Now is a crucial time for banks to provide flexibility that
caters to Millennials — the next generation of investors.
5. Financial institutions are in the business of risk management, not
innovative disruption. Tomorrow’s successful financial institutions
are those that balance traditional risk with innovation, and align
with customer values to further drive differentiation in a crowded
field. By investing in relationships with customers today, banks can
reap the dividends of loyalty tomorrow. In order to do this, banks
must learn from successful startups while safeguarding the wealth of
the digitally connected consumer.
Of the top trends, we see the following 3 as particularly
critical for successful financial institutions this year.
8. 2 0 1 6 M O S T D I S R U P T I V E T R E N D S
HYBRID LIVING SIXTH SENSE
9. I N T E R N E T E V E R Y W H E R E
For many banking customers, the local branch is no
longer the central hub. Tellers are being replaced by
the greater convenience and control afforded by online
banking. In the past 10 years, online banking has
increased dramatically; over a third of customers at
major U.S. banks regularly use mobile banking,
including 43% of 18- to 29-year-olds.1 The clear
direction is for financial institutions to accommodate
customer demand for complete control at their
fingertips, anytime, anywhere.
10. I N T E R N E T E V E R Y W H E R E
Of course, the rush to mobile banking presents
challenges for privacy and security. Customers
demand convenience, but it must be tempered
with smart innovation. Banks need to ensure
that the “next big thing” in mobile banking is not
the next big data breach.
11. The Rapid Rise of Mobile Banking
and Decline of Bank Branch Locations
An increase in mobile banking among consumers has given
banks little choice but to cut locations or reduce services. In
2014, banks experienced a record year in closures.
IS ON THE RISE…
…WHILE THE NUMBER
OF U.S. BANKS
CONTINUES TO DECLINE
39% of consumers in 2014 ages
18 to 35 would consider switching
to an online-only bank.
Sources: CNBC, 24/7 Wall St.
12. I N T E R N E T E V E R Y W H E R E
As the Internet is increasingly entrenched in everyday life, future customers will expect to
conduct 24/7 banking based on their lifestyle. Maintaining loyal customers will require
banks to respond with systems that allow people to complete most financial transactions
on their mobile devices as seamlessly as ordering an Uber. This means designing with
convenience in mind to create a seamless, user-friendly experience.
This focus on convenience does not diminish the importance of security; banks that
address both stand to gain the most. Customers expect to easily conduct more and more
of their banking on a mobile device. At the same time, they are very aware of the potential
risks of mobile banking, notably identity theft. The greatest opportunity for banks, then,
lies in the balance between innovation and risk.
13. L I T T L E B I G B R A N D S
Trust is at the heart of the relationship between
financial institutions and their customers.
Shaken by ongoing banking scandals in recent
years, customers demand financial stability and
the best-in-class service that they have come to
expect from other industries. Big banks must
manage their vigilance against risk while being
steadfast in finding ways to improve the
14. L I T T L E B I G B R A N D S
An ever-growing number of financial startups
are focused on enhancing the customer
experience in ways that big banks simply cannot.
With high regulatory and capital barriers,
though, these disruptive companies have much
to gain from partnering with established firms.
For big banks, leveraging the agility of startups
presents an opportunity to better relate to their
customers and create brand affinity that will
result in a sticky consumer.
15. L I T T L E B I G B R A N D S
Unencumbered by the inherent risk aversion and entrenchment of big banks, financial
startups, have paved the way for larger institutions to begin to integrate customer
experience innovation into their own platforms. By creating smart partnerships with
startups, big banks can piggyback on the rapid innovation and appealing user experience
exhibited by many startups, while providing startups with capital, test cases, and setting
themselves for potential acquisitions down the road. In turn, this helps big banks appeal
to a new generation of consumers who expect their banks’ user experiences to be as
intuitive and efficient as anything else on the market.
16. L I T T L E B I G B R A N D S
Leveraging local resources is another promising approach. For example, Lending Club
has partnered with more than 200 community banks to offer loans to small businesses
that have been traditionally neglected by big banks. There are certainly inherent risks on
both sides, but these creative partnerships may present new opportunities for banks
willing to consider them.
17. L I F E D E S I G N
Baby boomers have begun to pass down their life
savings and, over the next 30 years, more than
$30 trillion in wealth will be transferred from one
generation to the next.2 This represents
incredible investment potential for financial
institutions, if only they can keep the next
generation as customers. Unfortunately,
Millennials who gain control of an estate often
eschew traditional financial advisors. Banks
must work harder to appeal to the next
generation and maintain brand loyalty.
18. L I F E D E S I G N
Millennials want to invest their money with
banks that relate to them and align with their
values. With this generation, transparency goes a
long way. They are accustomed to siding with
brands that share their values and that can adapt
to their ethos. Ethical and conscientious
considerations play an increasingly important
role in how Millennial customers choose to
invest their money.
19. Sources: Bloomberg, CNBC, DealBook - New York Times, Forbes
The Current Landscape of Financial
Advisors and Millennial Professionals
An estimated $30 billion inheritance will transfer from Baby
Boomers to Millennials. Millennials are expected to spend $200
billion in 2017 and $10 trillion in their lifetime.
29%of Millennials seek
professional finance advice.
71% of Millennials asked
family for financial advice.
45% of Millennials turned to
friends for financial advice.
70%of financial advisors do not
seek clients under age 40.
The average age of a financial
advisor is 50+.
20. L I F E D E S I G N
Millennial consumers want to trust that their bank is a secure partner. Transparency on
the part of financial institutions goes a long way toward fostering that kind of
relationship. But more is needed to build lasting relationships. Now is a crucial time for
banks to provide flexibility that caters to the lifestyles, identities and values of the
Millennial generation. Otherwise, Millennials are likely to look beyond the big banks to
find the customer experience they expect.3
To be successful in generating and maintaining loyalty among the next generation of
customers, financial institutions must position themselves as collaborators in personal
life design. Millennials are information-seekers who want total control at their fingertips
as well as the peace of mind that a transparent banking institution provides.
22. H U M A N -TO - H U M A N
H U M A N -TO - B A N KH U M A N -TO -T E C H
The banking ecosystem—like many
other industries—is shifting
dramatically to be simpler, more
accessible, more real-time and more
transparent. In short, it is becoming
Here is how the industry is re-
imagining its processes and services
to place the customer’s unique
needs and motivations in the center.
The New Banking Ecosystem
23. • Increased use of person-to-person, digital payment platforms that further
eliminate transactional friction.
• More and more people will rely on each other for capital as the sharing economy
and peer-to-peer lending increase in significance.
• Financial institutions will facilitate person-to-person lending and leverage
partnerships with local banks to reach new customers.
H U M A N -TO - H U M A N
24. • As digital banking becomes more prevalent, Millennial customers will
increasingly trust algorithms and “robo-advisors” while shying away from
traditional investment advisors.
• Mobile banking and trading services will allow customers to complete 90% of
financial transactions in 30 seconds or less.
• Fingerprint identity sensors and other digital security modules will help guard
against data breaches and identity theft and continue to maintain the
convenience that customers desire.
H U M A N -TO -T E C H
25. • Customers will trust transparent banks that align with their lifestyle and values;
the exodus from institutions that engage in opaque practices will accelerate.
• Customer experience will demand more attention as an integral investment and
factor into ROI measures as institutions seek new, better ways to provide services.
• Banks will focus on hiring innovators from startups, tech companies, and
agencies while putting guardrails to mitigate risk in the these new types of teams.
H U M A N -TO - B A N K