Cisco Retail Banking Survey Finds Generation Y Consumers' Needs Will Transform Retail Banking
Banking Industry Could see Up to 10 Percent Revenue Increase with Adoption of New Business Models and Video Services
SAN JOSE, Calif. - Feb. 23, 2010 - Cisco today announced the findings of a retail banking study that suggests banks have an opportunity to increase revenues up to 10 percent by embracing Generation Y consumers. Conducted by the Cisco Internet Business Solutions Group (IBSG), Cisco's global consultancy, the study surveyed 1,055 U.S. consumers to better understand their financial priorities, service expectations from banks, video adoption, and interaction preferences. The study's results are wide-reaching, revealing that Gen Y consumers trust their banks and, despite recent financial setbacks, are seeking their help in making important financial decisions.
Gen Y Will Transform Retail Banking
Young consumers are embracing new communications technologies such as video, and are adopting online behaviors at an astonishing rate. Survey results indicate the rise of Gen Y will have a profound impact on retail banking, providing the next opportunity for substantial revenue growth. Debt reduction, expense management, and financial education are key priorities for younger consumers. Findings included the following highlights:
- More than 50 percent of Gen Y own a webcam, compared to less than one-third of boomers and silvers.
- 20 percent of Gen Y visit YouTube multiple times a day (five times more than boomers and silvers).
- 97 percent of Gen Y use mobile phones.
- Nearly 40 percent of Gen Y consumers are interested in interacting with an adviser via video, compared to 17 percent for boomers and silvers.
- Gen Y consumers are four times more likely than boomers and silvers to have posted a question about financial matters to a blog or online forum.
- 40 percent of Gen Y customers use web-based personal financial management (PFM) tools (primarily those offered by their banks) to manage expenses, reduce debt, and maximize long-term savings.
- More than 33 percent of Gen Y consider banks to be their preferred channel to receive professional advisory services.
- 85 percent of Gen Y are satisfied or very satisfied with their current financial services providers.
- More than one-third of Gen Y consumers believe they need assistance managing their financial affairs, while less than one-fifth of baby boomers and "silvers" feel the same way.
- Gen Y consumers value the financial advice of friends and family three times more than boomers and silvers.
Gen Y Wants Financial Advice Delivered via Video and Mobile Phones
Gen Y Favors Automated Video- and Virtual CommunityBased Financial Advice
Gen Y Wants Financial Advice Delivered from Their Banks
Gen Y Needs Help Making Financial Decisions
Innovative Retail Banks Will Have a Significant First-Mover Advantage with Gen Y
While Gen Y customers are generally satisfied with their banks, 26 percent would consider switching if they found a better value. To capitalize on this opportunity, Cisco IBSG recommends that banks create an integrated value proposition that meets the stated needs of Gen Y to help manage their finances, debt, and spending by offering professional advice in an automated fashion. Banks must address three key areas to develop this new approach:
- Build or Acquire Personal Financial Management (PFM) Capabilities To Help Customers Gain Control: Build capabilities to personalize advice on an Internet platform. Provide PFM functionality on a mobile platform that enables real-time alerts, reviews, and decision making.
- Improve Consumer Intimacy Enabled by High-Definition Video Capabilities: Introduce the opportunity to interact with centrally located financial services experts over video in priority branches. Prioritize branches that have a significant high-net-worth (HNW) consumer population and / or an opportunity to serve small and medium-sized businesses. Expand video-enabled advice to consumers' homes and mobile devices when technology becomes more prevalent and adoption rates increase.
- Develop a Financial Services Online Community: This should comprise a customer's family, friends, and peers enabling Gen Y to access the financial advice they value from their personal network, along with the trusted professional advice they want from their banks.
The Cisco IBSG study surveyed 1,055 U.S. consumers aged 18 and older. The survey's 75 questions focused on the different generationsGen Y (consumers born roughly between 1980 and 1992), Gen X (people born between 1960 and 1979), boomers/ silvers (those born before 1960) to achieve an accurate depiction of generational preferences and trends in retail financial services. The study was conducted by the Cisco IBSG Economics practice, which provides research on trends, innovation, and game-changing business practices across 10 vertical markets. For more information about the Cisco IBSG retail financial services survey, please visit www.cisco.com/go/ibsg/financialservices.
- Jörgen Ericsson, global lead, Cisco Internet Business Solutions Group, Financial Services Practice:
- Philip Farah, director, Cisco Internet Business Solutions Group, Financial Services Practice:
"Retail banks have a great opportunity to capture first-mover advantages. Gen Y wants financial advice from trusted sources and will turn to the banks that offer these services in the most compelling and tailored way. Banks that cater to the needs of Gen Y have the potential for significant revenue growth."
"The recent economic crisis has accelerated the rise of Gen Y as a major segment for the U.S. economy while the decline of boomers' influence is happening faster than anticipated. This will have a profound impact on retail banking, as banks' current value propositions are mainly designed around the needs of older generations. Banks now have a window of opportunity to embrace Gen Y through the appropriate utilization of technology and a shift in current business approaches."
- The Next Growth Opportunity for Banks: How the Post-Crisis Financial Needs of Younger Consumers Will Transform Retail Banking Services
- Top 10 Reasons Young Consumers Will Transform Retail Banking
- Cisco IBSG Flickr - Top 10 Exhibits
- How Banks Can Capture Mindshare and Increase Revenue
- Jörgen Ericsson and Philip Farah VoD
- Cisco IBSG Financial Services Website
- Cisco IBSG Financial Services Overview
- Jörgen Ericsson Bio
- Philip Farah Bio
- Cisco IBSG Facebook
- Cisco IBSG Twitter
Cisco, Internet Business Solutions Group (IBSG), Retail Banking, Gen Y, PFM, Video, New Business Models
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