a Financial Standard publication www.jfst .com.au Volume 3 Number 2 2009
ICT Drives Improvement in Financial Services to Generation Y, Part I:Generation Y as Consumers and Providers of Financial Services
By Rocky ScopellitiTelstra
This paper demonstrates how Generation Y prefer, and are indeed adopting, new styles of interactions in how they engage for services. This is leading to growth and diversity in new channels used to reach them, and challenges
in how they become integrated into existing channels. The key drivers of this are firstly, the rapid rise of social media, secondly mobility with much greater capacity and device capability, and lastly video which is increasingly becoming the preferred medium. The paper provides five key trends on how communications technology can improve customer service delivered to and through Generation Y.
WHO ARE GENERATION Y AND WHAT HAS MADE THEM WHO THEY ARE?
Overview
‘Generation Y’ is the common label used to describe the generation born between the late 1970s and early 1990s. Some researchers locate them more precisely than that: McCrindle Research, for instance, identifies Generation Y as those born between 1980–19941. They are the generation of young Australian adults now in their late teens and twenties.
The Australian Bureau of Statistics (ABS) indicates that the 15–29 (Generation Y) age-group accounts for about 21 per cent (approximately 4.1m) of Australia’s population – approximately the same as the 30–44 (Generation X) age group, but slightly larger than the following 0–14 age group at 18 per cent. The long-term impact of the falling birth rate can be seen by comparing the proportion of the population aged 0–14 in 1955 (29 per cent) with today’s figure of about 18 per cent2.
Rocky Scopelliti is the general manager
of Industry Marketing of Financial Services
at Telstra Enterprise and Government. In
this role, he is responsible for accelerating
the awareness of and adoption of Telstra’s
technology solutions in the financial
services sector.
Scopelliti has extensive experience in both
the information technology and financial
services sectors whereby he has held
senior management responsibilities
covering product development, strategy
and planning, business development and
strategic marketing.
Educated in Australia and the United States
at Sydney University and Stanford
University, he has a graduate diploma in
Corporate Management and a masters in
Business Administration.
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a Financial Standard publication www.jfst .com.au Volume 3 Number 2 2009
According to McCrindle Research, the 15–29 age group represents about 18 per cent of the total workforce today and is forecast to represent approximately 42 per cent in 2020.
All generalisations about ‘generations’ need to be treated cautiously. While it is true that each generation is shaped by the powerful cultural influences of the years in which they grew through childhood and adolescence, there’s inevitably a large Range of individual differences in their responses to those formative influences. For example, the ethos of individual families, ethnic and regional sub-cultures will Increase the diversity of responses to the same events, as will differences between Rich and poor Australians. (Before the global financial crisis, Ibisworld was reporting that 20 per cent of Australian households had an average annual household income of just $22,0003).
No ‘cultural’ generation can ever be defined as precisely as the demographics might suggest. So-called generational characteristics – emotional, cultural and Behavioural – exist to a greater or lesser extent in every generation and, in any case, There are no precise cut-off points. Young Baby Boomers are likely to have more in common with older Generation Xs than with older Baby Boomers. Also, people’s position in the life cycle will have much more effect on their attitudes and behaviour than will their chronological age or the generation they are supposed to belong to.
As the rate of social change speeds up and society becomes more culturally diverse and socially complex, generational differences will blur even more and the range of Individual differences in response to cultural influences will become even wider. This helps to explain why the current group of 20-somethings are more than usually resistant to generalisations being made about them. However, broadly-based observations about the influences that are likely to have shaped their emerging attitudes, values, motivations and aspirations can still be made.
Major influences
The first and most powerful influence was, of course, their parents – most of whom were baby boomers. So a journey into the mind of today’s young adults begins with a flashback: what made their parents the way they are?
While this paper is not the place for a detailed account of boomer culture, there’s one essential point about baby boomers that helps to explain their influence on generation y. The Boomers were the children of a paradox; they were the product of two utterly different – and opposite – influences on their view of the future.
On the one hand, they were being raised in the heady atmosphere of the post-war economic miracle. There wasn’t just a baby boom, but a manufacturing boom, a mining boom, a housing boom and an explosion in all kinds of consumer markets – from in-home telephones and wall-to-wall carpets to washing machines, refrigerators, cars and travel. The other powerful but contradictory influence on them was the cold war.
In an attempt to reconcile the promise of an endlessly prosperous future with the prospect of no future at all, the boomers embraced instant gratification. The impact of this for example was; impatience, easy debt, poor saving, poor planning.
