As analysts as well as investors, we take a long-term view. That means we don’t obsess about every headline, nor do we tend to default to knee-jerk reactions. Taking a long-term perspective means looking at current developments and thinking about how they might play out in the future, both directly and indirectly.
We’re not alone in that. We expect the companies we invest in to have a robust and realistic long-term vision that demonstrates they understand the degree to which the world is changing so they can position themselves to attract the customers of tomorrow (and the next decade).
Understanding the expectations of the customer of tomorrow plays a crucial role, which is why companies across the spectrum of sectors pay such close attention to Millennials.
Research suggests that in general, Millennials are worse off financially—on a like-for-like age comparison—than any generation since the so-called “Greatest Generation” that suffered through the Great Depression.
In large part, that’s the result of the Great Recession, and it’s prompted a substantial change in mindset among that younger generation. But while Millennials may not be as wealthy on an inflation-adjusted basis as their grandparents were at the same age, there’s a looming intergenerational wealth transfer that means they could come into money later.
We realise the importance of engaging customers and potential customers at an early stage. That’s the long-term play for many financial services companies. If they can attract Millennials as customers now, they stand a better chance of retaining the customers when today’s younger generations have more assets in the future.
What Do Millennials Really Want?
- Trust in legacy brands is low
- Millennials have clear expectations
- Branding is crucial
There’s a perception that Millennials are very different from previous generations. We don’t necessarily subscribe to that view. The main difference, in our view, is that previous generations didn’t have smartphones or access to the mobile internet.
The ubiquity and speed of mobile communications are changing the way Millennials and other generations interact with brands.
With past generations, there was a fair amount of consistency in the way financial institutions went about appealing to potential customers. Their approach tended to be built around inter-personal relationships, centered on branches and human interaction.
That’s why initial steps towards the digitalisation of banking were greeted with suspicion and scepticism about usability and security.
With Millennials, we’re seeing the first generation that cannot be appealed to in the traditional ways that were used to target their predecessors. We think that while Millennials are not so different from previous generations per se, they may offer some insight into the way future generations could behave.
We think subsequent generations are going to be more like Millennials than like previous generations.
At our recent Global Investor Forum, we hosted a panel of prominent fintech entrepreneurs who shared their thoughts on the rationale for—and challenges of—appealing to Millennial customers. We offer an excerpt from the discussion in our latest “Talking Markets” podcast featuring CEO of Blast and Co-founder/chairman of Acorns, Lindsay Holden, founder and CEO of Long Game, and ounder & CEO of Rocket Dollar. Listen below.