instead. Often misread as complete ignorance, this group have found time and time again that the financial odds are stacked against them, now making a conscious choice to live in their overdraft and worry about tomorrow when it comes.
  21. 21. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 22 MEET THE iGEN iGEN MONEY TYPE ALTER EGOS Dependents a.k.a. Captain Clingy Captain Clingy fights against responsibility with the help of his trusty shield and super safety blanket forged from a thousand smashed piggy banks. When confronted with his one weakness, insufficient funds, regular cheques from the bank of mum and dad are the only thing that will restore his power. Hacknophobes, a.k.a. The Digital Dodger The Digital Dodger lurks in the shadows, away from bright city lights, smart phones and social media. Her cape of invisibility shields her from her archenemy, the Privacy Destroyer. Last time she faced her foe The Dark Dodger ended up trapped within the Redditsphere for weeks. Her powers drained, she returned to her cave to recharge. Adults in training, a.k.a. The Evolver Having only recently developed his Shapeshifting powers, The Evolver is training hard to refine his skill and learn more about the financial foes he’ll have to face in the future. The Evolver will have to manage his time and assets carefully if he’s to have any chance in defeating the scourge of Ecotropolis; Student Debt. Superusers, a.k.a. The Juggler The Juggler, an exceptionally powerful telepath, sits omniscient in the Fortress of Finance. A seasoned superhero, The Juggler knows all there is to know about money management. Fearless, she sets up account after account, reaping the benefits new customer incentives. But, knowing that crime never sleeps and one day she’ll be a Supersenior, she’s already saving for retirement. Checked out, a.k.a. The Flying F*** The Flying F*** has abandoned the once fair city of Ecotropolis, now overrun with dastardly deposits and rock-bottom interest rates. She invested herself in Ecotropolis, but has yet to receive anything of value in return. It seems the situation is hopeless, so why stick around? The only power she need rely on now is the power of flight.
  22. 22. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 23 MEET THE iGEN 5 IMPORTANT MACRO TRENDS AFFECTING THE iGEN As the number of young people attending university increases, the number of 18 year olds beginning to build up debt increases also. The university fee cap is set to rise next year from £9,000 to £9,250 and maintenance grants have been abolished in favour of more loans. Just over half of 18 to 24 year olds have said they regularly worry about money. Young people without a degree are often overlooked by employers, victims of academic inflation, meanwhile graduates are increasingly finding themselves in roles that do not meet their expectations. Between 2007/08 and 2014/15 household income rose by 11% for those over 60, remained stagnant for those aged between 31 and 59, but fell by 7% for those aged 22 to 30. The struggle to save is real and banks are not offering the same incentives to set money aside they once were. In August 2016 UK interest rates were cut from 0.5% to 0.25%, a record low and the first cut since 2009. According to the Institute of Fiscal Studies young people are set to be poorer than their parents at every stage of their lives. It’s obvious that a great number of young people are struggling to manage their money: •  37% of 18 to 24 year olds in debt say they do not have a plan to repay what they owe. •  42% said they have found managing their money more difficult than expected. •  One in eight (12%) do not expect to ever be able to repay what they currently owe. Not all debt is academic either. According to Joanna Elson, chief executive of the MAT, significant proportions of students hold debt on credit cards, overdrafts and to family and friends. Once in debt, only a tiny minority (2%) will seek advice from a money or debt advice charity and only 12% will contact a student money advisor. Throughout our research we found that younger people are not necessarily aware of the support that is available to them, but are generally grateful for a little extra help when it comes. RISING DEBT AND THE STRUGGLE TO SAVE 01 Sources: Telegraph, Robert Anderson of The Student Loans Company, October 2016 BBC, Chris Johnston, August 2016 Guardian, Peter Cheese, October 2016 BBC, Institute for Fiscal Studies, July 2016 BBC, The Bank of England, August 2016 BBC, Christ Johnston, August 2016
  23. 23. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 24 MEET THE iGEN 5 IMPORTANT MACRO TRENDS AFFECTING THE iGEN Young people are no longer limited by geography; they are no longer exposed only to those cultures and sub-cultures that exist in their immediate location. Access to the internet allows young people to interact with one another cross-culturally. They are, at the same time, exposed to a thousand wild and wonderful sub-cultures they might otherwise have never encountered. A recent study by McCann concluded that the power of modern influencers affects the way in which young people choose to define themselves. Those aged between 16 and 25 have access to a veritable Pick and Mix of styles, cultures and influencer personalities to adopt or be inspired by. Despite what you may have heard, today’s youth are generally label averse. This is not to say that sub- culture is dead, we still have Afropunks, Seapunks and Steampunks, Cybergoths and Pastel Goths, K-Pop and J-Pop enthusiasts, and many other tribes beside, keeping the sub-culture culture alive. However, young people no longer feel the need to box themselves within one or two sub-cultures, many simply take what they want, what they’re inspired by, and incorporate into their own ‘kaleidoscope-like’ identity. The traditional tribe is dead and classic markers of success and maturity, like marriage, children and career, have been left behind in favour of a more flexible model of ‘figuring it out’. “Micro-moments” or small moments of personal achievement have become a tool for measuring success, a tool made all the more popular by the YouTube stars and online influencers who choose to publicise their own lives as a series of micro-moments. Rather than a distinct sub-culture, those within the 16 to 25 age group are informed by a variety of influencers as well as their own desire to reach the same milestones or ‘micro-moments’ as their favourite home-grown celebrity. iGEN culture is formed around new and flexible milestones, accessible and varied influencer-informed sub-cultures, and a more fluid sense of self. NO TRIBES, NO LABELS – UNIQUE IDENTITIES 02 Sources: Equaliser London, Benjamin Conway, 2014 McCann Truth Central, “Truth About Youth”, June 2016 Vox Burner, Andrea Richeson, June 2016 Warc, Campaign Asia Specific, Nadia Tuma-Weldon, October 2016 “In the absence of any one, era- defining subcultural movement – a thousand flowers have bloomed.” Benjamin Conway, Equaliser London
