In banking, verified reviews are now the X-factor for Millennials
It is often said that customer loyalty is dead in banking – especially among younger consumers who have not built up the commercial relationships of their parents.
Research conducted by Feefo among 1,002 of the 16-to-34 age group in the UK has been exploring this issue and reveals that loyalty and engagement need to be addressed urgently by all those in the retail banking sector.
While the majority of this Millennial generation view themselves as loyal, 61% said they are intending to switch providers more frequently in future.
What then, can providers of retail banking, lending and mortgage services do to hang on to this increasingly important age group? In 2016, the 20-to-35 age group numbered 13.8 million people – some 21% of the UK population, so their habits and requirements are vital to the future of banking.
Fortunately, the research offered a very clear pointer. Some 85% of respondents said authentic reviews influence their financial decisions, which came out higher than advice from family and friends, at 82%.
While the Bank of Mum and Dad is hugely significant in the lives of young people, especially as they seek to buy property, it is no longer the paramount factor. Reviews, if verified as being from real customers, are increasingly influential with a generation accustomed to completing so much of its browsing, shopping and banking online.
What emerges from the research is a general feeling among a substantial proportion of young consumers that in the finance world, organisations lack responsiveness. They stand accused of failing to listen closely enough to their customers and of making insufficient enough effort to understand them.
Some 40% in the research, for example, said they have little or no engagement with their bank and only correspond when something goes wrong. Most tellingly, nearly nine-in-ten in the research (88%) said banks and financial institutions can still do more to improve loyalty, which is quite an alarming result.
Not only is the concept of loyalty changing as the Millennial generation matures, the entry to the banking and lending market of new, light-footed technologically-advanced companies and start-ups is also constantly cranking up the level of competition. This makes it all the more pressing for organisations to differentiate themselves through their capacity to give voice to customers and to be seen to be listening to them.
There is certainly no doubting the level of interest among 16-to-34-year-olds in the challenger banks and fintech businesses that are more mobile-friendly and are seen as being more in tune with contemporary life. The Feefo research found that more than half (51%) of respondents are already using a non-traditional service-provider.
When so many of the Millennial generation happily admit they are influenced by genuine reviews, the inference for any retail financial business is clear. Although the 16-34s may prize loyalty, they are prepared to switch banks and lenders more often than their parents and are demanding that organisations interact with them more meaningfully, giving them all the tools, such as verified reviews, that are available to them in other arms of online retail.
In the era of the fintech, the challenger bank and the aggregator website, it is hugely in the interests of all financial services organisations to engage with their customers through review systems such as Feefo, that are transparently authentic and widely-respected. This is now an indispensable means of attracting new customers and maintaining the highest levels of loyalty in a world where the ground is constantly shifting.
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