Gary Cotterell
Levi, Diesel, Nike the Y-Generation is branded from head to toe. With money to burn, these 20-somethings present an attractive slice of the pie for banking strategists. But this market is a tricky one.
Dino Fifas, MD of Logistix Kids SA, says the youth market has traditionally been costly for banks maintaining thousands of savings accounts, free of service charges. But the youth are the future big spenders and “it’s time for banks to get them transacting”.
Equipping young people with planning and management skills is critical to their long-term financial stability. But for most of South Africa’s youth, the idea of long-term planning is quite foreign. Growing up in an environment of crime and HIV/Aids, the “now” becomes more important than the “future”.
According to a survey conducted by Logistix Kids, 61% of urban blacks invest in society/informal savings schemes (stokvel), and saving in general doesn’t feature high on the list of priorities for most students.
For many, a sense of identity comes through their associations with clothing brands, record labels and car badges. Through association with or sponsorships of the arts, sporting events and music, “banks align themselves with the values and aspirations of the youth”, says Andy Rice, partner at Yellowwood Brand Architects.
According to Daniel Erasmus, youth market strategist for Standard Bank, that bank’s exposure is “through the Grahamstown Festival of the Arts, cricket, music and other youth-related products”.
Audrey Zwambila, a consultant in media relations at Absa, says: “Absa has tailor-made products to suit the youth and student markets. For example, savings accounts no longer require the minimum investments and there are no fees to a certain level.
“Absa maintains a high level of visibility in the student market through its strategically placed student bureaus on campuses which offer financial advice and banking facilities.”
Marketing has taken the form of snappy ad campaigns and sponsorships, but good, old-fashioned word-of-mouth still seems to be the best tool.
For those that use the formal sector their choice of banking institution is based largely on their parent’s choice and sometimes on that of their contemporaries. Banks still have the challenge to develop strong relationships to retain these new clients. Strategies need to become more dynamic and services need to be fast enough to meet the demands of this tech-savvy generation.
Through online banking, banks can offer more efficient services and lifestyle tie-ins. Nedbank’s youth site, www.serious.co.za, offers sports news, movie reviews and financial advice for students. Banks have realised that the average Internet user, aged between 20 and 40, is educated and well- salaried and keen to invest the perfect customer.
But it’s not good enough to only offer freebies or good service. Banks have to develop sophisticated relationships with clients by presenting privileged personalised service and customised offerings.
The Y-Generation wants to be taken seriously. Whether it’s brick-and-mortar or a new online environment, the old idea of “banking for life” can still hold true. Banks will just have to work harder to achieve the same loyalty from Generation Y as they did from the Baby Boomers.