BBB: THE BACKWARDS BEHAVIOUR OF BANKING

It’s clear that the financial narrative for millennial’s is different, their attitude to money

is a direct reaction of merging into adulthood, slap bang in the middle of a recession. Considered the ‘New Rich’, modern day spenders are having to make the most out of their resources and carving out their own life perks.

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But why is this? Why are millennial’s being side-lined as needing instant

gratification, being irresponsible spenders and the generation of ‘non-savers’?

Maybe it’s because buying a house has become a distant dream for many of us. The average income of a 22 to 30-year-old is now 8% lower than it was in 20081, and the average under-30-year-old spends nearly a quarter of their monthly outgoings on rent2 – which rises to more than half their outgoings in London!

With house prices so high they can’t surely increase, consumers are having to become more frugal with everyday essentials. All because lenders are restricting their loan requirements and credit extensions trying to ease back the level of debt, a positive affect but causing many frustrated consumers and the desire for something new.

All this means that house-buying and retiring at 60 with a large fat pension is as plausible as a double lottery win. Is it any surprise that millennial’s have changed the rules?

No, being the clear answer.

But what isn’t clear is why banks aren’t doing anything about it? Why aren’t the banks recognizing this current and future consumer and their new needs. Why is it that they are continuing to stick to experiences, communications and more importantly a product portfolio that couldn’t be further from the needs and emotional desires of this new consumer.

The answer is a simple one of two choices; either because banks don’t understand their modern day consumer or they don’t have the impetus to adapt and innovate at the pace required.

Spending years building portfolios and processes, including countless research pursuits into their consumers, their giant millennial

base and just choosing to ignore it. Why waste the effort? These shortcomings come from the banks biggest attitude and stubbornness, waiting for the younger client base to ‘grow up’ and be part of the ‘real world’ before catering to their need, whereas it should be the other way around. Ignoring their needs is nothing short of risking extinction.

The New Rich’, modern day spenders.

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It seems that despite all of the above, our financial landscape is unfortunately very reactive

rather than proactive, creating barriers not opportunities with action’s that lack connection and emotional gravitas. It take’s more than a new low-rate loan to ensure millennial’s alter their perspectives on money.

These barriers are being exemplified by…

…Creating this ‘buy now, pay later’mentality with credit cards and the cashless society of today, exploiting consumption behaviour, fuelling that swift fulfilment of spending joy but leaving a mass of debt in it’s trail.

…Lack of trust, a blend of defectivereputations and lack of transparency with banks; playing down the T&Cs, small print and high interest rates that cause a detrimental ‘gotcha’ experience for consumers.

…Further complicating the alreadycomplex network that is finance. Banks are leaving a whole generation of uneducated consumers behind. From ISA’s to bonds, consumers are completely unaware of their rights, options and how to go about helping themselves.

Whichever way you look at it; banks need to strategically look at these barriers and invest into reforming and educating the consumer’s future. Moving from a reactive to a proactive industry by seeding change, making finance more fruitful and ensuring banks build a deeper emotional connection with consumers. Choosing to partner with the consumer rather than patronise.

Some organisations are working to overcome these barriers; take for instance Mondo, a UK-start-up challenger bank, is set to focus purely on consumer spending, and will operate solely online and through a mobile app. By working with innovative technology to provide users with more control and access to their saving details, they hope to give consumers a more informed sense of how their spending habits accumulate and educate on how to improve. This will be combined with a transparent and open approach to fees and surcharges. Mondo’s move to capitalise on the lack of trust users have in traditional banks clearly struck a chord – the firm raised its target £1 million in 96 seconds through crowdfunding.

The need for change is more prevalent now than ever before. How

YOUR ANSWER.

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do you go about creating this change and understanding your consumer?

Banksy Art.

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