Winning over Generation Y

Article part of The Bank is Dead. Long Live Banking.

By Roger Houghton, strategy director, AnalogFolk

Everyone knows millennials spend all their savings on holidays, festival tickets and nights out, right?

Well, not exactly. Despite the media portrayal of them as free spirits, or ‘snowflakes’, Gen Y are actually on track to build better money habits than Gen X.

Research shows 45% of 18- to 34-year olds save a quarter of their salary each month, compared to just 34% of 35- to 54-year-olds. And 18- to 24-year-olds have the lowest amount of outstanding debt compared to other age groups.

Yet despite a desire to save, in the US, for instance, 60% of millennials say they’ll transact money differently from the services currently offered by banks, and only 33% believe they need a bank at all.

Banks need to engage with the new set of values and beliefs behind this attitude shift if they’re to attract the next generation of customers. How?


While banks could previously rely on passive loyalty (only 1 million people switched their primary financial institution in the UK last year), millennials seem set on doing things differently, with only 46% seeing themselves staying with their current financial services provider over the next few years.

The recent trend that’s seen rising rates of consumer borrowing is also set to be challenged, with 25% of millennials describing credit cards as something that ‘worsens their financial standing’ and another 30% stating they’re ‘not sure how credit cards could be helpful’ to them.

British consumers currently spend more than £50 billion a year on interest repayments on personal debt (or around £139 million per day), which is a significant slice of a provider’s balance sheet.

Millennials’ goals and priorities are clearly different. These themes emerged during recent focus groups and interviews AnalogFolk ran as part of an audience study for PepsiCo, where young people discussed their ambitions and attitudes to money.

Their desire to be ‘free of things’ (a preference for access over ownership) can also be seen as a desire to be ‘free from debt’, which is their primary financial goal, replacing home ownership or early retirement cited by previous generations.



The development of new digital offerings is often cited as the industry’s response to this situation, with one former CEO describing the rise of fintech as ‘a fundamental shift’ to meet the needs of millennials. With research from

Fiserv showing that 80% of consumers would trust a new bank if it had ‘good technology’, you’d expect to see younger, tech-savvy consumers turning to start-ups for their financial needs. But, according to EY’s fintech tracker, it’s actually income, not age, that’s driving adoption of fintech.

While millennials clearly have a strong digital preference, they aren’t defined by it. When it comes to finance, 45% say it plays an important role, but another 46% say it doesn’t, so providers may fail to engage with them if they recreate existing services in other channels without also taking into account millennials’ goals, needs and priorities.


This was the lesson we learned when working with Nike on developing its

digital training products. AnalogFolk recently launched the Nike Trainers Hub, an innovative digital service that uses an intelligence-matching engine to connect consumers directly with one of Nike’s elite trainers.

While this service proved successful in engaging users, we soon learned that giving people digital access to expert advice and information wasn’t enough if we wanted to help Nike members improve their performance.

To go that step further, we needed to make engagement both personal and purposeful. This led to a new engagement strategy, encouraging people to ‘Stop exercising. Start training’, with a redesigned Nike Training Club app that could deliver adaptive training plans based on a user’s goals and needs.


Millennials admit to struggling to understand and manage their finances. In one study, over half said they’d trust

their bank more if it offered useful content. Financial services, though, often seem designed for rational people who make sensible choices, when in fact we’re driven as much by emotion and intuition. Millennials have different goals and priorities and an underlying need for better emotional support, with a third saying they worry about how much debt they have and over half saying they don’t feel savvy when it comes to financial decisions.

To engage with millennials, banks need to focus on meeting their emotional needs, not just their rational, transactional ones. That’s why fintech innovation needs to stop asking, ‘What can this technology do for us?’ and start asking, ‘How can we use this technology to improve people’s lives?’


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