Children of the revolution
A generation that has grown up in such a revolutionary period in Australia’s social history is hard to label and compartmentalise. Growing up in a period of accelerating change will inevitably produce many different response patterns. However, by examining the rather unstable social and cultural environment Generation Y grew up in, we can draw some tentative conclusions – especially if they appear to be confirmed by observations of the attitudes and behaviour of Generation Y.
The upheavals of the 1980s and 1990s (including two major recessions) have taught generation y that change is like the air they breathe. To them, an accelerating rate of change – including radical social change – seemed normal rather than threatening.
For this generation, high divorce and low marriage rates are normal. Thirty years ago, 25 per cent of women were married by the age of 20. Today, it’s down to 3 per cent. Generation Y are the offspring of our most-divorced generation of parents and they are likely to maintain the trend.
According to Dr Hugh Mackay (April 2009), living with one parent is normal (the abs tells us that’s how one million dependent children now live). One-parent families are normal (accounting for almost 25 per cent of contemporary families with dependent children). Working mothers are normal. If they haven’t personally lived in such circumstances, today’s young adults have plenty of friends who have.
When it comes to it, particularly mobile phones and the internet, they are simply extensions of themselves. Generation Y’s are the most ‘connected’ generation in history. Constant replacement of technology is normal.
Their embrace of it has had its consequences. They have already blurred the traditional distinction between data transfer and communication. For many of them, data transfer is communication, though they still desire face-to-face contact with their friends as well.
They are less interested in traditional notions of privacy than older people are. Even the conventional concept of identity is being challenged by their increasing use of multiple identities online. A 2008 study conducted for Symantec by Woollcott research showed that, among heavy users of the internet, it is not uncommon for people to have more than ten online profiles or ‘virtual identities’ and that 40 per cent of the users of internet social networks, virtual worlds or gaming sites believe their online identities are actually closer to their ‘true selves’ than their physical or ‘real-world’ identities are4.
They are the most highly educated, over-stimulated and media-saturated generation in our history. They have been given a vivid example of how to live on credit. They have grown up with expectations of prosperity, fuelled by the mining boom of the past decade.
They feel like the most independent generation ever, though they have, in fact, been one of our most dependent generations ever. They’ve stayed at school longer, stayed in tertiary education longer, and stayed at home longer than any previous generation. In The World According to Y (Allen & Unwin, 2006), Rebecca Huntley reports that about 30 per cent of 21–29-year-olds are still living at home with at least one parent – and it’s close to 50 per cent of 21–25-year-olds5.
Given the rate of change, they expect the future to be unrecognisably different from the present.
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a Financial Standard publication www.jfst .com.au Volume 3 Number 2 2009
The options generation
How do you deal with a world – a family, a workplace, a culture, a technology – that keeps changing? You keep your options open, which is precisely how this generation is approaching its early years of adulthood.
Whether it’s relationship, a course of study, a job, a musical genre, a brand or a set of religious beliefs, the members of this generation are inclined to say ‘this is great, I’m enjoying this, but what else is there?’
This generation is widely criticised for its lack of commitment, but it’s really about postponed or even provisional commitment, rather than a lack of it. What looks like disloyalty – to an employer or a marketer – is more likely to be a case of someone who is pragmatically exploring all options.
Generation Y is likely to follow the low birth rate of Generation X even lower than its present level of 1.8 babies per woman. They’ll also maintain the present pattern of having the first child later than at any time in our history. Already, ABS data shows that the average age of the mother at the birth of the first child is 31 – up from an average age of 22–23 for the Boomer generation (Dr Hugh MacKay April 2009).
Flexibility, transience and adaptability will be characteristic of their approach to everything. This generation might be forced to postpone the purchase of their first home by economic pressures, but there are cultural factors in play here, too. This is a generation for whom renting for longer has great emotional appeal.
For Generation Y, the twenties are like an extension of adolescence – a time of exploring, wondering, testing, but not settling down. Their parents, at 30, were typically married with two or three kids, a mortgage, and an established career. Perhaps this next generation will be in that state when they are forty. Thirty is the new 20.
Keep your options open is like their mantra. But there are three more observations about the members of this generation that help us to understand their emerging worldview.
The tribal generation
The second big lesson life has taught Generation Y is that they need each other. It’s as if they have developed an intuitive sense that the most precious resource needed for coping with life in an unstable and unpredictable world is not technology, not education, not information – but each other.
