In 2010, OCBC, a bank in Singapore, conducted research with more than 1,000 Millennials (1982-1995), revealing that young people felt neglected by and disengaged from financial providers. As a result, OCBC rolled out FRANK – a new kind of bank.
The FRANK concept is a marked departure from OCBC’s traditional branch design. The store is designed to be hip, stylish, and trendy. It is modeled after shopping experiences that young adults are familiar with, such as shopping for a gadget or fashion item, allowing customers to browse, touch, and ask questions about the products and discuss their banking needs.
The FRANK name stems from the phrase “frankly speaking,” and is intended to convey honesty, sincerity, and simplicity. OCBC’s decision to focus on young consumers comes at a time when the financial industry is being challenged to evolve from every possible angle. Consider these facts:
As consumers, younger generations don’t trust financial institutions and are gravitating to spending and saving via mobile apps instead of traditional banks;
Population aging will likely effect financial markets because of its expected impact on saving rates and the demand for investment funds; and
Baby Boomer retirements have driven up the need for financial management, however, the industry is simultaneously aging and unable to service that growth.
The financial industry as a whole –financial planners, banks, credit unions, insurance brokers–is observing dramatic shifts in consumer behaviors and demographics at the same time it’s observing dramatic shifts in workforce behaviors and demographics.
Since 2013, XYZ University has celebrated Halloween by reporting on the scariest workforce stats and we felt it was important to spotlight the finance industry this year, especially considering these industry stats:
- Millennials are set to inherit $30 trillion over the next 30 to 40 years.
- More than half of Millennials don’t want to spend more than an hour getting financial advice and the overwhelming majority would prefer to discuss finances with their spouse, parents or friends over only 14% who prefer a financial advisor.
- Millennials are more likely to use mobile banking than older demographics.
- Industry-wide, 65% of all bank employees are older than 40.
Over the past eight years, a parade of banking scandals have erupted around the world. This certainly hasn’t helped the financial industry recruit talent among the Millennial generation, which expects and demands employers be more transparent, responsive, and honest.
Equally, if not more damaging is the fact that few financial institutions followed OCBC’s example and prepared for demographic shifts. Few institutions prepared for the impact of technology, changing consumer behavior, or the aging of the workforce.
The graying of the financial industry has become a prevalent, overlooked problem. The marketplace and workforce are changing more drastically than ever before, and without young talent, most institutions will struggle to keep up with these industry-changing trends.
With finance and insurance representing $1.4 trillion of U.S. gross domestic product, we can’t afford to ignore this situation any longer. The finance industry is too large and influential to base everything on hope; we must take action. Every financial institution must prioritize and plan for the future.