The Millennial generation, defined loosely as those born between 1981 and 2005, currently consists of 75.4 million people in the U.S., surpassing Baby Boomers by 1.5 million and claiming the title of America’s largest generation. As these individuals grow older, their impact on the economy and payments industry becomes more and more noticeable. Companies like Visa and First Data are aware of the Millennial presence in the industry, and they’ve created guidelines to prepare businesses and financial institutions on how to best serve the generation.
Let’s break down what sets this generation apart, what they expect of merchants, and what companies need to know about this population.
What sets this generation apart?
Apart from their vast size, there are a few other distinctions that define the Millennial spender. If there are two words to encompass the Millen-gen as a whole, those words are “digital technology.” Since they were raised in the era of emerging digital banking capabilities, they don’t write checks and they transfer money through their phones. As the heaviest users of smartphones, their attitude towards technology sets their expectations as consumers apart from other generations.
Another important thing to know about Millennials is that they are increasingly affluent, and the highest spenders of all their global peers. However, while they’re known for being active consumers, they’re also conscious about saving - 63 percent of Millennials have a saving goal, and 47 percent have $15,000 or more in savings.
So, these things considered, it would be reasonable to assume a Millennial’s priorities when it comes to banking: easy accessibility and advanced technical capabilities. Visa gives us a few other ideas in their recent report for understanding the Millennial mind-set:
What do Millennials expect?
What should issuers/merchants know about Millennials already?
Visa recently provided four top recommendations for issuers and merchants regarding preparation for best serving Millennials. Some things to consider are the growing rate of digital wallets, which spark the Millennial interest in new payment and rewards solutions for their digital lifestyle. A major key is to transition from a product-centric approach to a customer-centric approach, which is Visa’s first recommendation. Other suggestions include:
1. Move to a digital-by-default ethos.
This involves giving more of a voice to your customers. Encourage community participation by creating a social network where customers can engage and share experiences with one another. Give your brand a digital presence, and offer digital access to accounts for self-reliant Millennials.
2. Adopt a multi-channel approach.
Creating a consistent omnichannel experience for your customers should be a priority. Understand and invest in your customers’ preferred channels, and integrate or align customer relationship management across products. Overall, the customer should experience a seamless journey across touch points, while receiving real-time information and alerts.
3. Be disciplined, with accurate targeting and relevant communication.
This includes developing differentiated and specific messaging for younger and older Millennials. It’s important to consider strategic inter-generational cross selling, for example, Gen X/Baby Boomers to Millennials for certain card types. Be authentic and true to communication, and design a customer engagement strategy to cover an entire lifecycle, if you want lifetime customers.
Visa isn’t the only company analyzing the Millennial generation’s economic influence. According to a recent First Data report, Millennials are said to be the financial force of tomorrow. They recently published ‘The Unbanked Generation’ guide to give better understanding to this generation’s effect in numbers. Some important takeaways include:
Over the next few years, we should see the industry adapt to the increasing expectations of the generation, resulting in quicker payments, simpler personal account management and an overall emphasis on prioritizing customer relationships. Millennials are shaping payments, and businesses have no choice but to evolve with them.