Generation Y have become an intensely connected, intensely tribal generation. As teenagers for example, they would hang around together at school all day, then, as soon as they got on the bus or train to go home, out came the mobile phones to maintain the contact. Through their 20s, the SMS text has become an indispensable medium of communication, rapidly evolving its own language – somewhere between written and spoken. The technology fascinates and excites them, but it is, above all, a means to an end: stay in touch with the tribe.
The word ‘Relationships’ is one of their favourite words and they can have relationships online as well. The idea that human presence is essential to human connectedness has gone6 (see Sven Birkets, The Gutenberg Elegies (Faber & Faber, 1994). The recent development of social networks has demonstrated just how open Generation Y (and others) is prepared to be, even when not in the presence of other humans.
Relationships are such a high priority that the members of this generation will make decisions about employment or, indeed, brand loyalties, based on the quality of relationships with a work-group or a service provider.
Their sense of identity is likely to be more connected to a group than was previously the case. It would be premature to suggest that the era of individualism is over, but a culture-shift in the direction of a more communitarian ethos is on the way, and this is the generation leading the movement. Even their growing use of multiple online identities is a sign that the traditional sense of identity is waning under the influence of the new tribalism.
For this generation, www is an actual web – a symbol of the connectedness of the tribe. Newer IT applications – especially YouTube, Twitter, Facebook, and MySpace – facilitate tribal connections that other generations don’t fully comprehend. Everything can be shared, widely and instantaneously. Reports of good and bad experiences (including service experiences) can be ‘put out there’ in ways that redefine the meaning of ‘word-of-mouth’.
A recent study by Forrester in April 2009 highlighted how close social connections allow this generation to influence each other’s purchase decisions with 70 per cent telling their friends about products that interest them (twice as much as other groups)7.
The values generation
This is a generation that has had less formal religious/moral instruction than previous generations of Australians. The Boomers presided over the freefall in church attendance reported in the National Church Life Survey (from about 30 per cent to about 15 per cent of Australians who attend church once a month or more often) and typically did not send their children to Sunday schools in numbers to match previous generations.
In response, the members of this generation have tried to fill the vacuum. Many of them have developed an interest in what they call spirituality, often wanting to distinguish it from the dogma of organised religion. Some have developed an interest in New Age and Eastern mysticism, some in the mystical experiences associated with drug use, and some in conventional religion as well: it is this generation that has contributed large numbers to the surge of support for the fundamentalist/Pentecostalist churches (e.g., Hillsong, Christian City Church) and, according to the National Church Life Survey, arrested the decline in church attendance (Dr Hugh MacKay April 2009).
Their interest in non-material values has not replaced materialism. Generation Y want all the material prosperity their parents offered them such as top-of-the-range clothing and cutting-edge IT (although, as identified earlier, that’s as much about finding ever-more-magic ways of staying in touch as about possessing the instruments to achieve it). But they know there’s more to life than all that. Their interest in non-material values is real, and is based on a determination to ‘get their values straight’ and to create and maintain a lifestyle that is true to those values (again, many exceptions!).
As students, these are the people who are enquiring about the corporate values of a potential employer. As consumers, many of them are interested in the values of the brands they buy, especially from an environmental point of view, but also in ‘human rights’ terms. So there’s an idealism to be found in this generation that co-exists with a harsh pragmatism as well. They are, after all, the
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most media savvy, most sceptical and best-prepared generation of consumers we’ve encountered. They are more ready to speak up and complain and, importantly, have the means to now be heard globally.
The instant generation
The most obvious of all the generalisations to be made about this generation is that their whole-of-life exposure to information/media technology has accustomed them to the idea of instant response. Their parents were the instant-gratification pioneers, but they have taken the concept to a new level of demand. Having been so constantly stimulated, they are not only accustomed to constant stimulation – they need it.
They are widely criticised in the workplace for being impatient, and for expecting promotion and rewards to flow quickly to them. They have become accustomed to things moving at the speed of an electronic impulse; for example fast food, instant credit, and cash from an ATM. They have become accustomed to the idea that things happen quickly and that something is always happening.
This generation is like every generation – a product of its social, cultural and economic environment. Perhaps their apparent fickleness is a sign of their perfectly understandable need to keep their options open. Perhaps their apparent self-centeredness is a misinterpretation of their pre-occupation with their own relationships within their own tribe.
