Millennials are poised to become the largest demographic group in the world by the end of the decade. That’s less than 3 years away, folks, and as the stats start rolling in, we’re seeing that they have a very different approach to managing their finances.
For starters, their trust in—and loyalty to—the big financial institutions is at an all-time low, and they’re responding by taking more direct control over their earning and investment decisions, as well as seeking advice from a much broader set of sources.
“…[Millennials] consider technology and online platforms an important aspect of financial advice. 57% [of Millennials] would even change their bank relationship for a better technology platform” – Deloitte, Millennials and Wealth Management
They’re starting more than twice as many companies than Baby Boomers, and 9 out of 10 Millennials are consulting at least one social network for investment tips – twice that of their predecessors.
Simply put, the Millennial generation has both the numbers and the influence to change the way we all bank, save, and invest. Their demand for financial services is growing, but they want and need very different things from what’s traditionally been offered in the past – which means the design of financial services and products, and the customer experiences they deliver should be at the forefront of providers’ efforts to remain relevant in a dramatically changing landscape.
In this post, I’m going to explore how and why the world of finance is experiencing such a tectonic shift, and discover how innovations in user experience and product design are paving the way for this rapid evolution in fintech and financial services.
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How Millennials are reshaping the user experience of financial services
In order to grasp how to design the best user experience for financial products and services, we should start the same way as we would for any other industry: get to know our users! Let’s examine the forces and emerging customer attitudes that are changing the face of the industry, and I’ll explain how we’re seeing them manifest in the UX of different financial services products.
Loyalty? You’ll have to earn it
As I mentioned before, there’s significantly lower loyalty to the established, big-name financial brands among Millennials. Today, less than half (46%) of these customers see themselves staying with their current financial services providers over the next few years, according to a survey on Millennials’ financial habits by credit scorekeeper Experian.
Few groups were hit harder by the 2008 market crash than Millennials, and as a result, they have far less trust in traditional, big-brand financial institutions. This is huge news in an industry that traditionally prided itself on long, legacy client relationships that were passed down through the same families. Simply put, Millennials don’t really care who their parents’ tax guy is – they’ll find their own, kthxbai.
How this is changing the design of financial services
[BRANDING] Prestige no longer carries trust – Today, we’re seeing a widespread humanization of financial services’ brands, where before they were far more formal and prestigious.
[INTERFACE DESIGN] Fonts and color schemes are broadening – As a designer in the finance world, it used to be that you could use any font you liked, as long as it was Times New Roman, or maybe, maybe Georgia, (if you didn’t tell anyone, and no-one noticed). Nowadays, the humanization of these firms is being driven not just by the content, but also the presentation.
Where once finance websites and apps were dominated by trustworthy british racing greens, and calming, stable navy blues, the latest wave of fintech applications use liberal splashes of vivid color and bold, modern typography to direct attention, and make financial data come alive for their Millennial customers.
[CONTENT] The tone has softened – The biggest financial services firms used to speak in authoritative tones about legacy, experience and expertise. Now, they’re more straightforward, and colloquial – they speak to customers almost like a trusted peer than a wise old professor/father-figure. Compare this TV ad for HSBC from as recent as 2007…
…with this one for Digit, the automated saving app, launched in 2015. These guys perform roughly the same function (helping you save for the future) in the same industry, but one arrived only 8 years later:
[vimeo 114073586 w=640 h=360]
Wanna see something else wild? Check out Merrill Lynch’s website as it looked in 2004 (thanks, Wayback Machine), to how it looks today. What a difference a devastating global economic meltdown can have on your sales pitch, huh?
Open-minded, and willing to shake things up
On the flip side of this lack of trust, Millennials are more open to new brands and fresh approaches than their predecessors, when it comes to managing their money. If Nike started offering the “Just Do It” Mortgage, there’s a strong chance it’d get some serious traction.
“67% of [Millennials] are open to products and services from non-financial services brands, compared to 45% for affluent Gen Xers.” ~ Forbes, How Millennials’ money habits could shake up the financial services industry
In addition, Millennials have faith in the technology of automated investment algorithms, to make better decisions than fallible human advisors. This mindset and openness to new ideas has created a gold rush of sorts, as new companies in fintech suddenly find their newness is no longer a barrier to competition with the heavyweight banks for these customers’ dollars.
How this is changing the design of financial services
[INTERACTION DESIGN] Innovative UX is engaging a new generation of investors. Millennials’ openness to fresh approaches means that today’s competitive fintech products and services are innovating heavily around the needs and user experience associated with conducting the same financial transactions their parents and grandparents did – whether that’s saving money, buying stocks or even applying for a mortgage.
By providing a more frictionless experience while conducting these transactions, financial services providers are persuading an increasing number of hesitant Millennial investors to put their dollars to work in the market.
