ING Direct’s CEO Vaughn Richtor discusses how digital channels are pivotal for engaging millenials and building financial literacy.
It is almost difficult to imagine doing our banking now the way we did in the pre-digital era. Physically going to check our balance, paying in money over the counter and queuing to transact? These were all commonplace only 15 years ago.
Since then we have gone from telephone banking, to being able to bank at home via pc, to mobile banking and downloading apps in a relatively short period of time. The financial services landscape is changing rapidly and for good reason – customers are influencing it.
There are two key trends which I see changing the face of financial services in the near future; firstly, the customer desire to take control of their finances and secondly, the digital technology which allows this to happen.
Combined, I see a huge opportunity for the financial services industry to leverage consumer appetite for knowledge and control and drive engagement via digital platforms in a simple and straightforward manner.
Young people have grown up using digital platforms and are used to obtaining immediate access to knowledge. They seek information online, share opinions and increasingly look for ways in which they can increase their knowledge around how to do things for themselves – and that includes managing their money.
When I was growing up, you would need to go to a bank and apply in person if you wanted a mortgage. Now, you can do it all online – research, apply and be pre-approved in a matter of minutes. People are feeling more confident in taking this approach, because they have a wide range of information at their fingertips which helps inform their decision making.
Developing financial tools and calculators can also help people make financial decisions independently or at least give them a good foundational knowledge on which to build. Very few people want to spend their time working out the power of compound interest on their credit card, but if there is a tool available which does it for them? That becomes s a far more effective way to educate people and spread the message of financial wellbeing.
Superannuation is one area where I think there is significant room for the industry to make the most of digital technology and make it easier for people to build their wealth for retirement.
Although people are showing greater comfort levels with their savings and mortgages, they still perceive superannuation as complex. Yet, many people only see their balance once a year when they receive a printed statement. Compare that to how regularly and easily people check the balance on their everyday account, or keep track of their savings, or monitor their home loan repayments. These days, it is all digital. Why should superannuation be any different?
If we want to encourage young people to take control of their financial wellbeing, it makes complete sense to focus on digital as a delivery and engagement platform. Digital offers us the opportunity to engage the younger generation early in life, in a way which is meaningful to them and it is an opportunity we cannot afford to overlook.
After all, financial wellbeing is important and, if people have the appetite for taking control of their finances, then banks must make it easy for them to do so.