Marketing Financial Services To The Next Generation
Bridging The Trust, Innovation, Channel, and Content Gap
Financial services marketers are facing a demographic cliff as the market pivots from older legacy clients to younger customers. 142 million tech-savvy and mobile-first Millennial and Generation Z consumers are poised to redefine what digital marketing means in the financial services industry by demanding more innovation, more meaningful experiences and more brand trust than traditional older and wealthier customers.
The CMOs of legacy financial services brands have long relied on a market dominated by older customers. Today, Generation Z and Y (Millennials) make up 42% of the population and 59% of the workforce in the US – but only command 11% of the investment assets ($21T). By comparison older generations (Baby Boomers and The Silent Generation) command 62% of investment assets ($97T) and have largely left the workforce (only 6% are working).
This concentration of wealth with older customers has led to marketing strategies, channels, and budgets in the financial services industry that are heavily skewed to the high and ultra-high net worth market segments. “The industry has followed the money, and until now there has been a lot more money with older investors,” says David Master who has held marketing executive roles at Janus Henderson, Legg Mason, Prudential Financial, and Chase Manhattan Bank over the last 30 years.
But those strategies will not work going forward as industry demand pivots from older clients to younger customers who don’t fully trust legacy financial brands, use different channels to communicate, and have very different ideas about investing, borrowing, and making payments.
These new generations are already reshaping the market, and rules of engagement, across every aspect of financial services – from banking to insurance to investments and payments. Today 60% of Millennials are actively considering insurance, investments, and mortgages. In investments, millennials will increasingly dictate how workplace investments are allocated they will soon comprise three-quarters of the global workforce, according to EY’s Global Generations Research. In lending, Millennials are the highest driver of net new loan demand today, according to a study by Morgan Stanley. Building brand equity and trust with Gen Z customers will matter as these younger borrowers are forecast to account for one third of all consumer debt by 2040.
The elephant in the room is the fact that $84B of assets currently held by older clients are going to be transferred to a younger generation in the Great Wealth Transfer next ten years – which only exacerbates the problem of finding better ways to market Financial Services To The Next Generation.
The art of building brands, trust and relationships with these 142 million younger customers will be very different. I recently hosted a panel of marketing leaders from JPM Chase, Credit Karma, and North Avenue Capital where we talked about the challenges and opportunities that marketers face as they try to bridge the generational gap in terms of building trust, adapting communication channels, generating effective content, and innovating. These industry veterans emphasized that brands need to adapt their offerings, innovations, content, channel strategies, and value propositions to differentiate their offerings in the eyes of younger buyers if they are to succeed. “Since our founding, we’ve worked hard to learn ways to understand and engage millennials and now we’re figuring out ways to engage and differentiate our services with even younger Gen Z buyers who are different in terms of their role, behavior and preferences,” says Kaitlyn Crowder, Vice President, Marketing Director, North Avenue Capital in our webinar conversation. “One strategy that has worked is to differentiate with speed. In a lending sector that is inherently commoditized, we’ve been able to use speed to close as a differentiator. And we’ve focused on building the trust with consumers by backing that promise up by demonstrating ways we ‘walk the talk’ in everything we do when we engage the customer – from providing real time updates, on time follow up, timely response and communications.”
“From an innovation perspective, we are 225-year old bank competing in a rapidly changing payments technologies, marketing to new non-traditional buyers, says Abel Flint, VP of Growth and Brand at J.P. Morgan Payments. “We’ve been effective at authentically emphasizing our strengths and differentiators. We offer ‘fintech with foundations’ which emphasizes both our innovation and but also our reliability, stability, and scale. We’re an established bank and also a technology and data-driven company. The bank has invested $17 billion firmwide on technology and operate globally at unparalleled scale and speed.
Buyer research suggests Financial Services marketers will also have to serve up a different mix of offerings and asset classes to meet the needs of these younger buyers, which are materially different from older customers they are used to. Having grown up amid the economic uncertainty of 2008 and Covid 19, these younger generations are exploring non-traditional spending strategies like Buy-Now-Pay-Later — a market now worth over $30 Billion — and alternative wealth-building methods like fractional housing investments, meme stocks, and cryptocurrencies, according to WHY Report trends research by Horizon Catalyst. Most (72%) younger investors, ages 21 – 43, believe they have to look beyond traditional stocks and bonds to achieve above average investment returns, according to the 2024 Study of Wealthy Americans by BofA. That’s twice as many as their older counterparts (over 44 years old) who feel the same way. For example, 21-43 year olds are seven times more likely to invest in cryptocurrencies and digital assets than Baby Boomers according to the same study. They are also twice as likely to be interested in investing in art and collectables than older investors.
