Private banks are not doing enough to attract millennials and some may have already missed their chance to secure them as clients, according to the survey by global consulting firm Simon-Kucher & Partners.
The study findings should concern private banks as 60 percent of millennials said they were not happy with their current wealth management services (in Singapore, the figure is 59 percent).
To capture the business of this high-net-worth generation, private banks have to significantly upgrade their customer experience.
However all may not be completely lost with the report also uncovering several key factors that banks can adopt to achieve future success.
Asia’s wealth managers will need to get the offering right though as it seems that millennials will only give banks one chance to impress them.
It could be argued that compared to previous generations, those born between 1981 and 1996, the so-called millennials, are spoiled for choice when it comes to managing and investing their money.
A myriad of fintechs, insurtechs, innovative online banking and investing services are now widely available and still growing in sophistication, while also staying user-friendly.
In most cases the advanced solutions now mean the need for a relationship manager has been circumvented as the human element has been replaced by the smart phone or tablet as the preferred tool of choice as the conduit for investing.
This recent survey involved 645 individuals from six countries, which included Australia, China, Hong Kong, Singapore, the UK, and the US. Participants had either at least one private banking relationship in the family or at least US$500,000 in investable assets in their personal accounts.
The study found that a vast improvement in the current private bank offering is required to attract millennials. Otherwise, this group of customers will shift their wealth to alternative solutions.
“The future survival of private banks will depend on whether they’re able to master the art of winning millennials and keep them as customers,” says Desi Soetanto, consultant at Simon-Kucher, who spearheaded the study.
Three out of five participants were not satisfied with traditional wealth managers, and 80 percent are currently using or considering using fintechs to manage their money.
These millennials are planning to allocate 56 percent of their investable assets into fintechs, meaning private banks can expect to lose a substantial customer group.
Banks need to learn from brands that millennials favour, such as Apple or Netflix, and adopt certain practices that these innovative companies utilize.
According to Soetanto, in order to successfully upsell and retain clients’ loyalty, private banks need to add “wow” factors to the customer experience.
Soetanto identified a number of extraordinary elements that private banks can offer to hook millennials, including 24/7 access, the option to select their preferred relationship manager, customized recommendations, fee transparency, and comprehensive and exclusive offerings.
Across the board, banks are performing poorly in addressing these factors.
Surprisingly, in what can be seen as a generational shift, price was consistently ranked as the least important factor by millennials when selecting private banking services.