Why Millennials scare financial brands

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Society of Grownups headquarters, courtesy of MassMutual.
Society of Grownups headquarters, courtesy of MassMutual.

Young consumers and digital tech are forcing financial marketing into uncharted territory

A hip storefront just outside Boston that looks like a cross between a coffee house and an upscale co-working space is the latest face of financial marketing aimed at Millennials.

Called the Society of Grownups, it’s designed to convince young  people to sign up for cheese wine and supper events along with friendly financial education. Owner MassMutual, a life-insurance and financial-planning company, worked with design firm Ideo to come up with the concept. It’s staffed with financial planners and operates  as a separate legal entity, with subtle mention of the MassMutual brand. 

About 650 people have paid for chats, guest lectures and one-on-one sessions since the Society’s October opening. Favorite topics? Student loans, cooking skills, travel, investing and home buying, according to Society of Grownups director Nondini Naqui.

"This is a bold experiment that enables a 160-year-old company to learn how to reach a generation of grownups who are faced with unique challenges — like student debt, unemployment and salaries that haven’t kept pace with the cost of living," Naqui said. The center doesn’t sell financial products but data from clients’ financial profiles plus their feedback is used to upgrade the Society’s classes and growing website.

The trendy venture is the latest sign that young consumers and digital tech are forcing financial marketing into new, uncharted territory. Research backs it up. Banking is the industry most likely to be disrupted by Millennials, according to a three-year survey by Viacom. Half of the cohort sees no difference between bank brands, and two-thirds of them think the way we access our money will be totally different in five years, per the survey, which was completed last year.  A third of respondents expect they won’t need any bank at all.

The Viacom finding that’s perhaps most nerve-wracking to financial marketers is that more than 70% of  this group would prefer financial services from  Google, Amazon, Apple or Pay Pal rather than their own nationwide bank.

Life insurers, banks, asset managers and other financial companies are failing to connect with Millennials at a time when these young people need the industry most, concluded a 2014 global study by Bank of New York Mellon and the University of Oxford. About 60% of these consumers said they have yet to see any products targeted at people like them, per the study.

But most people in their 20s don’t have very much money, so why should financial institutions worry? It’s because they have more marketplace influence than their modest income and spending would suggest, experts said. "The emergence of Gen X and Gen Y consumers has shifted the overall behaviors of bank customers, who are less reliant on brick-and-mortar branches and are increasingly comfortable with tech-enabled capabilities, including remote deposits and e-payments," said Binna Kim, Managing Director of Cognito, a financial services marketing firm.

Signs of financial brands bending to Millennial sensibilities include:

  • Allstate’s online insurance subsidiary Esurance last March introduced a video appraisal service that lets customers video chat on a smartphone in real time with company appraisers to get their claim estimate on the spot. For the first time, the company advertised in the Super Bowl this month, in spots that focused on personalization.
  • Wells Fargo and Chase now operate social media command centers to monitor interactions on Facebook, Twitter Instagram and other social media. The command centers each post responses and new content all day for 5-6 days a week.
  • Meanwhile, amid the recent Boston snowfall, the Society of Grownups staff was planning a $30 weekend  class on healthcare reform called "HMO, PPO, WTF?"

Call it the new vocabulary of banking.

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