Perhaps the biggest change will be the evolving mix of paid, earned, owned and shared channels marketers must use to “break through the clutter” to effectively engage, educate and activate relationships with these younger buyers. “From a go-to-market perspective, you have to experiment with new and non-traditional channels to meet the customer where they are,” according to Emily Childers in our webinar conversation. Emily heads Growth Marketing at Credit Karma – a personal finance company that engages 140 million Americans – half of whom are Millennials – in their marketplace to help them manage and optimize their finances. “To do that you will have to go to new places and constantly experiment. We are constantly changing the mix of owned, earned, paid, and shared channels to achieve a 360-degree view of the customer and looking for new channels and technologies that can give us first mover advantage,” adds Childers.
Younger buyers have to be engaged differently because they are ‘digital natives’ born into an era of technological innovation. They grew up with smartphones, gaming, and social media as the norm – while Gen Z and Boomer customers had to react and adapt to digital channels. This means marketers must engage brands through a wider combination of channels – ranging from search, television, events, and email to OTT platforms, influencers, livestreaming, social commerce, and games. In particular, social media has become an increasingly important channel to reach younger customers. Over three quarters of Gen Z and Millennials feel comfortable purchasing on social media, according to research by the WHY Group. Younger Gen Z consumers are especially active on social media channels. For example, 80% of them spend time on the YouTube platform, 75% on Instagram, and 69% on TikTok. Half of them spend at least four hours a day on these platforms, according to a survey of 1,002 consumers ages 13 to 26, by Morning Consult Research Intelligence. The amount of time and attention they spend on these platforms is forcing marketers to raise the bar on the quality of their content, rethink their allocation of paid media relative to earned and shared media, and rework their attribution models.
In particular, these new channels are changing the way marketers plan, create, deploy and leverage content, creative and messaging. “Today marketers need to be transitioning to content, messaging, and channels that appeal more to a younger audience. And that will look different in terms of being in shorter form, ‘social ready’, video, and in tune with their individualized interests,” adds David Master who along with Jennifer Ball, the CMO of Franklin Templeton and other leaders in the field, will be speaking about how content has become king in terms of driving sales and client retention in the asset management business.
Overcoming bad content – in the form of misinformation is a big opportunity, according to Emily Childers. “Learning from the internet is the disease that this new generation faces. You need to combat it transparent systems, communications, credit scoring and education,” says Childers in our webinar conversation.
“We see education is a big opportunity,” adds Kaitlyn Crowder. “In our business, if you are not educating customers you are not reaching them. Particularly with brokers – who are important influencers and channel partners in our business. We’ve had to find a way to educate within the limits of attention span by getting to the point quickly and making videos 30 seconds instead of 3 minutes to address the behavior and expectations of younger audience.”
Confounding matters further, younger buyers want honesty, consistency, personalization and privacy all at the same time. For example, both Millennials and Gen Z want honest and transparent communication (97% and 96% respectively) and greater consistency in all their interactions with a company (95% and 93%), according to research by Salesforce. They also demand both personalization and privacy. On one hand over 91% of both Millennials and Gen Z want to be viewed as individuals, not numbers. On the other hand, over 92% want assurances that their customer information is used responsibly, and most would like their financial institution to provide advanced identity and credit protection according to the same study – and nearly half expressed interest in data protection for digital assets, according to a survey of 1,039 consumers by the Financial Brand. This is forcing marketers to change their governance, communication and data strategies.
From a relationship standpoint, Financial Services marketers will be challenged to build trust with younger buyers according to the panelists. A Financial Brand study examining Millennial and Gen Z banking buying behaviors revealed that trust and security are top priorities when choosing a financial services provider.
With all these constraints, changes and balances to navigate, you’d think markers would become conservative. In fact, the best marketers in the industry are embracing this challenge as an opportunity. “All of these changes, new channels, behaviors and trends make this a great time for marketing to create more value,” says Kaitlyn Crowder, Vice President, Marketing Director, North Avenue Capital in our webinar conversation. “You have to be courageous – and experiment like your life depended on it – because sticking with the status quo in terms of content, media and engagement channels will mean failure,” says Abel Flint, title, Growth & Creative Strategy at J.P. Morgan Payments. “You cannot let tradition or legacy get in the way of experimenting with new media content, and ways to go to market. As a long-established 225-year old bank operating in rapidly changing payment landscape – we’ve had to build trust with a new generation of buyers. One avenue is finding ways to tap into the content and channels of publishers, while being authentic, or the co-creation of content with our partners,” adds Flint who will be speaking about ways to make your brand stand out in a saturated and overwhelming multi-channel media environment.
I’ll continue this conversation on November 7th and 8th along with a roster of 45 leading marketing executives from banking, wealth and asset management, insurance and fintech industries speaking about the changing nature of marketing in financial services at the 11th annual Digital Marketing in Financial Services Summit in NYC.
link