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Note: See related articles on pages 11, 25, 27 and 28.
Looking to connect with Gen Y and other hard-to-reach consumers, banks are getting more creative in reaching out to customers online, particularly with personal financial management tools and social media.
In the greater New York City/Brooklyn area, a large and growing community of twentysomethings identify themselves as "freegans." They are not interested in working or having money; they want to live simply and maintain a small carbon footprint. They can be found sleeping in abandoned buildings, dumpster diving for food and playing music on street corners to pay for basic needs (along with asking their parents for money). Many have at least one college degree and most come from middle-class families; they are deliberately shifting their economic mobility downward.
If banks want to grow, this is the type of hard-to-reach market segment they must crack. Not only do many freegans lack bank accounts, some don't even have street addresses.
While not always as extreme, Generation Y's (18- to 30-year-olds) broader mind-set toward finances is different from the views of their Generation X and baby boomer parents. According to a recent Cisco survey, Gen Yers are heavily in debt (25 percent said they had too much debt and 15 percent said they couldn't make ends meet), need help with budgets and finances, and use their cell phones constantly. Meanwhile, those that do bank like their financial institutions more than any other group (85 percent said they were satisfied or very satisfied with their current banks and that they wanted their banks to play a major role in helping them with their financial needs). And they like to have a nearby branch they can visit, even if they rarely do. (See page 11 for more on the Cisco study.)
Such demographic realities are driving banks to rethink the channels through which they interact with customers. In search of new opportunities and hoping to hold on to the business they do have, banks are getting more creative connecting with customers online, particularly with personal financial management tools and social media.
Innovative acquisition
"If you look at the market today, there isn't a wave of [organic] growth for banks to ride anywhere on the horizon, so they...