Their dreams have been shaped by their circumstances. If institutions want to understand them; if institutions want to respond more effectively to their needs as consumers; if institutions want to serve them better and have them serve customers better, they’ll need to listen very carefully to what they say. If they don’t, they won’t listen to them. If institutions want to reach them, they need to learn to understand technology and instant communication as they do.
Summary
l Generation Y (15–29 years of age) make up 21 per cent of the population, represent 18 per cent of the workforce and are forecasted to make up to 42 per cent of the workforce by 2020.
l Whilst generalisations about generations need to be treated cautiously, people’s position in the life-cycle will have much more effect on their attitudes and behaviour than their chronological age or the generation they are supposed to belong to.
l The first and most powerful influence on Generation Y is their parents – most of whom are Baby Boomers who set an example of ‘instant gratification’.
l To Generation Y, an accelerating rate of change – including radical social change – seemed normal rather than threatening.
l Mobile phones and the internet are simply extensions of themselves. They are the most ‘connected’ generation in history. Constant replacement of technology is normal.
l Generation Y are less interested in traditional notions of privacy than older people are. Even the conventional concept of identity is being challenged by their increasing use of multiple identities online.
l They are the most highly educated, over-stimulated and media-saturated generation in our history.
l Keeping options open is how they deal with a world – a family, a workplace, a culture, a technology – that keeps changing.
l Flexibility, transience and adaptability will be characteristic of their approach to everything.
l Technology fascinates and excites them, but it is, above all, a means to an end: stay in touch with the tribe.
l Newer IT applications – especially YouTube, Twitter, Facebook, and MySpace – facilitate tribal connections in ways barely understood by older people. Reports of good and bad experiences (including service experiences) can be ‘put out there’ in ways that redefine the meaning of ‘word-of-mouth’.
l As consumers, many of them are interested in the values of the brands they buy.
l The most obvious of all the generalisations to be made about this generation is that their whole-of-life exposure to information/media technology has accustomed them to the idea of instant response.
Figure 2. MFI satisfaction by financial services quintiles (valued to the bank)
Figure 1. Main Financial Institution (MFI) customer satisfaction
Source: Roy Morgan, April 2009 Source: Roy Morgan, April 2009
37The Journal of Financial Services Technology
a Financial Standard publication www.jfst .com.au Volume 3 Number 2 2009
GENERATION Y AS CONSUMERS AND PROVIDERS OF FINANCIAL SERVICES
Why customer satisfaction is important
Customer satisfaction has a key role in achieving three key business goals for financial institutions:
l Increasing share of customers’ wallet,
l Decreased defection (or switching of financial institutions) and;
l Increased acquisition of new customers.
Let us first examine the relationship between customer satisfaction and share of wallet. Consumer’s attitudes toward financial institutions are largely driven by their personal experience of those institutions.
From the historical low in 2001 as shown in Figure 1,institutions have increased focus and importance on customer service, and placed greater emphasis on understanding of customer satisfaction in a ‘multi-channel model’. This has led to gradual recovery to the point where it is now at similar levels to 10 years ago. The spread in customer satisfaction across institutions has decreased markedly since its peak in mid 2006.
At first glance, Figure 1 implies little room for differentiation based on customer satisfaction. However, let us consider the potential value of business that the customer may bring to the financial institution8.
Figure 2 shows customer satisfaction levels broken down into value quintiles (20 per cent breakdowns). Generally, low value banking customers (first quintile) tend to be more satisfied with financial services institutions than high value customers (fifth quintile), due to different levels of financial sophistication and needs. High value customers are important as they represent the opportunity to increase the value they hold with the bank. We see that, in fact, there is substantial scope to differentiate based on customer satisfaction, as the spread is much greater.
Now let us briefly examine the relationship between customer satisfaction and customer churn or defection. Of course, many factors apart from satisfaction can influence a customer’s decision to change institutions.
However, as can be seen in Figure 3, satisfaction levels of bank customers who intend to switch their main financial institution (MFI) in the next 12 months are substantially lower, currently at around 30 per cent, than compared to satisfaction of all MFI customers currently at around 74 per cent (from Chart 1). There are also much higher levels of MFI intended defectors who are dissatisfied (43 per cent) than who are satisfied (30 per cent).
Although many factors may influence a customer’s decision to churn, satisfaction does appear to play a key role.
Finally, let us consider the role those levels of customer satisfaction play in the acquisition of new customers. Recommendation and advocacy plays a crucial role in attracting new customers.
As can be seen in Figure 4, MFI customers that are satisfied with their relationship with the MFI tend to be more likely to advocate their MFI than bank customers who are dissatisfied with their relationship with the MFI.