  24. 24. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 25 MEET THE iGEN 5 IMPORTANT MACRO TRENDS AFFECTING THE iGEN Among the many monikers attributed to the 16 to 25 age group, one that’s recently cropped up is ‘The Subscription Generation.” Nearly a quarter of UK households subscribe to Netflix and 8 in 10 British adults now subscribe to a product or service . Subscription services like Spotify and Netflix are competing with the entire concept of owning media. “Battered by student loan debt and the Great Recession, Millennials place less emphasis on owning and more on sharing, bartering and trading to access to coveted goods.” – Jilian Mincer, Business Insider In 1987 less than 20% of 21 to 25 year olds lived in private rents, this number has since increased to 60%. The iGEN value access over ownership, and this preference (or concession) is propelled by businesses like Uber, Airbnb and car rental service Zipcar, as well as subscription box services like Birchbox and Graze. This ‘preference’ to rent or subscribe rather than buy may be fuelled in part by a desire to always have access to the best or most recent version of a product. “To us, having access to everything is significantly more important than claiming stake on it.” – April Zhao, Zuora. The 16 to 25 age group also value experiences, particularly those experiences that can shared online via social media and build on their own personal brand. A study by Harris Group found that 72% of Millennials prefer to spend more money on experiences than on material things. This preference is drive by a desire to be recognised and build a following, as well as a general ‘fear of missing out’. Whether it’s a preference or a practical response to a collapsing economy, the iGEN is no longer investing in housing and cars. The 16 to 25 year old age group is eco-conscious, pessimistic about their financial future, and more inclined to share their experiences online than ‘waste time’ struggling up the property ladder. ACCESS OVER OWNERSHIP 03 Sources: The Guardian, Jasper Jackson, March 2016 Vodzilla, Ivan Radford, June 2016 New Statesman, Joe Smith, April 2016 Business Insider, Jilian Mincer, May 2015 Cio, September 2016 Zuora, April Zhao, August 2015 Uptin Saiidi, CNBC, May 2016 CNBC, Taylor Smith, May 2016 “We aren’t spending our money on cars, TVs and watches. We’re renting scooters and touring Vietnam, rocking out at music festivals, or hiking Machu Picchu.” Taylor Smith, CEO and co-founder of Blueboard
  25. 25. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 26 MEET THE iGEN 5 IMPORTANT MACRO TRENDS AFFECTING THE iGEN The ‘instant gratification’ generation are accustomed to high-speed Internet access, next day-delivery, instant streaming, online banking and contactless payment. Now some retailers are offering same-day delivery, Wells-Fargo has been experimenting with pre-staged transactions allowing customers to queue up banking transactions from their phones in advance to save time in branch , and the Amazon Dash button, introduced earlier this year, is a Wi-Fi connected device which allows customers to reorder their favourite products with the press of a button. The demand for instant gratification is shaping the future of retail, media and banking. In a survey by Trustev, 56% of young people said they expected retailers to have the option of same-day delivery. A separate survey conducted by Coldwell Banker Commercial Affiliates reported that 64% of young people were more likely to make a purchase from a retailer that offered same-day delivery. The introduction of Click and Collect at John Lewis over the Christmas period accounted for 56% of online orders. Metro Bank have offered same-day bank card replacement since 2010. The 16 to 25 year old age group are no longer satisfied with next-day delivery or basic mobile apps with limited capabilities, they crave immediacy. “This mobile app is simply too slow and hard-to-use, and in the technological age, this is simply unacceptable.” – Charlie, iGEN study participant. Only innovation will satisfy this craving; efficiency is expected and immediacy is what industry leaders should be aiming for. The iGEN want what they want and they want it now. INSTANT GRATIFICATION 04 Sources: The Boston Globe, Christopher Muther, February 2013 Wells Fargo Media, Wells Fargo’s Culture of Innovation, May 2016 The Boston Globe, Christopher Muther, February 2013 The G-Brief, February 2016 Campaign Live, Sara Spary, January 2015 “The need for instant gratification is not new, but our expectation of ‘instant’ has become faster, and as a result, our patience is thinner.” Narayan Janakiraman, The Boston Globe
  26. 26. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 27 MEET THE iGEN 5 IMPORTANT MACRO TRENDS AFFECTING THE iGEN Traditional celebrities are not as popular with the iGEN as they were with generation that came before and branded messages do not resonate in the same way. The 16 to 25 year old age group want real recommendations from ‘real’ people. According to Nielsen, 92% of them would trust recommendation from individuals (even if they don’t know them personally) over brands. This decline in trust in brands has driven the rise in Influencer Marketing which according to Technorati is now a £156M industry. 70% of young YouTube subscribers say they relate to YouTubers more than to traditional celebrities, and 6 in 10 would follow advice on what to buy from their favourite creator over their favourite film or TV personality. Linear TV viewing is declining every year and according to McKinsey word of mouth is the primary factor behind 20 to 50% of all purchasing decisions. It is important to remember, however, that the relationship between the iGEN and modern influencers is built primarily on trust and a sense of accessibility and authenticity. If paid posts and brand sponsorships from vloggers, instagrammers and bloggers aren’t authentic or relevant, the iGEN will simply choose to ignore. “When a brand partners with an influencer it is not a two-way exchange…the audience’s relationship with the influencer is the trust on which successful influencer partnerships pivot.” – James Stafford, The Drum The influencer marketing ‘trend’ is no longer ‘emerging’, it’s here and it would seem it’s here to stay. The iGEN looks for community; relatable personalities they can develop friendship-like relationships with. Platforms like YouTube, Twitter and Instagram are getting better at providing valuable consumer insights and brands and businesses are getting better at recognising the benefits of long-term relationships with social influencers and their audiences. TRUST IN ‘REAL’ PEOPLE 05 Sources: Nielsen, Marisa Grimes, April 2012 PR Newser, Patrick Coffee, March 2015 Nielsen, Marisa Grimes, April 2012. Think With Google, Celie O’Neil-Hart and Howard Blumenstein, July 2016 NeoReach, Misha Talavera, June 2016 McKinsey, Jacques Bughin and Jonathan Doogan and Ole Jørgen Vetvik, April 2010 NeoReach, Misha Talavera, June 2016 The Drum, James Stafford, July 2016 The Guardian, Timothy Armoo, September 2015
  27. 27. 03. TOUCHPOINTS How the iGEN see and interact with banks right now
  28. 28. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 29 BANKING TOUCHPOINTS HOW DOES THE iGEN SPEND THEIR MONEY? WHAT DOES THE iGEN SPEND THEIR MONEY ON? The iGEN is constantly transitioning; from student to undergrad, to adult in training with a laundry list of new responsibilities. How much money they set aside to pay for rent, bills, travel and transport generally depends on their age and level of dependence. Still, on average iGEN participants spend 36% of their income on household bills and rent, and only 12% on entertainment and leisure. More money was spent on public transport than on maintaining cars or personal vehicles, and travel and transport made up only 8% of the average monthly spend. Only a few older participants had begun to pay off their student loans, but those who were were setting aside up to 15% of their monthly income for the purpose of repayment. With most students relying on state funded education, their parents or student loans to fund their education, on average only 1% of earnings was spent on Education. Hobbies and clothing are treated as non- essentials, benefitting from a combined 6% of monthly earnings. DOES THE iGEN SAVE? Despite the fact that interest in the economy has been on the decline, the iGEN is still either investing or setting aside, on average, 20% of their monthly earnings. Savings and investments concern the iGEN greatly, with 48% of panellists citing low interest rates or a lack of ROI as their main reason for switching banks in Q2. Bills/rent 36 Savings/ investments 20 Food/monthly shop 15 Entertainment/ leisure 12 Travel/ transport 8 Misc. 3 Clothes 3 Hobbies 3 Education 1 Student loans 1 Breakdown of monthly iGEN expenditure (%) Source: Hark, activity 3: Think about your monthly expenditure. How does it break down? Draw/create a pie chart visualising the breakdown of your monthly spending in percentages.
