Winning The Next Generation

We sit down with Partners Wolfgang Jacob and Benjamin Gilgen to unpack the findings of our recent survey, conducted amongst millennials in Germany and Switzerland to explore what wealth management means to the next generation and learn about the next frontier of hybrid banking.

What would you say is the most surprising learning from the survey?

Benjamin Gilgen: Particularly for German millennials, the need for personalized financial information and planning is very high, as they know that they cannot rely on the state pension system. But only every second German millennial we spoke to already had a clear idea on how to organize their financial affairs and build assets to ensure a carefree later life. Those that do tend to stick with the traditional banks, they use those they’ve banked with their entire life and in who they have some level of trust. The cool FinTech startups are apparent and shaking up the market, but they are anonymous, impersonal and not necessarily trustworthy, suffering from an image problem shrouded in hype and turmoil.

Wolfgang Jacob: This is true. FinTech companies still have some way to go to draw customers away from their long-established banking institutions, but the reception to the new technology has been very positive and is already re-defining the standard. Over half of German and Swiss millennials say they have no qualms about managing their retirement strategy by mobile phone and entrusting their wealth management with low-cost, algorithm-based investment models.

The research shows an appetite amongst millennials in Germany and Switzerland for a new style of banking, what would a bank that appeals to this next generation customer look like?

WJ: The solution is a hybrid model of banking, offering the right balance of personal advice and mobile applications. We know that millennials favor the digital slickness and transparency FinTechs offer, but the results of the survey show that they don’t provide customers with is that face-to-face aspect that traditional banks do so well. When it comes to discussing strategic financial decisions, such as retirement plans or the purchase of real estate, young people want to speak to an expert. We found that every second Swiss and German millennial said they wanted this, it makes them feel safer having a personal consultation with someone who can explain the pros, cons and intricacies. It’s a promising and value creating combination, beginning with initial face-to-face consultations and then from there handing over to a Robo Advisor who streamlines the portfolio and keeps it all on track.

BG: Capable and motivated employees therefore remain an important asset and continue to be important in the business of modern banking. That’s the good news for the traditional banks and the area the mobile startups need to find a way to solve.

So, if FinTechs needs to become more human and advisory, then what should traditional banks be doing now to become more digital – and therefore more hybrid?

BG: The digital solutions of companies like Uber, Amazon or Spotify show the financial industry how a great customer experience should work. They radically place the consumer at the center of their actions. Most banks have problems creating such exciting customer-friendly technical solutions. They are too caught up in their old world, their outdated thinking and processes and the encrusted structures. What they need to be doing is rethinking how they engage with customers, and particularly millennials, to make it more valuable, relevant and interesting.

WJ: The digital tools are available, and it’s not mandatory to buy a FinTech in order to build cutting-edge digital solutions. Established banks should be able to develop value-adding and appealing applications themselves and make more consistent use of technology if they put the customer back at the center of everything that they do. Technologies such as chatbots, foresighted learning, in-app support, etc. give banks the opportunity to better connect with their customers digitally and make customer relationships more interesting. This is how they can become more hybrid and regain relevance.

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