Retail Banks risk losing customers in the future if
they fail to keep pace with the changing demands of a new
generation of customers.
Customers are
using Web 2.0 daily and banks are not keeping pace, according
to a report from analyst company Celent.
It said the banking service expectations of Generation Y, the
Net Generation, which grew up in the 1990s and 2000s, have been
shaped by the internet.
"The wise retail banker will look at this segment's needs and
begin a transition plan to ready the bank to serve them," said the
report.
Generation Y will reach 84 million consumers in the US by 2010
and combined with generation Z, which is the next generation, will
represent over half the US population in 2020 and nearly two-thirds
in 2030.
"Addressing consumers' broadening expectations will require a
cultural shift within the bank as well as a technical one," said
Celent.
Online banking services have been slow to integrate Web 2.0
technologies, which enables engaging, interactive and
collaborative activity. Banks risk a gulf between them and
customers opening up.
"Consumers have continued to change, and so have banks, but at a
much slower rate. While consumer expectations advance at a faster
pace than banks can support, the gap between expectations and
delivery grows, threatening many banks' bottom lines," said the
report.
Celent said banks are missing out on significant business
because they are not in tune with the demands of new IT savvy
generations. The analyst firm recommends that banks acknowledge
this shortfall and begin to address it.
Advice to banks
Realise that Web 2.0 is not a specific technology rather, it is
a shift in consumer behaviour and the technology supporting it.
Understand the behaviour and expectations of post-Web 2.0
consumers.
Recognise that the gap between traditional banking products and
services and the expectations of the post-Web 2.0 consumer grows
every year the bank does not evolve.