  29. 29. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 30 BANKING TOUCHPOINTS WHAT KIND OF SAVINGS DOES THE iGEN HAVE? WHAT KIND OF SAVINGS/INVESTMENTS DOES THE iGEN HAVE? More than you would expect. 72% iGENs have some kind of savings or investment, which is only three percent under the UK average of 75%. But as to be expected, the value of these investments is where the major generational differences arise, generally with older age groups having higher value investments. When examining the types of investments the iGEN hold, they under index for stocks and shares but interestingly slightly over index for alternative investments such as gold or art and antiquities. 71.8 75.4 73.4 79.6 0 20 40 60 80 100 iGen Older Millennial Gen X Boomers % audience that has savings/investments of some kind 57.9 13.6 8.2 7.5 6.4 2.4 64.58 21.09 12.29 9.19 6.53 2.95 65.04 22.1 5.51 8.32 4.2 2.97 71.89 29.55 3.84 8.04 4.73 3.51 0 10 20 30 40 50 60 70 80 Cash/savings/pension Stocks/shares/bonds Gold Property (other than the house you live in) Art/antiques Other % audience with each savings/investment type iGen Older Millennial Gen X Boomers Source: GlobalWebIndex, UK, Q3 2016.
  30. 30. Focus group activity: How do you manage your money? 1.  What do you use money for? 2.  What issues do you have with managing your money? 3.  What tools help you manage your money? 4.  Who do you go to for money advice? BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 31 BANKING TOUCHPOINTS iGEN’S RELATIONSHIP WITH MONEY
  31. 31. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 32 BANKING TOUCHPOINTS IS THE iGEN INTERESTED IN FINANCE? INTEREST IN FINANCE BACK ON THE RISE The two charts on this page display the interest levels of the iGEN age group (16-25) compared to those of older age groups over time towards two topics; the economy/finance and personal finance/ investments. Interest in the economy amongst the 16-25 age group had been on the decline for the past three years, however 2016 has shown a resurgence of interest amongst all age groups; potentially a response to heightened political awareness in the year of Brexit. The same cannot be said for interest in personal finance and investments however, which is a topic that has been in decline since 2012 with only 15% of iGEN having a strong interest in this topic in Q3 2016. With both topics we see a proportional increase in interest levels with age, with lowest interest levels amongst the younger people in the study. Please note in these charts that we are tracking the age groups of those current cohorts over time, rather than the generations themselves. 0 5 10 15 20 25 30 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Strong interest in the economy/finance 16-25 26-35 36-51 52-65 0 5 10 15 20 25 30 35 40 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Strong interest in personal finance/investments 16-25 26-35 36-51 52-65 Source: GlobalWebIndex, UK, Q4 2012 to Q3 2016.
  32. 32. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 33 BANKING TOUCHPOINTS IS THE iGEN INTERESTED IN FINANCE? Source: GlobalWebIndex, UK, Q3 2016. FINANCE TOPICS ARE AMONGST LEAST POPULAR But despite a slight interest in the economy and finance in 2016, the iGEN is still much more interested in other topics over finance and investments. From the list of 33 topic options, the iGEN put economy/finance fifth from bottom and personal finance/investments third from bottom, beating only gardening and gambling as topics of interest. TOP FIVE iGEN INTERESTS •  Music (67%) •  Film/movies (66%) •  Gaming (51%) •  Television (48%) •  Food/restaurants/cooking (46%) BOTTOM FIVE iGEN INTERESTS •  Gambling (9%) •  Gardening (9%) •  Personal finance/investment (15%) •  Business (16%) •  Economy/finance (17%) iGENS ARE THREE TIMES MORE LIKELY TO BE INTERESTED IN GAMING THAN THE ECONOMY iGENS ARE TWICE AS LIKELY TO BE INTERESTED IN PHOTOGRPAHY THAN PERSONAL FINANCE
  33. 33. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 34 BANKING TOUCHPOINTS iGEN AND ONLINE SHOPPING Source: GlobalWebIndex, UK, Q3 2016. iGEN LEAD THE WAY FOR MOBILE SHOPPING, FROM RESEARCH TO PURCHASE TO SELLING iGEN are the most likely of all ages to use their mobile phones for online shopping. For all age groups, online shopping is now so mainstream that when you look at online purchases across all devices, there is very little variation in behaviour between age groups. The major variations come from looking at shopping activities including purchases made using a mobile phone/ smartphone, with just 15% of Boomers doing this compared to 52% of iGEN. 67 52 20 67 49 23 77 36 21 77 15 17 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 PC/Laptop Mobile phone/smartphone Tablet % audience using each device to purchase products online iGen Older Millennial Gen X Boomers 69 61 52 25 63 59 49 22 53 46 36 12 31 27 15 4 0 10 20 30 40 50 60 70 80 Searched for a product or service you want to buy Visited an online retail site or store Purchased a product online Sold a product online % audience using mobile phone/smartphone for different online shopping activities iGen Older Millennial Gen X Boomers
  34. 34. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 35 BANKING TOUCHPOINTS iGEN AND MOBILE PAYMENTS Source: GlobalWebIndex, UK, Q3 2015 to Q3 2016. 29 24 15 6 0 5 10 15 20 25 30 35 iGen Older Millennial Gen X Boomers % audience that used their mobile phone to pay for an item/service 0 2 4 6 8 10 12 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Apple Pay users (in last month) 16-25 26-35 36-51 52-65 29% iGEN REGULARLY PAY FOR ITEMS AND SERVICES WITH THEIR MOBILE PHONE Following the mobile-first trend from the previous page and throughout this report, the iGEN are the age group most likely to regularly use their mobile phone to make payments. 29% use their phone to pay for items/services compared to just 15% of Gen X and 6% of Boomers. This includes mobile payments in shops but also mobile app payments for services like Uber or Deliveroo. Although iGEN consumers are comfortable using their mobile to undertake a wide variety of activities, they are currently more likely to use their phone to pay for an item/service than they are to use QR codes (14%), voice control (26%), MMS (27%), or office software (18%). APPLE PAY USED BY 10% OF iGEN Although UK adoption is still low, Apple Pay as a method of in-app or in-store payments is especially on the rise amongst the iGEN. Traditionally adoption has been led by Older Millennials but in the last quarter iGEN just passed them with 10% iGEN that have used Apple Pay in the past month. A further 10% say they are interested in using it in the future.