Customer satisfaction thus plays an important role in creating advocacy and thus attracting new customers.
Generation Y as consumers of service
Drivers of satisfaction and service
Let us again focus on Generation-Y and the factors, which drive their customer satisfaction with financial institutions. Different age groups have different levels of satisfaction with banks, which tend to be dictated by life stage and different financial needs.
As shown in Table 1, the 18–29-year-olds have increased satisfaction with institutions compared to a year ago, and are now more satisfied with their MFI than the total population aged 14 and over.
On face value, one explanation why Generation Y is more satisfied with their MFI is that their financial needs are simpler than those of the next age bracket.
This is borne out if we focus on those high value to the MFI (financial value quintile 5). Table 2 shows that these Generation Y customers, with more complex financial services needs, have the lowest satisfaction levels than any other age group.
Figure 3. MFI satisfaction and dissatisfaction
Source: Roy Morgan, April 2009
Figure 4. MFI satisfaction and advocacy
Source: Roy Morgan, April 2009
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a Financial Standard publication www.jfst .com.au Volume 3 Number 2 2009
But what factors drive their satisfaction? Consumers interact with financial institutions in many ways and for many reasons. Thus we would expect the customer’s satisfaction with these institutions to have a number of diverse drivers.
Roy Morgan Research has developed a model consisting of a number of key factors which influence customer satisfaction and the perception of customer service. This model is used to study the degree (as a percentage) to which each of these factors influences the customer’s satisfaction or perception of customer service quality. Driving factors in the model include:
l Price (fair fees and charges)
l Product (products that meet your needs)
l Process efficiency (efficient, error free service)
l Flexibility (willing to bend to meet customer needs)
l Problem resolution (resolve problems on the spot, quickly and efficiently)
l Partnership (appreciate and take your perspective)
l Relationship (interested in relationship long term)
l Staff (friendly, courteous, knowledgeable staff)
l Branch (comfortable, secure, friendly branch atmosphere)
Figure 5 and 6 depict the influence of the various drivers on customer’s satisfaction with their MFI for the populace overall and for 18–29-year-olds respectively. The single strongest driver of customer satisfaction is problem resolution and for Generation Y, resolving problems quickly and efficiently is even more critical.
Overall good service (‘service’) provides a summary of consumer experiences when dealing with the financial institution, as opposed to satisfaction, which indicates if the institution is meeting expectations.
Figures 7 and 8 depict the influence of the various drivers on what customers perceive as good service. We see that problem resolution is also the single strongest driver of the customer’s perception of good service for both groups, closely followed by the requirement for staff to be friendly, courteous and knowledgeable.
Financial services institution experiences
Despite different generations and age groups, in financial services, life-stage tends to dictate attitudes to satisfaction with institutions. Life-stage is related to income levels, financial sophistication, and level of engagement with financial services and diversity of financial products held.
When further exploring key financial services experiences by age, the following four charts highlight how 18–29-year-olds differ from other age groups on attitudes toward service. One of the most interesting observations when looking at statements around service is that a higher proportion of the 18–29-year-olds have consistently rated their MFI as good on “having many convenient ways to access your money”. An increasing proportion of them have also rated their MFI as good on “aiming to put you in greater control of your financial affairs”, “being willing to bend a little to meet customer needs” and “treating you as an equal partner”.
A higher proportion of the 18–29-year-olds have consistently rated their MFI as good on “having many convenient ways to access your money”. The six months to March 2009 demonstrates a significant increase.
There have been increases in the proportion of customers who have rated their MFI bank as good on “aiming to put you in greater control of your financial affairs” across all age groups over the last six years with 8–29 years the highest.
Table 1. Satisfaction by age
Base: Australian population 14+, MFI total banks 6 months average Per cent satisfied Feb 09 Difference ^ (CF Feb 08)
Total population 74.9 -0.3
18–29 76.1 1.8
30–54 71.1 0.1
55 plus 78.7 -1.5
Note: ^ Difference refers to percentage point difference
Source: Roy Morgan, April 2009
Table 2. Satisfaction of MFI total bank customers by age and footings
Base: Australian population 14+, Percentage who are satisfied MFI total banks 6 months average Quintile 1 lowest Quintile 5 highest
Total population 77.8 73.4
18-29 77.3 67.5
30-54 74.9 72.2
55 plus 79.0 76.6
Source: Roy Morgan, April 2009
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Since late 2008, the 18–29-year-old age group has sharply increased the proportion of them rating their MFI as good on “being willing to bend a little to meet customer needs”.
