While Generation X - or those born roughly between 1964 and 1980 - have adjusted to technological innovation and digital disruption, millennials are the ones actually propelling it. Most young people today will use online apps to shop for groceries, get a cab, read the news or find rental accommodation.
Paud O'Keeffe, Head of Innovation at BNP Paribas Securities Services in Dublin, looks at young people's digital experience
The huge leaps in technology and its capabilities have made this possible. An iPhone 5, first introduced in 2012, has 2.7 times the processing power of a 1985 Cray 2 supercomputer, and this accessibility has helped transfigure daily life and working practices.
Financial institutions have been waking up to the fact that millennials are the next generation of investors for some time – despite perceptions that they are a demographic with less cash and a poor understanding of personal finance. The latter shortfall can be solved fairly easily through better education, but long-held views about millennials' lack of disposable income should be put to rest now.
Research by the Center on Wealth and Philanthropy at Boston College estimates $59trn will be passed down from 93.6 million US estates between 2007 and 2061, in what will be the greatest transfer of wealth in history; and millennials are likely to inherit a significant proportion of this total. Wealth preservation needs will require this demographic to save and invest for the future. But millennials are not just the investors of the future – they are the employees too. An Ernst & Young (EY) report said 75% of the global workforce will be millennials by 2025, and a significant percentile of this demographic is already employed in management roles. The EY study said 62% of millennials work in management, putting them ahead of the baby boomers. These are the clients of tomorrow.
The financial services industry is making in-roads with this group, and online banking perhaps is the best known example, but how are asset servicers helping bring about digitisation and abridged user experiences to millennials?
Appealing to a younger generationGenerational shifts mean that end users of services – whether it is a fund manager or institutional investor – will have markedly different expectations over the next few years. The words 'instant gratification' are often used liberally to describe millennial expectations, and it is a fitting reflection.
Younger people will frequently complain if there is a slight holdup to an online delivery or movie streaming service. As such, millennial clients will increasingly demand investment exposures, performance metrics, risk analytics, counterparty risk details, liquidity data, client reporting or information about collateral movements in real-time.
Those providers who insist on manual processing of reports and templates will be disadvantaged in this new digital age. Forcing clients to log into websites utilising a physical token to access data is no longer going to be acceptable. Asset servicers need to ensure that reporting is through systems or technologies that are embraced by millennials, whether it is via smartphones, tablets, APIs or online chat facilities.
Information must be accessible anywhere in the world given the increasingly mobile nature of workforces. Furthermore, such automation of services will lead to lower costs, and this will help the client.
This article was originally published in HFMWeek in June 2017