  35. 35. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 36 BANKING TOUCHPOINTS THE IMPORTANT MILESTONES IN iGEN’S BANKING LIVES TRIGGER 1 ✪  Birthday money ✪  First part-time job TYPICALAGE Take control of bank account Convert to student account Shop around for rewards 10 14 16 18 Bank account set up by parents Choose first bank account 12 20 22 24 TRIGGER 2 ✪  Going to university Choose new student account TRIGGER 3 ✪  Finished university ✪  New home ✪  First ‘proper’ paycheck Savings, joint accounts, mortgages Try alternative solutions Get credit card or short-term loan
  36. 36. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 37 BANKING TOUCHPOINTS PRE-16 BANKING TOUCHPOINTS FIRST BANK ACCOUNT IS OFTEN SET UP BY PARENTS Most UK young people already have a bank account by the time they reach their teens, but they are often not very connected to it. The first bank account is often set up by parents for their children, sometimes when the child is very young or just born. iGENs have been aware that they had bank accounts, and sometimes aware of their accessible funds but until reaching secondary school age these accounts are very much managed by the parents. TAKING CONTROL For the majority of cases where a bank account already exists, there comes a moment in time where the young person wants to take over control of their bank account. Many iGENs we spoke to recalled the coming of age moments when they had easy access to their own cash and developed more of a connection and awareness of their personal finances. For some iGENs, there was a specific trigger point that prompted them to take the reins of their bank accounts from their parents (either formally via the bank or informally via parental handover) but for others it was an incremental part of growing up. TRIGGER POINTS Coming into money is a common motivator for iGENs to want to take control of their bank accounts. As they get older, they are more likely to be given money for birthdays and Christmases and need somewhere safe to keep this. They need a way to convert any cash they are given or they make into money they can spend online – something 81% of the UK iGEN regularly does. As young people move into their teens, they are given the freedom to go out shopping or to the cinema with their friends. This moment often marks the need to have a cash card or debit card to buy things with when they’re away from their parents. Finally, from age 14, many iGENs talked about getting their first part-time jobs and needing to control their wages and expenditure. These jobs included working in shops, cafes, hairdressers, babysitting, walking dogs, pot washing, flyering or car washing. CHOOSING A FIRST ACCOUNT For the majority of the iGEN, their first account was already set up by their parents. But for the few without a bank account by the time they hit their teens, they chose one for themselves. At this time they were heavily influenced by their family and friends, or signup rewards and incentives. “As long as I can remember my whole family has been using HSBC. Even my grandparents.” Greg T “…members of my family used it and recommended it to me as it was reliable. There is also a local branch nearby if I ever need support or guidance.” Caleb P
  37. 37. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 38 BANKING TOUCHPOINTS STUDENT BANKING TOUCHPOINTS: PRE-UNIVERSITY CHOOSING A STUDENT ACCOUNT When it comes to selecting the right student account for university or further education, the iGEN consumer is essentially a free agent. They are not especially loyal to or tied down to their existing bank and are open to setting up a new student account elsewhere given the right terms or incentive. iGEN consumers on their way to university shop around for the student account that suits them best, and despite very compelling one-off incentives (or “bribes” as some iGEN students called them) including Amazon vouchers, railcards, coach cards and cashback iGEN consumers carefully consider the less exciting but often more important offerings like interest-free overdraft limits and account charges or fees. MAIN CONSIDERATIONS According to the iGEN there are three main considerations when choosing a student bank account: 1.  Recommendations from family and friends Parents often do a lot of research on behalf of their children and consult broadsheets and finance media to understand the best deals on the market. As with university selection, student bank account selection is often a collaborative process between iGEN student and parent/s. 2.  Interest-free overdraft iGEN students know that the availability and size of their student overdraft is one of the most important safety nets that will support them financially through university. They compare banks based on the amount of 0% overdrafts offered, taking into account increases over the years at university. 3.  An accessible branch Interestingly for this digital consumer, having a branch on-campus or within easy access was a major selling point. As we will see later in this report the iGEN has a real need for face-to-face interaction when it comes to banking, especially when it comes to making decisions around loans, overdrafts and credit. SOURCES OF ADVICE As outlined above, even though student accounts now are completely different to the student accounts their parents may have had, the iGEN are still heavily influenced by their family when it comes to selecting their student account. Older siblings are a trusted source of information, as well as talking to peers either ‘in real life’ or in online student communities like The Student Room. Money Saving Expert was another popular trusted source of advice. “I signed up with [Barclays] initially because they offered the best student overdraft - something I was sure I’d need to dip into during my time at university…” Amarinder C “If I’m looking for advice on choosing a bank account I’d go to older people, because they’ve done it before. They’ve probably done it multiple times in their lives.” Michael
  38. 38. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 39 BANKING TOUCHPOINTS STUDENT BANKING TOUCHPOINTS: DURING-UNIVERSITY FIRST CREDIT CARD It is not uncommon for students to get into financial difficulties whilst at university, especially those less dependant on their parents for financial support. During their time at university many iGEN students acquire their first credit card to supplement their maxed-out overdrafts. However they don’t make these decisions lightly and much prefer in-branch, face to face advice primarily to make sure they understand the terms and conditions of their first credit card. Written terms and conditions on websites and forms often confuse, bore or annoy iGEN consumers, and they need the human interaction for added trust. One of the major themes from this study concerned trust, and the feeling that banks are “out to get me”. The iGEN don’t want to be caught out by terms and conditions so prefer to talk these through with someone face to face, someone they can ask questions to, to help build trust for what is a big financial decision. SHORT-TERM LOANS Often seen as a last resort but occasionally used by iGEN students towards the end of term (when they know they have another loan payment coming soon), short-term loans or ‘payday loans’ have become highly stigmatised necessary evils for some iGENs. 9% of UK iGENs said that they expected to use a short-term loan (less than 30 days) within the next six months, and are the age group most likely to do this. When asked about short-term loans, the iGEN have a clear repulsion to them, but are still the age group most likely to use them. “…when I got my first credit card, I went into the bank and I must have spent an hour and a half with the lady in there who set it all up for me, she got the app on my phone and she explained all the terms and conditions to having a credit card. I’m glad she was the one helping me because I had no idea what I was doing.” Lucy M 9.4 8.0 3.6 2.2 0 1 2 3 4 5 6 7 8 9 10 iGen Older Millennial Gen X Boomers % audience intending to purchase short-term loans within 6 months Source: GlobalWebIndex, UK, Q3 2016.
