Australia’s Gen Ys, put off property ownership by surging home prices, are spending their money on luxuries and life experiences.
KPMG has just released its Banking on the Future Report 2017 which concentrates on Gen Ys and how they handle their money.
Gen Ys, those aged 18 to 30, already make up 22% of Australia’s population and will be about half the work force in five years.
The study finds that bank loyalty has been diluting with 28% of Gen Ys holding products from three or more financial institutions, up from 11% in 2015.
They also like the convenience and Uber-style banking, ordering services and making payments with the tap of a smartphone.
And about half plan entrepreneurial pursuits. This is seen as an important way to get ahead and solve problems for themselves and their communities.
On spending habits, Gen Y are unique compared to previous generations.
FOMO (fear of missing out) is very real for Gen Ys. They prioritise life experience over property ownership.
“Coupled with soaring property prices … the FOMO psychological effect is driving this cohort to prioritise travel, luxury items and experiences over property ownership,” the report says.
“Gen Y professionals’ attitude towards ownership has spawned the sharing economy. They are turning to providers who offer access to products without the burden of ownership at a fraction of the cost.”
Daniel Knoll, KPMG’s head of financial services management consulting, says the economic importance of Gen Ys cannot be underestimated.
“They are the mass affluents of the future and, interestingly, their individual customer experience with their bank is currently their biggest pain point,” he says.
KPMG says their digital sophistication will reshape how banks deliver products and services.
“Delivering an enhanced customer experience is the key to attracting and retaining this group,” says Knoll.
“Convenience, whether managing money, making payments or accessing funds, has become the cornerstone of true engagement.”
The KPMG Report shows that mobile and tablet banking have risen to number two in the most valued attributes of a bank, with internet banking services retaining the top spot.
The third edition of the KPMG report surveyed 1400 Gen Y professionals about what they want and expect from banks, wealth managers, insurers and other sector providers.
“Gen Y professionals expect and want digital pathways and ease of use. They demand diversity and aren’t necessarily going to be loyal to one financial services brand or product,” says Knoll.
“For financial institutions, these sorts of attributes will help them shape their products, services and business models to meet millennial needs.”
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