Motif Investing is a stock trading app that tackles a key friction point preventing many newer investors from getting into trading stocks: the laborious task of researching and picking which specific companies’ stocks to buy. This app instead enables you to buy a “motif” in a single transaction – a curated collection of up to 30 different stocks, all based around a particular theme, like “Robots & AI”, or “Clean Energy” – and even “Elon Musk Saves The World”. Motif then takes care of curating these collections, and regularly changing out which stocks are included, based on performance.
Digit automates your savings by watching each transaction you make, and making a calculated guess as to how much you can afford to save each day. It collects those leftover amounts in a savings account, and thereby relieves you of the mental burden of manually making each painfully sacrificial deposit yourself.
One of our clients, Sparkfin, is like “Tinder for stocks” – utilizing a simple, but addictive left-right swiping mechanic in their mobile app, to enable rapid discovery and selection of suitable stocks to invest in.
[STORYTELLING] Automate in America. Big banks used to tout how your finances would be diligently managed by an experienced, vetted professional advisor – no mention would ever be made of the automated tools they used to do their jobs.
Today, the design storytelling in this industry has changed. Modern automated investment services (dubbed “robo-advisors”), like Wealthfront and Betterment, make no effort to hide the fact that it’s the software calling the shots from behind the scenes – despite showing header images full of smiling, smart finance pros!
Control and Convenience
After the shock of 2008, Millennials are now more prone to do the legwork themselves when researching investments – according to a study by HootSuite, 46% of affluent Millennials perform their own research, make decisions, and execute trades, vs 36% of GenX’ers. This stacks with other findings that the vast majority of consumers (70%) prefer the convenience of banking online (Javelin Strategy report), and only 22% of Millennials rely solely on the advice of a human financial planner (Accenture Generation D report).
But doing your due diligence takes a lot more time than delegating it to paid advisors, meaning that Millennial customers crave convenience, as well as fine-grained, direct control over where their money goes.
How this is changing the design of financial services
Cheaper, automated delivery of services – By innovating on the UX of delivering financial services, and driving down the costs of doing business, fintech companies are able to reach a far wider audience of potential customers.
Fintech companies that are leading the charge deeply understand that better product design and more automation lowers the cost of doing business, which enables them to charge lower fees – a powerful competitive advantage over traditional retail (AKA human-powered), banks. Clearly and intuitively designed interfaces, coupled with detailed knowledge bases and active support forums enable Millennial customers to self-service for almost all their regular needs, and troubleshoot their own problems when they occur.
Sophisticated finance apps like Digit even go as far as to drive users into conversational chatbot interfaces that can handle most run-of-the-mill transactions without the involvement of another person. Or consider Trigger, which enables users to build their own automated investment algorithms based on “IF (stock does something), THEN (take action)” logic – just like IFTTT for stocks. Gone are the days of picking up a phone to talk to your stockbroker when you stumble across a hot tip (almost).
In summary: We Don’t Need No Education
The financial services industry is changing rapidly, and this change is being driven by the radically different preferences and buying habits of Millennials. Innovations in user experience and product design in the industry are enabling a wave of new, low-cost services to enter the market and compete on more equal ground with the older, more established banks.
Millennials are among those most negatively impacted by the 2008 crash – an experience which permanently altered their financial attitudes and behaviors in several key ways:
- They have less trust in established finance brands and human advisors
- They’re more open to new ideas and approaches in investment – and banking with new brands
- They have more trust in technology, and are more likely to consult the wisdom of their peers before making financial decisions
- They want way more direct control over their finances – and need convenience baked into the service providers they use, in order to better facilitate this desire for self-management
Design and customer experience teams in the finance industry must be mindful of these different needs and behaviors in order to fully connect with Millennial customers, as they’re already effecting radical changes in the UX and design of financial services & products:
- Financial services brands are becoming less formal & authoritative, and now project softer, more human and compassionate public images
- There’s a hunger among Millennials for less friction in the process of conducting everyday transactions – automation is no longer feared, but seen as a vote of confidence
- Innovative UX and product design around conducting financial transactions is driving down the cost of efficiently delivering financial services at scale, as are advances in automation technology – which in turn is making the industry more accommodating to new competitors. These UX innovations include new gestures (swiping to browse through stocks), more flexible purchasing methods (motifs, or purchasing fractions of stocks), and even complete automation of everyday transactions like contributing to your savings account.
- The interfaces of fintech apps are increasingly focused on providing their users with financial insights in more direct layperson terms, as well as leveraging broader color palettes, and intuitive data visualization techniques in order to dispense actionable investment advice.
Fintech has only just started heating up
Since competition in the Millennials market is being driven by innovations in UX and the customer experience, this evolution in the visual interfaces associated with managing our money is only a hint of things to come.
Voice interaction and chatbots are making rapid progress, and are poised to completely supersede visual interfaces – so the next time Charles Schwab encourages you to “Talk to Chuck”, they may really mean it.