Rob Manning, Group Strategy Director, Jacob Bailey Group, creative business services agency
The first cash machine was introduced to the world just 50 years ago – an emblem of how quickly transactions change with time. Today, we are moving at speed towards a society that is entirely cashless. Consumer behaviour is changing, something that businesses and governments are starting to recognise and react to.
The news that Visa is considering offering incentives to UK businesses to go cashless, for instance,is one of many similar incentives. But it raises big questions. What are the benefits to businesses and consumers? Is a cashless future simply inevitable? How do we prepare for it?
Visa’s scheme involves asking companies to bid for the money by explaining how going cashless would affect them, their staff and customers. This insight is no doubt crucial to answering some of these questions; and is a smart mechanism that allows Visa to benefit from crucial insight about cashless life in practice.
Some of the main advantages for businesses going cashless are the efficiency, transparency and traceability that the digital future will permit. However, it is also a way of future-proofing businesses as new, increasingly digitised generations demand cutting-edge payment solutions.
What’s more, there is already a real demand for going cash-free.According to a recent survey from ING, one in three people would go completely cashless if they had the option. Meanwhile, 68 per cent of people would rather visit a shop that only accepted cashless payments instead of just cash. Some countries are already taking steps to actively discourage cash payments.The rapid surge in cash alternatives started with physical notes and coins being replaced by debit and credit cards, which are currently being substituted by the steady roll-out of digital alternatives such as mobile payments.What’s more, a handful of companies such as Expedia, Microsoft and Bloomberg are starting to accept cryptocurrencies like Bitcoin as online payment methods, gradually creating a new marketplace for businesses and individuals. There is clearly a pressing need for organisations, no matter their size, to start exploring future-facing payment solutions.
The millennial turning point
Millennials are often hailed as the harbingers of digital change. For this generation, technology-based lifestyle solutions are expected. While it means many businesses have been left scrambling to catch up, millennials are also a useful litmus test for innovation. The audience is a perfect fit for businesses with the ambition of catalysing a cashless society.
The problem is that engaging with and attracting the attention of millennials is hardly easy, especially for financial services brands that people rarely want to hear from in the first place.
We know that millennials are very different in their attitudes and approach towards brands compared to previous generations. They are not hard to reach, but they are hard to impress. They’re also maturing in an economic environment of uncertainty and mistrust. These factors make it more difficult than ever before for financial services providers to prove their worth.
At Jacob Bailey Group, we work with a number of financial services brands. We conducted research to better understand the millennial mindset, how they manage their finances, and what they think of financial services companies. Our Millennial Dilemmas research discovered five key traits that typify this generation:
- Unconfidently confident: millennials need constant recognition and reassurance, but view help as “interference”. They also expect rewards that they don’t often earn.
- Individualistic and entrepreneurial: getting the social media generation’s attention requires tailored communications, offers and rewards. Millennialsembody the entrepreneurial spirit of wanting to be listened to andimpact organisational direction, without necessarily starting a company.
- Instantaneously expectant: millennials expect that everything should be ready how they want it, when they want it.
- Socially and environmentally driven: money isn’t everything to millennials. They value individual benefits and rewards, particularly those which have additional social value.
- Technology focused:having grown up with digital, millennialsprefer instant messaging communication, but find nothing special about it. They increasingly value personally addressed printed material and face-to-face support for bigger decisions like loans or account changes.
This invaluable insight is crucial to understanding millennial behaviour and attitudes, enabling financial services brands to tailor their communications and transactional strategies and better their chances of remaining relevant – such as cashless options integrated with a greater value exchange.
From insight to action
Of course, uncovering and then applying insight isn’t always an easy feat, and not just for traditional financial services organisations. Even digital-first brands face their own hurdles.
Take MasterCard, for instance. While on the forefront of cutting-edge payment solutions, it has no direct interaction with the people using its products and services. Instead, banks take the role of the middleman. This poses a challenge for the business when wanting to understand the present and future needs of its clients, including cashless solutions, potentially slowing down the pace of innovation.
How to get around this? MasterCard embarked on an internal campaign targeting the many millennials within its 30,000-plus workforce. Creating a “no cash challenge” proposition, with a digital platform to encourage millennial MasterCard advisers to share their experiences of a “life beyond cash”, information could be gathered about their attitudes towards their finances and a cashless future.Not only did 96 per cent say they would use cashless, 95 per cent of bank branch employees felt better equipped to discuss appropriate payment methods to offer customers. While also doubling up as a training exercise, the campaign helped set the scene for a life without cash being not only inevitable, but also anticipated.
It seems increasingly likely that the future will be cashless, and businesses need to start preparing for it. To be most effective, they must really get to know what their customers need on a day-to-day basis. This inevitably requires lateral thinking as every business and sector faces its own challenges.
Millennials are the first digital natives driving change, but the next generation is hot on their heels. Generation Z is looking even more tech and media savvy than its predecessors.
To meet the challenges each new generation of customers will surely bring, brands must stay on the front foot and continue to evolve their products, services and communications. Today, it is increasingly clear that cashless solutions must be invested in – but who knows what the demands of tomorrow will be?