  39. 39. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 40 BANKING TOUCHPOINTS POST-UNIVERSITY BANKING TOUCHPOINTS SHOPPING AROUND Although the iGEN tend to feel less valued as bank customers due to their younger age and smaller balances, they are well aware of the power they hold as potential new customers. iGEN consumers are comfortable holding multiple bank accounts and switching to new banks that offer attractive rewards and benefits to new customers. Once they have a stable salary and are confident they can meet the monthly deposit terms, they are happy to shop around and switch accounts to pick up the incentives. POST-STUDENT PRODUCTS Into their 20s, UK iGEN consumers are looking for different types of financial products from their banks. Living independently, bank accounts that offer contents insurance or cashback on paying bills become more attractive. Money moments like moving in with a partner and getting a joint account, or paying into a pension all start to become duties to tackle. PREMIUM CURRENT ACCOUNTS The iGEN is the largest prospective market for premium current accounts, with 10% of UK online iGENs saying that they intend to purchase one within the next 6 months. Older more independent iGEN consumers in our study discussed the benefits of getting their insurance, rewards and lifestyle benefits all as part of their premium account package, praised mainly for the convenience this offers them. The Adults in training iGENs feel secure knowing they have got the majority of important things covered with their bank account’s premium package, and they don’t have to shop around getting quotes or renewing policies independently. ALTERNATIVE BANKING SOLUTIONS Part of the ‘Shopping around’ that iGEN consumers do also involves challenger banks and alternative banking solutions. iGEN Superusers are wooed by the technological superiority of mobile-only challenger banks like Atom, Monzo and Starling, favouring the fresh approach to money management and slicker user experience. “My friend says the worst thing you can do is stay with the same bank for so many years, when you’re our age, not when you’re old. You get better deals on interest rates, they’re more flexible.” Victoria “Now that I’m an adult, well more of an adult, and I’ve got my own place, I need the home insurance, the free travel insurance, it’s great.” Victoria 10.0 9.4 3.9 2.7 0 2 4 6 8 10 12 iGen Older Millennial Gen X Boomers % audience intending to purchase premium current accounts within 6 months Source: GlobalWebIndex, UK, Q3 2016.
  40. 40. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 41 BANKING TOUCHPOINTS MYSTERY iGEN SHOPPING AT METRO BANK A friendly staff member seated me in an open waiting room as soon as I arrived. My name was taken and I was seen seven minutes later. I was sat by some disgruntled customers both trying to close their accounts, which didn’t fill me with confidence but the woman I spoke to during my appointment was very reassuring. I was asked if I wanted to set up an account that day, which is possible if you bring some form of photo ID. All accounts are free to set up and while they do not offer a student account, they do have accounts for under 21s and learner accounts for young teens and children. Rather than a sit down appointment, I was taken on a tour of the bank. When I asked about interest rates I was told that Metro do not offer interest on their current accounts, they do however offer instant access saver accounts, fixed rate cash ISAs and instant access cash ISAs. Fixed term savings account (0.90% to 1.20% AER) and Young Saver Accounts are also available. According the woman I spoke to, Metro is planning on introducing finger print recognition to their banking apps some time in November 2016. Customers can also save when travelling with no-fee transactions within Europe. The Metro banking app allows customers to put a temporary block on their phone if they think they’ve lost it. This block is easy to remove if, for example, you realise your card was in your pocket the whole time. This feature could prove invaluable to younger customers unused to the responsibility of carrying a debit or credit card, or a first year Fresher out of their comfort zone. Unlike most banks I visited, Metro can provide customers with a new card the same day it’s requested, as long as the customer makes the request in branch and brings some form of photo ID with them. For students and young professionals the Money Machine allows customers to save on a micro level. Change can be converted into cash, donated to charity, or transferred straight into an existing account. This service is available to customers and non-customers alike and Metro does not take a cut. Other, less necessary services like treats for pets, educational games for children, the payment of admin fees when adopting a pet from Battersea Cats and Dogs Home, and free merchandise, even when not relevant suggest an attention to customer service that goes above and beyond. The appointment lasted around 20 minutes, and felt very slick. The tour felt quite rehearsed and the approach was very ‘American’. Metro is relatively new and has not had time to build the same level of trust with customers as more traditional banks native to the UK. That said, most banks are struggling to regain trust post- Recession and so with that in mind the Metro culture is quite refreshing. The interior aesthetic was very new, very clean and very shiny. I was offered a great deal of informational material, lollipops and a pen. Metro opening times are incredibly convenient. Metro is open seven days a week, from 08:00 to 20:00 during the week, from 08:00 to 18:00 on Saturdays and from 11:00 to 17:00 on Sundays.
  41. 41. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 42 BANKING TOUCHPOINTS MYSTERY iGEN SHOPPING AT CO-OPERATIVE BANK Initially I, along with two other customers queuing at the information desk, were ignored by stressed out staff members. After about ten minutes of waiting I was seated in a small, but comfortable waiting room. I was offered tea, coffee or hot chocolate to drink while I waited. There were not a lot of customers in branch but the staff seemed swept off their feet. Later the employee I sat down with would apologise for the wait and blame it on the popularity of the bank and the limited number of physical branches in the area. According to the women who sat next to me, “the Brighton branch is usually very quick.” The staff seemed to know some customers very well. They were beckoned in branch and the staff stopped to have a quick chat with them. For those loyal and local, long-term customers the atmosphere at the Co-Op was casual and homely. After ten minutes or so I was seen by the one employee available to talk more casually and answer general questions. Immediately I was asked if I was opening an account because I had seen the adverts plastered around town offering £150 for switching accounts. It turns out the offer was only available if you were to open an account with four active direct debits. This offer then, does not necessarily work as an incentive for younger bankers who do not yet need to pay their own bills or rent. There was no charge for setting up an account and the employee I spoke to said Co-Op could offer a 36-month redirection service. I asked specifically about student accounts, but was not told much about them. I said I was considering applying for a Masters degree and he went on to tell me about the three-year student overdraft scheme in detail, a scheme that would not be relevant to me as a Master’s student. Students are allowed a year before they must begin paying back their overdraft. Their financial planning service is, unfortunately, no longer available. Generally, the staff were polite and the employee I spent the most time with described his time working at the Co-Op in a casual, affectionate way. Unfortunately he was also very pushy, signing me up for a follow up appointment after I said no to one several times. As I was leaving he called after me to say he was pencilling me in for Thursday and I received a text alert on the day reminding me of my appointment. One reason the Co-Op Bank appears to be so popular is because they offer Cashminder accounts, for people who might not be eligible for other accounts. The Cashminder account is available as a joint account and does not include any overdraft, chequebook or monthly account fee. The appointment lasted around 15 to 20 minutes. The Co-Op bank is open Monday to Friday from 09:30 to 17:00 and on Saturdays from 09:30 to 13:00. The bank is closed on Sundays. For a young professional, these times are not particularly convenient but these opening times are consistent with most other high street banks. The bank aesthetic was simple and clean, but a little rough around the edges. I was offered some informational material, the contact card of the employee I spoke to, and an hour-long follow up appointment.
