When it comes to attracting and retaining banking customers, the focus is often on millennials: how do banks identify with them? What services are they interested in using? How do millennials prefer to communicate?
Millennials are important, but they aren’t the only group worth taking note of for banks. Baby boomers – the enduring and financially stable generation of customers – must not be left out of the picture. They often have successful careers, money to save and spend, and high expectations of customer service. Once upon a time, and maybe still so, this generation was naturally experimental and trend-setting in the way they approached new methods of doing things, including technology. Grouping this generation into one specific category is difficult, because they’re likely the most diverse generation of banking customers in terms of how they bank, where they bank and what they want out of their banks.
Half of baby boomers reported more than $100,000 in investable personal assets to Gallup in 2015, with only 37 percent of Generations Xers and 14 percent of millennials reporting similarly. The same data found more than a third have reported having more than $50,000 in deposits at their bank. With that in mind, it is clear to see the value this generation presents to banks: the ability to actively borrow, invest and spend. It is time for banks to really hone in on this core group of customers – one that cannot be overlooked.
STRONG LOYALTY, UNIQUE NEEDS
According to Collinson Group’s Mass Affluent Survey, 60 percent of baby boomer respondents have been with their bank for more than two years and are happy with their service. This is great news for banks: it expresses loyalty to a particular brand and that overall, this demographic of customers is satisfied. In order to retain this loyalty even in light of recent banking scandals, financial services organizations must continue to focus in on baby boomers’ unique banking expectations.
Use a multi-channel approach
Unlike digitally native millennials, baby boomers appreciate banking that takes a multichannel approach. Their high expectation of customer service means they expect banks to meet them wherever they are and whenever they are ready. Maintaining a multi-channel approach demonstrates both choice and good customer service. According to the Mass Affluent Survey, baby boomers bank with different resources across the spectrum.
BABY BOOMER BANKING
As illustrated in the chart above, baby boomers bank digitally half the time. In fact, 47 percent of baby boomers make digital payments whenever they can. With 93 percent of baby boomer respondents saying they have a smartphone, and 54 percent saying they use or can’t do without their banking/finance apps, this digital trend will likely be on the rise. Having learned to adopt new technologies, baby boomers are not strangers to the digital world.
Indeed, leveraging a multi-channel banking approach provides convenient opportunities to introduce boomers to digital services that they do not yet know about or have not yet tried. By empowering boomers to continue to expand their use of new technologies, banks will be able to save money through digital and also provide the elite customer service baby boomers expect: whenever, wherever.
Yet despite the growing demand for digital, it is important not to alienate customers who still prefer the traditional, face-to-face banking interactions at local branches. Nearly a third of respondents stated they still prefer this method of banking. After all, branches are an invaluable resource hub for customers, and it is important to provide the type of customer service boomers are accustomed to.
While the focus of most customer retention programs tends to be on millennials, it is essential to remember that baby boomers are a key segment of the customer population that banks cannot afford to overlook. Indeed, baby boomers have high expectations of their financial services organizations, and expect their needs to be met in order to retain their strong loyalty.
So how can these organizations continue to best deploy their services to hold onto baby boomers’ loyalty? Banks must embrace digital, but be mindful – leverage mobile ecosystems, data analytics and smartphone payments as options, while also being mindful not to alienate customers that prefer traditional banking services at branches. A multi-channel approach will be key to meeting their banking needs. Whether over the phone, in-person or through an online portal, appealing to the evolving expectations of baby boomers is not something that banks can gloss over: their customer loyalty is crucial to success.
Lars Holmquist is the Senior Vice President for the Americas, Collinson Group.