Hint: Instant Issuance Would be Very Appealing
Millennials now comprise the majority of the working age population in the U.S., according to The Wall Street Journal.i Given millennials’ increasing spending potential, marketing to them has become the cause du jour for numerous companies, including financial institutions.
According to a survey from Accenture released in late 2015, millennials are open to exploring options when choosing their financial institutions. Per the survey, large regional or national banks had lost 16 percent of their millennial customer base in the previous 12 months, while local or community banks witnessed a five-percent increase among that population (credit unions saw a three-percent increase). iiWhile millennials may choose to go with larger financial institutions for various reasons, including those institutions offering a wider range of products or fitting into customers’ longer term plans, other millennials are responding to creative new programs that differentiate small-to-midsized banks and credit unions.
More good news for financial institutions is that the rapidly emerging concept of instant issuance plays right into the needs and desires of the millennial audience segment. Instant issuance, simply put, means providing payment cards (including credit, debit and prepaid cards) and other services instantly from within a bank or credit union branch.
Ten years ago, instant issuance technology was extremely complex and required heavy investments in hardware and software as well as lengthy integrations with core systems and card processors. Additional expenses were incurred due to required training to operate the system and additional resources needed to support a secure network with proper oversight.
Today’s technology has changed all that. Now operating through a Software as a Service model, instant issuance is scalable and easily integrated with existing systems. Financial institutions use their existing software to transfer data to a third- party provider. The data is immediately processed and converted into a print file that is returned to the branch electronically. Small, desktop printers encode the data and print the card quickly. In addition to the lower cost of deployment, training has been simplified and involves learning a single process on a single machine versus multiple processes for hardware, software and network interaction.
There is much about how millennials think that can inform marketing related to instant issuance. They want it NOW.
For starters, the key word within instant issuance is “instant.” A Huffington Post article by marketer Andy Karuza is appropriately titled: “Millennials: Marketing for Instant Gratification.”iii A Boston Consulting Group report noted that the generation places more value on speed and convenience than friendliness of service.iv In an age when any answer is a Google search away and products can be delivered same-day within certain cities, the beauty of new instant issuance products is they can be provided, well, in an instant.
Cash is still king
A GoBankingRates survey completed in early 2016 noted that nearly 60 percent of millennials still prefer to be paid in cash—despite significant attention to electronic so-called person-to-person (P2P) methods, such as those offered by Venmo and PayPal.v The ongoing preference for cash means millennials still rely on their debit cards. A service that provides these vital instruments quickly and conveniently would logically prove persuasive for small-to-midsize financial institutions marketing to younger audiences.
It’s all about making it MINE
Many financial institutions are deploying other services alongside instant issuance that are appealing to millennials. Chief among them is a custom-card capability, which allows users to develop their own unique card designs. Via online portals that are extensions of websites provided by banks and credit unions, users design their own debit cards and pick them up at their local branches.
Instant Issuance Brings Millennials into the Branch
The aforementioned millennial preference for cash encourages younger customers to visit ATMs, so visiting a local branch is not much of an additional burden. The ability to create custom cards further encourages millennials to drop in to the branch to retrieve a card order. And once in the branch, the bank or credit union has an opportunity to educate and introduce additional value-add services.
Alleviating concerns about EMV®-based transactions should be a key point of emphasis during in-branch visits. Instant issuance solutions produce chip-based cards; when a customer retrieves them, branch employees should take the opportunity to explain how EMV transactions work and why the chip is important.
Security, in general, is top of mind for all consumers today, given the prevalence of security breaches in the news. Many branch customers will raise security concerns, especially with regard to their debit cards. Instant issuance solutions allow financial institutions to quickly address worries. Any consumer questioning the security of their card data can receive a new card—and a new card number—on the spot.
In addition, branch visits to pick up new physical cards present opportunities to discuss other new offerings. One example capitalizes on the increasing popularity of mobile payment methods that utilize digital wallets on phones. Financial institutions are offering services that procure digital cards placed in a digital wallet, and these cards can be procured concurrent to the procurement of physical cards via an in-branch instant issuance solution. A digital card is connected to the same account and the same credit card number as the physical card.
By counseling millennials on their digital offerings, financial institutions can maintain a branding presence within digital wallets, while heretofore such branding was ceded to the mobile payment platform. While as noted millennials currently prefer to pay each other in cash, the market for electronic person-to-person transactions will expand. Industry firm Ovum predicts “the total global transaction value generated by P2P mobile money transfers will increase from $15.22B in 2014 to $270.93B in 2019.”viii Of note, the new digital card can be placed within the digital wallet inherent to a phone’s operating system, or it can be accessed via a bank’s existing mobile app.
Convenience & Innovation Reap Rewards
Distilled down to the basics, the millennial desire is not so different from that of any other consumer group. Millennials want convenience, they expect financial institutions to constantly provide new technologies and services that make their lives easier, and they are willing to reward those institutions that meet their needs. The challenge is that this young and now influential consumer audience is not used to waiting. And they want products that are personalized. Fortunately, with new services on the horizon from the financial institutions, these needs can and will be met
An Emerging Millennial Offering: Instant Issuance for Prepaid
History tells us that interest in prepaid, loadable cards is confined primarily to unbanked consumers. Well, conventional wisdom has changed. CPI Card Group sees a significant market for prepaid within the broad younger consumer market. According to Business Insider, Gen X and millennial consumers comprised 80 percent of U.S. prepaid card owners in 2013.vi And the income levels for these prepaid users vary. Twenty-seven percent of millennial and Gen X prepaid card users earn more than $100,000 per year.
Small-to-medium sized financial institutions could offer prepaid cards instantly as an additional value-add service. Such an offering would combine the popularity of prepaid cards among millennials with the millennial marketing advantages of instant issuance.
Credit Union Magazine highlighted this trend by interviewing CPI Card Group’s Stacy Jensen, and the resulting interview is available online. vii
To learn more about Card@Once instant issuance, visit www.cardatonce.com
i Gellman, Lindsay; “Helping Bosses Decode Millennials—for $20,000 an hour,” The Wall Street Journal, May 18, 2016.
ii “Banking Shaped by the Customer; 2015 North American Consumer Digital Banking Survey,” by Accenture. Page 10. Accessed via Accenture microsite: https://www.accenture.com/us-en/insight-consumer-banking-survey.
iii Karuza, Andy; “Millennials: Marketing For Instant Gratification,” Huffington Post, December 30, 2015.
iv Barton, Christine; Fromm, Jeff; and Egan, Chris; “The Millennial Consumer; Debunking Stereotypes,” Bcg.perspectives online blog, April 16, 2012, chapter 3.
v “For Millennials, Cash is Still King,” eMarketer, March 9, 2016.
vi Bakker, Evan; “The rise of reloadable prepaid cards could affect the way millennials approach banking,” Business Insider, April 24, 2016.
vii “Millennials, underbanked drive prepaid card growth,” Credit Union Magazine, June 10, 2016. Available online at: https://news.cuna.org/articles/110402-millennials-underbanked-drive-prepaid-card-growth.
viii Zoller, Eden; “Disruption and Innovation ahead for P2P mobile money transfers,” Ovum, February 25, 2016. Accessed via Ovum online. Link: https://www.ovum.com/press_releases/disruption-and-innovation-ahead-for-p2p-mobile-money-transfers/