  42. 42. 04. PAIN POINTS Why banks are driving the iGEN mad
  43. 43. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 44 PAIN POINTS INTRODUCTION ABOUT THIS SECTION We analysed the problems our iGEN study participants face with everyday banking and categorised them into six major pain points. Major pain points present huge barriers to iGEN adoption and trust of their banks and the banking industry in general. The major pain points represent the human feelings and attitudes of the iGEN in the UK today, and are the reasons this group of consumers feel that banking today is not relevant to their needs. Banks that can tackle both these pain points stand the chance of becoming more relevant to the iGEN and building affinity with them.
  44. 44. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 45 PAIN POINTS BREAK-UP LETTER TO A BANK MANAGER Dear Bank Manager, I am writing to you today because I have made the decision to close my accounts with you and switch to a new bank. While I have been with the bank for many years now there are a few issues which have led me to make this decision. The first is an issue which has weighed on my mind since I first opened an account with your bank. When I first opened my account I had just recently moved to England, and the customer service representative I dealt with made me feel as though I would not be approved to have a free account, and that I would need to get an account with a monthly fee. I'm sure you'll agree that those tactics were dishonest and not the kind of first experience you would want a customer to have of your bank. The second issue is your bank's decision not to support android pay when it was released a few months ago. I believe this speaks volumes about your banks vision of the future, and I am not content to stay with a bank that are behind the technology curve. I believe the banking industry is set to go through dramatic changes in the coming years, with the rate of technology changes only increasing and the advent of game changing financial technologies such as crypto currencies and the block chain. If your bank cannot support something as relatively simple as android pay, how will it fare when these technologies mature and shake up the banking industry? In short I need a bank that embraces new technologies and so I shall be switching banks to a more forward looking bank. Thank you for your time. Kind Regards, Ryan Hark activity 2 Imagine you're about to switch banks. Think of the main reason/s you'd want to switch. Compose a break-up letter to your bank manager, cancelling your account, explaining why you want to switch.
  45. 45. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 46 PAIN POINTS MAJOR PAIN POINTS: OVERVIEW YOU DON’T SPEAK MY LANGUAGE YOUR TECHNOLOGY IS SO LIMITED I’M JUST A NUMBER TO YOU I FEEL LIKE YOU’RE OUT TO GET ME YOU DON’T TRUST ME, DO YOU? I HAVE TO JUMP THROUGH SO MANY HOOPS 1 2 3 4 5 6
  46. 46. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 47 PAIN POINTS MAJOR PAIN POINT 1: THE LANGUAGE OF FINANCE The iGEN express a lot of frustration when entering the world of banking and financial services, because of the way account services and terms are presented to them. The language of banking is something they a forced to learn rather than instantly connect with. They feel that the odds are against them from the start and it is difficult to find the information and advice they need to make smart decisions with their money. Many are unfamiliar with even the most commonly used terminology like Current accounts, or the difference between Debit and Credit cards. Add to this the jargon and never-ending terms and conditions and it makes these consumers feel like banks have something to hide. The iGEN crave uncomplicated straight-talking advice to help ease them out of the feeling of intimidation when presented with the need to make decisions in an alien language. But it’s not just direct translations and explanations of terminology that the iGEN need; they’d like a more open and impartial conversation about the financial options available to them. The iGEN does their research online before buying and this includes financial products. But for big money moments they want to also talk to someone face to face that speaks their language and can make recommendations to suit their personal situations. So many iGEN consumers currently go to their parents as a first port of call for financial advice partially due to their lack of trust in banks but also because of the barriers that banks themselves have created between them and their younger consumers. When talking about what they wanted from their bank, the topics of clarity, simplicity and transparency in communication came up frequently. The risk of not providing younger consumers with a less alien way of communicating banking services is of increasing the disconnect that the iGEN feel between themselves and their banks. Banks that don’t speak their consumers’ language create a feeling that their products and services ‘aren’t for me’ which in a competitive market landscape is a big risk to take. YOU DON’T SPEAK MY LANGUAGE 01 “To me, finance and banking beyond the day to day is quite intimidating. My ideal solution would be a free service offering impartial advice and information to help myself and others to move forward in the financial world and take big steps like buying a house, taking out a loan or making solid investments.” Natasha
  47. 47. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 48 PAIN POINTS MAJOR PAIN POINT 2: LACK OF PERSONALISATION The iGEN are savvy consumers and are very open to switching to a new bank or simply opening a new account elsewhere if they feel they can get a better deal or feel more valued at another bank. Many iGEN consumers feel no particular loyalty towards their bank/s even those that have been with the same bank for many years. In fact, the iGEN are so aware of the benefits new customers can receive that they feel unfairly treated as existing customers. Over time, instead of building a stronger connection with their banks many iGEN consumers feel undervalued and forgotten as their bank chases new customers. They feel that interest rates, cash rewards, other benefits and other incentives do not reward loyal customers but are only there to attract new customers. This leads savvy iGENs to switch entirely or to open new accounts and move their main financial dealings to the bank offering the best incentives, letting their old accounts lie empty and unused. However the feeling of being undervalued and overlooked is not just about preferential rates and rewards elsewhere. iGEN customers that have been with their banks for some time feel that they deserve more of a personal service once they’ve demonstrated how they manage their money. They feel the amount of data that banks build up on the personal finance habits of their customers should be put to better use by offering personalised recommendations and advice. iGEN are more likely than older consumers to forego some of their privacy if it means a resulting increase in relevance and personalisation, and they don’t understand why banks can’t treat them in a more tailored way, given all the data they have on them. When we asked our participants whether their bank knows too much about them, the majority said yes. But when we asked how they felt about that, the vast majority agreed it was fine as long as they benefitted from it. The iGEN want their bank to pay attention to their unique needs and situation, and to treat them as individuals rather than treating every customer in the same way. I’M JUST A NUMBER TO YOU 02 “Every year that passes I feel more like a number than a person.” Celia “I feel that new customers are valued more than long term customers and I want to find a bank who values both." Cat
  48. 48. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 49 PAIN POINTS BREAK-UP LETTER TO A BANK MANAGER Dear Bank Manager, I have decided to close my existing account with your bank. Let me briefly explain the reasons below. I have held this account for almost 2 years, and moved a considerable amount of money in and out of it. When I opened the account, I did not get the most basic type of account but one that met all my daily banking needs. Fair enough, I never had to pay a penny to keep this account open, but I did not get any advantages with it neither. During the time I had this account open, I was never offered any kind of overdraft facility (which, as a new customer did not get, understandably) or any other kind of perks. Not that I would have liked to have an overdraft, but after the initial hassle of opening an account and going through all the checks and feeling a bit uncomfortable by sensing that the banking industry does not trust a newcomer, it would have been nice for you to say "Well, you have proved to us that you are a nice and loyal customer". At the moment it kind of feels like that I am trusting you with all my money, and all I get back in return are some shopping offers that prompt me to spend more money than I actually want. You see, I never needed any special services from you. I did not look for flashy titles of "best customer service" or anything like that. I just needed a place where my money is safe and accessible, which is what I got. However, since you never even gave me a nod indicating that you trust me now, only offered me account upgrades for fees I did not want to pay, I decided that I am moving my money to a different bank. Nowadays, it is easier that ever to move all my banking to a different place - and there's always a bank that will give me a nice bonus to do so. I could even move my account around every year or even twice a year, and earn a couple of hundred pounds in the process, or remain with you while you are sitting on all my savings and monthly budget for nothing in return - probably turning all my money around meanwhile for a good profit that I never see anything of. Well, I think all of the above is enough reason to finally close this account. Yours, Gergo Hark activity 2 Imagine you're about to switch banks. Think of the main reason/s you'd want to switch. Compose a break-up letter to your bank manager, cancelling your account, explaining why you want to switch.