Since late 2008, the 18–29-year-old age group has sharply increased the proportion of them rating their bank as good on “treating you as an equal partner”.
In summary, the 18–29-year-olds at an overall level tend to be at least as satisfied with financial institutions as the overall population, other than the higher value (Quintile 5) who is much less satisfied. On matters of control, flexibility and being treated equal, there has been a sharp favourable increase since September 2008. As we have seen in the past, as life stage changes, this can have an impact on satisfaction levels, level of involvement with institutions and ratings on service delivery – the question is to what degree will be different for the current 18–29-year-olds.
Relationship between financial services institution channels and satisfaction
We have now seen evidence that Generation Y have very strong expectation of problem resolution and of courteous, friendly and knowledgeable staff. We have also seen that Generation Y’s requirement for flexibility and control directly influences their perception of customer satisfaction. But what role does the choice of channel play in customer satisfaction for Generation Y?
Certainly, as would be expected, Internet banking has risen rapidly in adoption over the last decade. Internet banking has a particularly high adoption rate amongst Generation Y, with Roy Morgan Research indicating that 49.7 per cent of 18–29-year-olds having used the9 internet to conduct banking (versus 48.7 for 30-54 year olds and 19.9 per cent for 55+).
Further evidence of Generation Y’s comfort with remote forms of banking can be found in Figure 14. The proportion of 18–29-year-old customers who express a desire never to attend a branch is consistently high (around 60 per cent in march 2009) and consistently higher than other age group.
Not only does a greater proportion of Generation Y aspire to never have to attend a branch, but as depicted in Figure 15, those customers aspiring never to attend a branch are increasingly well satisfied.
At least one factor contributing to Generation Y’s apparent comfort with technology-mediated interactions, such as internet banking, lies in their desire for control. As Figure 16 shows, more than half of 18–29-year-olds agree with the statement ‘Computers and technology give me more control over my life’. This attitude appears to be much more consistently held by Generation Y than any other age group.
Further demonstrated again by those customers who agree that computers and technology give them more control over their lives are increasingly satisfied, with Generation Y the most satisfied.
Figure 7. Drivers of overall good service
Source: Roy Morgan, April 2009
Figure 8. Drivers of overall good service for 18–29 year olds
Source: Roy Morgan, April 2009
Figure 5. Drivers MFI satisfaction
Source: Roy Morgan, April 2009
Figure 6. Drivers MFI satisfaction for 18–29 year olds
Source: Roy Morgan, April 2009
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In summary as customers, 18–29-year-olds use internet banking more than other age groups and have important attitudinal differences (preferring not to attend branches and find computers and technology give them more control). Significantly, Generation Y customers expressing those attitudes are increasingly satisfied.
Generation Y as providers of service
Generation Y are not only the consumers of financial services, they are also the group who will increasingly provide customer service. Generation Y represent 21 per cent of the workforce today, and that proportion will rise to 42 per cent by 2020.
According to Roy Morgan Research, job satisfaction amongst Generation Y is lower than that for all employees. This trend is both true of all industries as well as the financial services industry. Not surprisingly, Generation Y employees are more likely to be considering moving job than the average employee, especially if they are dissatisfied. Roy Morgan Research figures show the following data for the 12 months to December 200810.
From a technology perspective, two questions need to be considered:
l As institutions seek to attract, engage and retain Generation Y talent, what are the technology implications? and
l What technology support will Generation Y require in order to contribute optimally to the provision of service?
Engaged employees leads to direct business benefits – a Deloitte and Synovate Symmetrics study of a large retail US Bank showed that a 5 per cent increase in employee engagement led to a 3 per cent increase in customer loyalty and share value11. Generation Y have their own expectations of the role of technology in their workplace:
“Gen Yers grew up with cell phones, PDAs, and the internet, which means they are used to being constantly connected and having an infinite amount of information at their fin-gertips. To manage these young workers effectively, retailers must be responsive to the unique cultural expectations that this new generation brings to the workforce.”12
Among the major needs and wants of Generation Y13, three have technology implications for employers:
l The need for work/life flexibility
l A tech-savvy work environment and;
l Open social networks that embrace open/honest communications.
