It doesn’t matter if someone is a senior sorting out retirement or a teenager buying their first car. Finance is a world that is always relevant to life. This is good news for lenders since it keeps a steady stream of new customers coming through the door — at least, there’s the potential for that.
If lenders want to attract new generations of customers, though, they need to make a conscious effort. They must come across as relatable, accessible, and understanding. Here are several ways lenders can market themselves to younger generations.
1. Cultivate Trust
When you’re working with something as sensitive as financial data and the transfer of money, you want to establish trust and safety as top priorities from the get-go. We live in a digital world where scams, identity theft, and countless other cybercrimes are common. The younger generation of digital natives is well-aware of this reality, too. If they feel you aren’t protecting their information, it will undermine their willingness to engage with you.
Make sure you’re safeguarding every aspect of your financial transactions in thoughtful ways that build trust, too. In other words, don’t just say you’re being safe and leave your younger customers in the dark about what you’re doing.
The information age has equipped fledgling adults with the ability to research and understand what to expect. If they sense you’re pushing them to the side or talking down to them, it won’t build that sense of trust — even if you know everything is fine.
This is the very reason complex identity solutions like multi-factor (MFA) and biometric authentication have gained so much traction in recent years. They utilize technology to make transactions safe, secure, and fast.
Solutions like Truework take this concept even further. They reinforce security by only providing personal details about an individual when they give explicit consent. You don’t take their personal information and then disappear for a few days while you mysteriously dig into their personal data. Nor are you verifying things like employment and income through unknown third-party channels that are never identified. You include the customer in the verification process.
Whether it’s through MFA, explicit consent, or other options, make sure you’re clearly establishing trust with younger customers from the get-go.
2. Study Your Audience
The need to know your target audience isn’t anything new. Businesses have always conducted market research. In an industry where your target audience is perpetually changing, though, it’s easy to fall behind on understanding who it is that you’re trying to reach.
Things aren’t even as simple as studying basic demographic elements of younger audiences. When you’re working with finance, lenders need to attain a deep understanding of what drives each generation.
For instance, STRATMOR Group compiled an intricate study on Millennials and how lenders can reach this very large, quickly-aging demographic. The study highlighted a wide variety of factors. For instance, it found that Millennials are connected, prefer convenience, and are multi-taskers.
It also went into detail regarding terms like “tech-savvy,” clarifying that it doesn’t just mean familiarity with technology anymore. A tech-savvy audience is comfortable with digitally enriched, seamless, end-to-end, experiences.
Some of these factors apply to younger individuals (think Generation Z and under). However, older Millennials are already entering middle age, and the information released in the report doesn’t automatically apply to the even younger generations that are following.
The point here is twofold:
- Make sure you are always striving to understand what the youngest members of your target audience are interested in. Also, keep in mind that this is something that will always be evolving.
- Understand that gaining insight about one or two elements of a younger generation isn’t enough for lenders. Finances apply to all areas of life. Those with money to borrow must gain a comprehensive knowledge of what interests, drives, and other key factors are motivating those with borrowing needs.
The takeaway here? If you’re a lender, never stop researching your target audience.
3. Don’t Underestimate Younger Borrowers
The news cycle may be prolific, but it can also be misleading and, at times, even straight-up inaccurate. In the case of younger generations and wealth, it’s easy to read articles and news reports and walk away with the idea that Gen Zers and Millennials don’t understand how to manage money.
They’re struggling to amass wealth, they won’t buy houses, and they have lots of debt. Therefore, the natural conclusion is that they need help with rudimentary money management decisions, right? Wrong.
EU Business School points out that younger generations are smart — and they’re well aware of the fact that banks were a central part of many of the financial struggles of their youth. The challenges that they’ve faced, from the Great Recession to the pandemic, student loans, housing prices, and more, are complex and hardly their fault.
EU also points out that, in spite of the perception from the press, Millennials and Gen Zers are financially self-aware and quite adept at handling their money. They’re able to save, and they can handle financial struggles. Critically, they also know that they can turn to digital solutions instead of banks to solve their problems (more on that below).
Younger generations know how to handle money. They also know that they’re perceived as lacking money management skills. If traditional lenders approach them with a “fix it” attitude, they’re going to send the wrong message.
Instead, make sure to infuse your interactions with respect and a sense of equality. Establish yourself as an ally that is helping your younger customers achieve their financial dreams not someone swooping in to save them.
4. Embrace Tech — All the Way
If they want to attract younger borrowers, lenders must find ways to integrate tech throughout their operations. We already touched on the idea of an “end-to-end” streamlined experience. This isn’t just a convenience or a selling point that sets you apart from the competition. Embedded and highly functional technology is an absolute must for any financial activity at this point.
In 2019, Morgan Stanley was already reporting that as much as 80% of Gen Zers with a smartphone use mobile banking. If lenders aren’t willing to meet younger generations where they are, especially when it comes to technology, they’re going to lose their business.
This isn’t an exaggeration. In the past, borrowers didn’t necessarily have to go to a specific bank. But if they needed a loan, they had to choose a financial institution sooner or later. Now, apps and software solutions have provided a growing number of options that make stubborn banks mired in the past irrelevant.
Digital peer-to-peer lending through companies like Upstart has made it easy for borrowers to access loans through crowdsourced tech solutions. Cryptocurrency has cut the need for banking out of financial transactions entirely.
If banks want to keep up, they must embrace technology and proactively use it to improve their customer’s experiences. This can take the form of mobile check deposits, digital transfers, integrating cryptocurrency options, and so on. If banks are willing to show younger borrowers that they’re using technology to improve their lending experience, they can establish themselves as legitimate options that genuinely meet the needs of younger customers on their terms.
5. Personalize Experiences
The rise in technological capabilities has brought personalization to the forefront. Modern marketing tools can collect information and provide intimate, unique experiences for individual customers in a manner that was never before possible.
While it’s technically true that most of human history didn’t have this level of personalization, it’s important for lenders to remember that younger generations don’t see the world through that lens. They grew up in a time when personalization was and continues to be commonplace.
If banks want to gain the attention of younger borrowers, they need to seek out ways to personalize their experiences. For instance, you could use your market research (see tip 2) to create incentives that align with younger borrowers’ financial goals. Even then, these don’t have to be generic. You could offer one 25-year-old a way to pay off student loans faster and another a way to go on their next globetrotting trip — all based on their personal interests.
If you aren’t sure how to personalize these experiences, try going to the source. Growth from Knowledge reports that 44% of Gen Zers are willing to provide personal information if it will help personalize their experience. Use surveys, calls, feedback, and anything else you can to create an attractive and personalized lending experience.
Financing the Future
There are a lot of ways to attract younger borrowers. The important thing is that lenders realize that they can no longer expect borrowers to organically come to them for cash. There are too many alternative financing options out there to be reactive.
Instead, lenders must embrace a proactive strategy that markets their services to younger generations. If they can do that, they can remain a viable and integral part of their financial lives far into the future.
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