  49. 49. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 50 PAIN POINTS MAJOR PAIN POINT 3: EXPLOITATION AND DISTRUST Many of the UK iGEN consumers we spoke to felt that banks were working solely to serve their own interests rather than protect those of their customers. They feel that many banks today have been designed to trip up the vulnerable, and lead them into financial traps that are difficult to get out of. Although not all iGEN feel discriminated and preyed on by banks because they are young, there is the common view that banks treat those with less money very differently and the nature of being young puts them into that category. This is especially the case for iGEN consumers about to leave or that have recently left university, feeling the weight of debt and the pressure to earn. Some have been offered overdrafts, accounts and credit cards that have put them in financial trouble, and led them to feel out of their depth after leaving the bubble of university. These young people feel they are fighting a losing battle when student loan repayments don’t even touch their monthly interest, and their once huge interest-free overdrafts are shrinking by the day. Even those without huge student debts but that have small or irregular salaries and minimal savings feel marginalised. Many iGEN consumers spoke of being charged account fees because their regular payments into their current accounts weren’t high enough. And with more young people making their money in less traditional ways, starting their own businesses and freelancing, this pattern is not set to stabilise. For those young people who see themselves as vulnerable consumers, especially those that feel targeted by banks who see them as unstable and financially profitable, clear and transparent face to face contact is even more important. They want a real person they can trust to ask questions and give them straight answers, and who they don’t think is trying to set them up to fail. I FEEL LIKE YOU’RE OUT TO GET ME 03 “I think student banks are pretty unfair as well, they’re sort of designed to get students spending in their overdraft, and then you have to pay ridiculous interest on it.” Michael “People feel ripped off because even though the T&Cs are there, they don’t feel like it’s properly explained.” Victoria
  50. 50. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 51 PAIN POINTS MAJOR PAIN POINT 4: BANKS LOOK DOWN ON YOUNG PEOPLE Younger people are well aware of the controversies surrounding modern banking and traditional financial institutions. While participants noted that this sort of corruption does not affect them on a day to day basis, the underlying feeling of distrust continues to affect the relationship they have with their bank. Throughout this study we have highlighted a general lack of trust amongst iGEN toward banks and financial institutions (in fact, institutions in general). By now this is probably not a shocking insight to read. But what is interesting is that this sense of distrust swings both ways. Not only do iGEN not trust banks, but they feel that banks do not trust them. Many participants in our study felt untrusted and manipulated by banks. They say they are looked down on because they are younger and have less money. They are discriminated, or exploited because they are not trusted to take care of their money. They felt unwelcome in this adult world and undervalued as customers. When in fact, the iGEN are crying out for banks to take them seriously and provide them with the tools they need to manage their money responsibly. They believe that if banks behave fairly towards them they themselves have a responsibility to become accountable for their finances. There is an overwhelming desire to save money and be responsible with their spending, even if they think the big ticket items (a house, a car) are out of reach or irrelevant. But iGEN consumers recall touchpoints with their banks when they have been treated with distain by customer service agents, overlooked, generalised or patronised simply because of their age or their current bank balance. They really don’t want to live up to the stereotype they feel is placed on young people but want more support from their banks to help them to do so. As we can see from our stats, a strong proportion of iGEN consumers in the UK are actively contributing to and seeking out savings and investments. YOU DON’T TRUST ME, DO YOU? 04 "Since you don't trust me as your customer, I don't trust your bank." Angus “I think they have certain credit cards that are marketed towards young people because usually young people are less financially stable, so they think they’ll make more money off of them. It’s kind of exploitative in a way.” Daniel
  51. 51. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 52 PAIN POINTS MAJOR PAIN POINT 5: CONSUMERS NEED MORE FROM MOBILE BANKING The importance of technology to the digitally-savvy iGEN audience cannot be underestimated. To these young people, effective and convenient technology solutions make or break a bank, frequently representing the most important factor when choosing a new bank or product. If a bank doesn’t keep up with the platforms and solutions that this audience expect, they will be seen as behind the curve in all regards. Seamless mobile banking that offers the same functionality (and more!) as online banking i.e. via a desktop is where iGEN consumers want their banks to focus efforts. They would happily use mobile banking only over desktop/online and certainly telephone banking if the apps allowed them to do more than check their balance and transfer money between their own accounts. Compared to what they can achieve through their mobile phones in their interactions with brands in other sectors, banking apps are way behind the curve. The limitations are major frustrations and are important enough to iGEN consumers to switch banks. Where mobile apps aren't up to scratch, and this is often the case with major traditional banks, iGEN consumers are looking elsewhere. Many talked about switching to online-only banks that invest their money in improving their technology rather than spending it on bricks and mortar. Whilst mobile banking apps are the top priority for iGEN, they also want their banks to keep up with technological developments in payments and money management. Some study participants told us they switched banks because they didn’t support Android Pay, or wouldn’t allow them to have a contactless card. Having below-average technology for something as important as their everyday banking is a real issue for iGEN consumers who are used to being able to do everything from their mobile phones. Sophisticated mobile apps are not only nice-to-haves, but must- haves. YOUR TECHNOLOGY IS SO LIMITED 05 “When switching bank I would seriously reconsider the bank if it didn't have mobile banking.” Mark “Banking apps have been the same since they were launched, all you can do is check your balance and generate security codes. Let's change that.” Elliot “I am not content to stay with a bank that is behind the technology curve.” Ryan
  52. 52. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 53 PAIN POINTS THE TREND TOWARDS MOBILE BANKING 58 58 16 65 62 21 72 45 20 73 26 16 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 PC/Laptop Mobile phone/smartphone Tablet % audience using each device for internet banking iGen Older Millennial Gen X Boomers iGEN’S USE OF MOBILE BANKING IS ON A PAR WITH PC/LAPTOP BANKING In Q3 2016, 58% of the UK iGEN online population used their mobile phone for internet banking. This is exactly the same as PC/Laptop use and if we look at the trends over the past year is forecast to fall into second place to mobile banking by next quarter. Currently, iGEN are the least likely generation to use the PC/Laptop for online banking, despite being more likely than Gen X or Boomers to use their mobile phones. 0 10 20 30 40 50 60 70 80 Q4 2015 Q1 2016 Q2 2016 Q3 2016 % iGEN using each device for internet banking over time PC/Laptop Mobile phone/smartphone Tablet Source: GlobalWebIndex, UK, Q3 2016.