Note that we refer to work/life flexibility rather than work/life balance. For many employers and employees, the boundaries between work and private life are blurring. Forrester14 argue that ubiquitous mobility, a globalised economy, social computing and technology populism have all acted to change the concept of work/life balance. But rather than a trade-off between work
Figure 11. Proportion rated MFI bank good for “willing to bend a little to meet customer needs” by age
Source: Roy Morgan, April 2009
Figure 12. Proportion rated MFI bank good for “treating you as an equal partner” by age
Source: Roy Morgan, April 2009
Figure 9. Proportion rated MFI bank as good for “having many convenient ways to access your money” by age
Source: Roy Morgan, April 2009
Figure 10. Proportion rated MFI bank as good for “aiming to put you in greater control of your financial affairs” by age
Source: Roy Morgan, April 2009
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life and personal life, the focus on switching and multi-tasking capabilities which characterise Generation Y15 as allowing workers to blend work and life without compromising either.
The Burton Group noted the existence of a ‘mobility generation gap’ separating two distinct groups of employees. One, typically older group, is quite tentative in its use of mobile technology and tends to compartmentalise work and professional lives. The other, typically younger group is comfortable with mobile technology, using it to integrate work and professional lives and will in fact utilise their own personal mobile technology to blur the work/life boundary if none is provided16.
According to Thom McElroy, a principal with Deloitte Consulting:
“Today’s young workers demand work/life balance, but they don’t mind working hard. They just want to do it on their terms.”17
The communications channels available in many large enterprises will come as something of a shock to a generation which has grown to expect the ability to initiate communication instantly with anyone at any time, but which offers them choice in how
to handle their own communications. Similarly in a search-driven world where information on any topic they require is only a few queries and a Twitter request away, the heavily siloed information and knowledge in most large enterprises is incredibly frustrating to this group.
Mark Prensky, an educationalist and futurist indicates that people who grow up immersed in rich digital technology or ‘digital natives’ have developed a different cognitive skill balance than those who have not or are ‘digital immigrants’18. To quote Prensky:
“Digital natives are used to receiving information really fast. They like to parallel process and multi-task. They prefer their graphics before their text rather than the opposite. They prefer random access (like hypertext). They function best when networked. They thrive on instant gratification and frequent rewards.”19
Making effective use of the skills Generation Y brings to the workplace will require changes to the tools we provide for them which are consistent with key characteristics identified in the previous section such as ‘tribal’ and the need for more emphasis on ‘teamwork’, ‘collaboration’ and ‘relationships’.
Figure 15. Satisfaction of bank customers who have agreed with the statement ‘it would be ideal if I could conduct all my banking without ever having to go to a branch’ by age
Source: Roy Morgan, April 2009
Figure 16. Proportion who have agreed with the statement ‘computers and technology give me more control over my life’ by age
Source: Roy Morgan, April 2009
Source: Roy Morgan, April 2009
Figure 14. Proportion who have agreed with the statement ‘it would be ideal if I could conduct all my banking without ever having to go to a branch’ by age
Source: Roy Morgan, April 2009
Figure 13. Technology and banking: channel usage in the last four weeks
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Forrester20 make the following recommendations for supporting the work and cognitive styles of the ‘millennials’ (born 1980–2000) in our workforce:
l Provide a multi-tasker’s online environment
l Give workers access to each other
l Let them teach veterans about the possibilities and
l Deliver in-line training integrated with tasks
CIO magazine echoes this theme recommending that institutions seeking to attract and retain generation y talent should support the technologies used by generation yin their personal lives21. However, these approaches pose challenges to institutions both in terms of maintaining their technology environment and ensuring adequate governance of the use of these technologies.
The generational preference for work/life flexibility and anywhere, anytime access to people, systems and information is creating increased demand for mobility across a wide range of enterprise services. This is emphasised by 2008 Forrester research where, of 995 North American and European IT decision makers, 64 per cent indicated providing greater22 mobility support to employees was a priority (and for 23 per cent it was a critical priority)23.
