Banks in the Asia-Pacific region are increasingly tapping new media tools and increasing technological innovation to attract Generation Y (Gen Y) users, according to a new report.
Released Monday, the study by IDC's Financial Insights noted that most Asia-Pacific banks will place greater emphasis on online banking and mobile banking going forward. Banks' go-to-market strategies will also increasingly focus on new media such as online videos, blogs, podcasts, online games and social networking.
According to Financial Insights, banks in the region will take a three-phase approach to reach out to Gen Y. First, banks will enhance current strategies and products to gear them toward this customer segment. Following that, they will start to develop specific strategies for this target group or sub-segments within the Gen Y base. In the third phase, banks will focus on innovation which will result in new products and channel formats.
Michael Araneta, senior research manager at Financial Insights Asia-Pacific, noted in a statement that current Gen Y strategies of banks in the region are "disparate and tentative". They need to further understand the habits, mindset and preferences of this group of customers to better address Gen Y users.
"Some characteristics of Gen Y banking customers, such as their preference for interactivity, openness to credit, demand for choices, pride in communities, and their sense of entitlement, have become more apparent," he explained. "The overarching trait of this group is the pervasiveness of technology in their lifestyles."
IDC noted that banks have launched initiatives to integrate debit- and credit-card rewards to social networks. They are also exploring "advocate strategies", such as engaging influential Gen Y opinion leaders to endorse and recommend their organization to their network of friends.
Araneta pointed out that the current economic crisis provides an opportunity for banks to gain a foothold in the Gen Y market. To do that, they should quickly modify current channel strategies, product portfolios, and customer experience strategies. This also helps to create new markets and attract new customers.
"After the crisis, banks should focus on being transformative and innovative," he said. "Ultimately, banks should realize that the battle for the Gen Y segment can be won, not by simply building on top of traditional strategies, but by using innovation to respond to preferences that make the Generation Y unique from older generations."