Not only are they the fastest-growing customer base but they’re also hyperconnected and changing the way banks do business. And it’s no easy task creating financial solutions for a clientele that thrives on Buzzfeed quizzes, GIFs and grumpy cat memes.
Meet the millennials, born sometime between the early 1980s and 2000, who want to manage money and control their finances from the palm of their hand.
“They are the first group of individuals who use a wide range of connected devices,” says Aref Al Ramli, Regional Head of Digital Banking for Mashreq. “They grew up with social networks and have access to a large computing power in their pockets. These people grew up with the internet.”
A study by payments provider Visa last year found that millennials spent on average about four and a half to six and a half hours online every day. “It is important that every interaction, every communication, should have a digital element to help integrate it into their lifestyle,” says Shahebaz Khan, Head of Visa Performance Solutions.
“And it is not just technology for the sake of technology. It has to make it easier for them and it has to speed up their life and the things they do daily.”
Millennials are not only the largest living generation, they will also one day be the richest through income and inheritance. The UAE is particularly important in this regard because it has one of the world’s highest smartphone penetration rates at an estimated 78 per cent, as well as a large, rapidly growing millennial base. The number of millennials in the UAE is set to rise to three million by 2020, up from two million in 2014.
Mashreq’s customers are a good example of just how important millennials, and the connected generation as it calls them, are to the banking sector in the UAE.
Customers rarely visit a bank now with transactions happening online, on mobile and through ATM networks
“Ten years back, an average customer would visit the branch almost 15 times a year. And this was only ten years back. Now they rarely visit,” says Al Ramli.
“Today 91 per cent of the transactions happen outside the branch. They happen online, on mobile and through our ATM network.”
Mashreq is working hard to cater to millennials. The bank was among the first in the world to launch a fully fledged mobile app, says Al Ramli.
“We caught on very early,” he adds. “We understood the world was changing. We put a lot of focus and investment into the channels such as online and mobile, enhancing our ATM network. We are building it more as we go.”
Banking on the move
The availability of numerous digital platforms such as smartphones, tablets and mobile applications means millennials’ expectations of how they interact with the bank is changing.
Mashreq, which is celebrating its 50th anniversary this year, is one of the most active lenders in the UAE. It sees technology as a key area of innovation and is making huge investments in the field to differentiate itself. Snapp, Mashreq’s award-winning app, is not only aimed at millennials but towards all generations. Its eldest user is almost 92 years old, while the youngest is 18 years old, says Al Ramli.
The Dubai-based bank has also announced a fully fledged digital bank, Mashreq Neo, which will have everything a standard branch-based bank would have such as lending and investment capabilities.
Aimed primarily at millennials, its scope goes far beyond them, says Al Ramli. “It is for the connected generation, for people who are looking to bank in exciting ways, having access not only to servicing their accounts and making transfers using their mobile devices to opening an account and applying for credit cards.”
While traditional brick-and-mortar bank branches will continue to exist, Mashreq is working to make them more millennial-friendly. Its smart banking and iMashreq branches offer debit and credit card printing within 30 minutes, appealing to the customer desire for instant gratification.
“The branches will remain an important part,” says Al Ramli. “But it is also very important to understand that these customers like to be served in a different way.”
Mashreq has managed to stay ahead of the game so far, but it knows that more changes are coming to the industry, and fast. “We firmly believe that the change that will happen in the banking industry over the next five years is going to be more than what happened in the past 50 years put together,” adds Al Ramli.
Disrupt or be disrupted
Experts agree a paradigm shift is under way in the UAE’s financial sector as technology evolves and customers live in an increasingly connected world.
“Technology right now is out there and changing very rapidly,” says Saeeda Jaffar, Managing Director of Alvarez and Marsal, Middle East. “Whichever banks or financial institutions figure out how to utilise it best will probably be the ones that end up capturing a lot of the market.
“There is something that we often say in banking, which holds true - disrupt, or be disrupted.”