Summary
l The 18–29-year-olds have increased satisfaction with financial services institutions compared to a year ago, and are now more satisfied with financial services institutions than the total population aged 14 and over.
l However, the variation in satisfaction levels between the lowest value customers to the highest value customers is the greatest for the 18–29-year-old age group. High value 18–29-year-olds are substantially less satisfied with financial services institutions than low value 18–29-year-olds, and also when compared to all the other high value age brackets.
l The strongest driver of MFI satisfaction for 18–29-year-olds is problem resolution.
l Problem resolution was also the strongest driver of overall good service for 18–29-year-olds. However, they tend to place relatively more importance on staff and price in assessments of service.
l Whilst friendly, courteous and knowledgeable staff was of less importance to younger consumers’ assessments of MFI satisfaction, in relation to assessments of service, younger consumers place more importance on staff.
l 18–29-year-olds at an overall level tend to have more simple financial needs; therefore more emphasis is placed on convenience and control service measures.
l As convenience, flexibility and being in control have increasingly been rated as higher by 18–29-year-olds, the role of technology, and in particular Internet banking, is of even more importance than older groups.
l Not only do the 18–29-year-olds use internet banking more and have different attitudes toward technology, the financial services institutions satisfaction for those who agree with technology-based statements increased since mid-2008 (higher than other age groups).
l Studies demonstrate that engaged employees lead to direct business benefits – increase in engagement, increases customer satisfaction.
l Job satisfaction amongst Generation Y is lower than that for all employees. This trend is both true of all industries as well as the financial services industry
l Considerably more of Generation Y are considering leaving their current employer, than other groups.
l Generation Y have their own expectations of the role of technology in the workplace. Next generation customer service workers:
– Have different expectations of the tools they need to provide customer service;
– See the technology credentials of institutions and the tools they provide to employees as key factors in an employer’s desirability;
– Have grown up making a learning investment in their personal technologies. They would like to be able to leverage that investment by using the same or similar technology at work.
l Prize work/life flexibility and see highly connected mobile devices and applications as contributing positively to it. l
Figure 17. Satisfaction of Bank Customers who have agreed with the statement ‘Computers and Technology Give me more Control over my life’ by age
Source: Roy Morgan, April 2009
Figure 18. Employees satisfied with their job
Source: Roy Morgan Single Source Rolling Years, Population 14+; Exc Can’t Says
43The Journal of Financial Services Technology
a Financial Standard publication www.jfst .com.au Volume 3 Number 2 2009
NOTES1 McCrindle Research 2008, snapshot Why Gen Y – It’s a Boomers and Xers World.
2007
2 Australian Bureau of Statistics, Cat 3101.0
3 Hugh Mackay, Advance Australia …. Where? (Hachette 2008)
4 Symantec by Woollcott Research 2008
5 The World according to Y (Allen & Unwin, 2006)
6 Sven Birkets, The Gutenberg Elegies (Faber & Faber, 1994)
7 Talk To Youth The Way They Talk To Each Other, Forrester April 2, 2009
8 The financial services quintiles are based on the following approximate dollar ranges as at the six months to April 2009: Quintile 1: <$6.0k; Quintile 2: $6.0k – $36.7k; Quintile 3: $36.7k – $140k, Quintile 4: $140k – $328k; Quintile 5: >$328k. Financial services includes all deposit and transaction accounts, mortgages, personal lending, cards and wealth management.
9 Roy Morgan Research, April 2009
10 Roy Morgan Single Source, Jan-Dec 2008
11 Generational Talent Management: Strategies to Attract and Engage Generation Y in the US. Banking & Securities Industries, Deloitte financial services 2006
12 Gen Y — or Gen Whine?, Deloitte Development 2009
13 The Future Workforce: Young people’s views on Career, Employers, and Work, Jeffery, Lyn, Andrea Saveri, and Leah Spalding. Institute for the Future 2004
14 Embracing Chaos is Smarter than Seeking an Elusive Work/Life Balance, Forrester Inc. 2009 and Technology Populism Blurs the Work/life Boundary, Forrester Inc. 2008
15 See, for example, The Multitasking Generation, Claudia Wallis, Time Magazine Vol. 167 No.13, March 17, 2006
16 Enterprise mobility at the Crossroads, Burton Group Version: 1.0, March 12, 2009
17 Gen Y — or Gen Whine?, Deloitte Development 2009
18 Digital Natives, Digital Immigrants, Part II: Do They Really Think Differently?, Mark Prensky. From On The Horizon, MCB University Press, Vol 9 No. 5, October 2001
19 Digital Natives, Digital Immigrants, Mark Prensky. From On The Horizon, MCB University Press, Vol 9 No. 5, October 2001
20 Get Ready: The Millennials Are Coming!, Forrester Inc. 2005
21 Generation Y: love them or lose Them, Deborah Gilburg, CIO November 6, 2007
22 The State of Enterprise Networks and Telecommunications: 2008, Forrester Inc June 13, 2008
23 The State of Enterprise Networks and Telecommunications: 2008, Forrester Inc June 13, 2008