  53. 53. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 54 PAIN POINTS CURRENT MOBILE APPS ARE TOO LIMITED LESS THAN HALF OF iGEN MOBILE BANKERS USE THEIR BANK’S APPS iGEN consumers are just as likely as older generations to do their banking online. 80% of the iGEN regularly use internet banking across any/some device in 2016; approximately the same as the UK average. However the nature of this usage varies and paints a poor picture of the capabilities of the mobile banking apps available today. 58% of iGEN use their mobile phone for banking, but only 23% regularly use a banking app to do this. With less than half of iGEN mobile bankers using their bank’s app, opting to use their mobile browser instead, coupled with the qualitative trends this study has uncovered about the iGEN’s frustrations with the limitations of mobile banking apps, there is a lot to be done to bring the functionality and experience of mobile app banking up to the level of online/desktop banking. IGEN GET SUPERIOR APP EXPERIENCES ELSEWHERE The relatively low usage of specific banking apps does not mean the iGEN doesn’t use apps. This mobile-first audience are huge users of mobile apps for their news, social media, gaming, utility and entertainment. They have developed high expectations through their use of leading apps and demand a higher quality and user experience than most bank apps currently offer them. The good news for banks? More iGENs used a banking app than Tinder in Q3 2016. The bad news? iGENs used Pokemon Go much more than banking apps. Source: GlobalWebIndex, UK, Q3 2016. 80 58 23 84 62 27 81 45 26 77 26 19 0 10 20 30 40 50 60 70 80 90 Any device Mobile phone/smartphone Specific banking app % audience using internet banking via each online touchpoint iGen Older Millennial Gen X Boomers 0% 10% 20% 30% 40% 50% 60% 70% 80% YouTube Facebook WhatsApp Snapchat Pokemon GO Any banking app Tinder % iGEN using each mobile/tablet app
  54. 54. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 55 PAIN POINTS MAJOR PAIN POINT 6: BANKS MAKE IT HARD TO DO BUSINESS WITH THEM Seemingly simple tasks really frustrate iGEN consumers when they turn out not to be simple for them at all. iGEN participants expressed frustration with the outdated processes some traditional banks have in place for closing or opening accounts, problem solving and fraud protection. Study participants talked about the friction and long waiting times to solve problems that in their minds should be fast and easy to fix, blaming old-fashioned systems and clunky practises that aren’t suited to modern banking. This consumer group that values instant gratification simply cant understand why certain tasks are so difficult. A common pain point is waiting for transactions to clear, and therefore never being able to be certain that their balance is actually what they think it is. Study participants pointed to many occasions when they had been caught out by this and ended up paying overdraft fees because they hadn’t allocated for transactions to clear. They don’t see why they need to wait. Similarly, another common complaint is waiting too long for replacement cards to arrive after being lost, stolen or swallowed by the ATM. Changing personal details like address and contact number is equally frustrating to these consumers that are used to this being a very simple process in their dealings with other companies. Banks that achieved simplicity and efficiency without taking too much time from our participants were praised and appreciated for it. When talking about their ideal bank, simplicity was an often cited quality. iGEN customers would rather not have to speak to anyone and not have to fix anything; they just want their bank to work seamlessly for them. But when they do have to speak to their bank to sort out a problem, they really hate having to phone up. They would always rather use online chat or go into the branch to speak face to face than have to phone their bank for support. The phone is really seen as a last resort, for emergency situations. iGEN consumers look forward to a time when security measures are vastly improved and they don’t have to wait or jump through hoops to action simple tasks. I HAVE TO JUMP THROUGH SO MANY HOOPS 06 “Can’t stand HSBC. They never made anything easy…asked them to close my account four years ago and it still hasn’t happened.” Laura P, 25 “I tried to get a savings account and my own bank gave me three separate accounts and I have no idea how they’re different. I just want a singular account.” Victoria T, 24
  55. 55. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 56 PAIN POINTS WHY WOULD iGEN SWITCH BANKS? CUSTOMER SERVICE IS A DEAL BREAKER, BUT NOT NECESSARILY A DEAL MAKER FOR THE iGEN Important to note here is that whilst 47% of our iGEN Hark panellists gave poor customer service as a key reason for wanting to switch banks, it featured low on criteria they look for in a new bank. iGEN consumers can point to many examples where they have received poor customer service and in many cases this has caused them to switch, but customer service is much less of a draw for consumers looking for a new bank. In fact, they hope they don’t need customer service and instead choose a bank they think will run much more smoothly and meet their needs better. The iGEN appreciated those banks hot on fraud protection, particularly ‘suspicious behaviour’ text alerts, however a number of participants cited bad experiences with sudden, unnecessary account shut downs and over-zealous protection measures as their main reason for switching banks. As previously discussed, a lack of ROI, low interest rates and reduced incentives for long-term customers ranked high on the list of reasons participants put forward. Perhaps as a result of this need to constantly switch between banks and manage multiple accounts in order to benefit from new member incentives, slow or inefficient digital tools and apps came fourth as the most common reason for leaving a branch behind. The iGEN is a generation of digital natives, yet a number of participants still cited ‘no local branch’ as their number one reason for switching. This confirms a sentiment already expressed by iGEN participants, young people are comfortable online and expect technological innovation, but face to face contact is preferable when it comes to ‘big money moments’; like taking out a loan or considering a mortgage. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Customer service Better incentives elsewhere Interest rates Digital tools Charges and fees Other No local branch Travel problems iGEN’s main reasons for wanting to switch banks Hark activity 2 Imagine you're about to switch banks. Think of the main reason/s you'd want to switch. Compose a break-up letter to your bank manager, cancelling your account, explaining why you want to switch.
  56. 56. BANK TO THE FUTURE // #REBELTHINKING // GOOD REBELS & REEVOO // PAGE 57 PAIN POINTS BREAK-UP LETTER TO A BANK MANAGER Dear Bank Manager, I would like to close my current account with you as I find your mobile banking app slow and tedious to use. It has limited functions and takes way too long to load. As someone who is frequently on the move and needs access to online banking via my mobile, this simply isn't good enough for my needs. I will be switching to another bank as their mobile app has many more features and works flawlessly. Yours sincerely, Ash Hark activity 2 Imagine you're about to switch banks. Think of the main reason/s you'd want to switch. Compose a break-up letter to your bank manager, cancelling your account, explaining why you want to switch.
  57. 57. 05. BANK OF THE FUTURE Why banks need to make big changes fast

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A global study into 16 to 25 year olds and everyday banking looking at how banks can stay relevant for young people in the face of disruption in the financial services industry.

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