The big four banks will need to get their heads round a new, unpredictable kind of consumer, according to the latest work from Accenture: the banking "Nomad".
They make up almost a third of Australian bank customers, and according to Accenture’s newly-appointed financial services lead, Steve Willis, “Nomads” are a breed apart and likely to prove incredibly difficult to pin down. But the rewards will be profound.
Because these digitally-savvy consumers are not exclusively millennials. 43 per cent of Nomads are aged 22–34, but more are older: 37 per cent are 35-50, with 12 per cent over 50.
With total liquid assets of up to A$2 trillion the Nomad: “savvy, adventurous, and keen to shop around,” is already a “sizable opportunity” for Australian banks
“Startlingly, even in Australia, more than three-quarters (77 per cent) are willing to open an account with Facebook, Google or other online service providers.”
Six in ten Nomads would even consider banking with a supermarket.
Loyalty to a single brand is out for Nomads, but they will reward those banks “that are as nimble as they are.”
“Nomads are like social butterflies: they move from one offer to another and are attracted to whatever offer is most relevant to them at a given point in time. They will choose banks that curate the right service options for them and – crucially – provide the opportunity to shape products and services,” Willis said.
These Australians have a significantly greater preference for digital channels than the remaining 70 per cent of the banking population.
They demand convenience, accessing services wherever they are, whenever they need them. They are experimentalists, keen to shape new products and services.
According to Willis this is why the Nomads present a genuine opportunity for banks to grow market share.
“Their propensity to explore and embrace change means they can be prized from competitors and crucially, they are currently the least well-served, satisfied and understood.”
In contrast, “Quality Seekers” and “Hunters” – the other two segments identified and creatively named by Accenture – are well served and more steadfast.
“Considering how Australian banks have evolved their services through simplification and digitisation, we expect our institutions to continue to meet the needs of these two segments,” Willis noted. “But providers that come to terms with Nomads have the chance to build a significant growth engine.”
Experimentation and co-creation
Australian banks are starting with a strong digital foundation with Australian consumers among the world’s fastest adopters of mobile banking, according to research firm Forresters. With well over half of Accenture’s Nomads expecting to use smartphone apps for contactless transactions, Australian banks are already positioned.
According to Willis, they just have to pull the trigger.
“If I was advising that type of organization one of the things I might say is so you can’t afford to ignore this group. Because there’s a proportion of people who do regard loyalty as very important and do regard multiple products as very important and you’ve got to satisfy them both - so why wouldn’t you look to co-create?" he explained.
“Why wouldn’t you try some experimentation and co-creation with a group that may represent, that may have the characteristics of this nomad group.”
Although Westpac, National Australia Bank (NAB), Commonwealth Bank of Australia, ANZ and some smaller banks are toying with artificial intelligence (AI), all are fumbling at the proof of concept stage or merely automating customer-service short-cuts.
Nomads, in their “cognitive sophistication,” will expect investment management quality robo-advice, while more than half (53 percent) are interested in peer-to-peer (P2P) payment services.
Nomads expect more, 54 percent expect personal budget tools and 44 per cent, instant face-to-face banking conversations in their palms. Yet their “adventurousness” is not limited to devices, for example, most (eight in ten) are eyeing machine-generated banking advice.
However, according to Willis and lead researcher, Aleks Green, capturing significant share in this market means embracing the realities of nomadic banking.
“Nomads are highly transactional, they want services “in the moment” – whenever and wherever they happen to be -as already offered to them by non-financial service providers, from retailers to location-driven restaurant recommendations,” Green said.
“I find this very fascinating – it’s not that nomads aren’t loyal, they will go with a supplier for a need they have at that moment, if not they will take that need and explore that market,” she said.
“This is an age agnostic, income agnostic group that is explorative and adventurous, and the banks will have to work out how to keep existing customers happy whilst understanding how this other group works.
Willis and Green believe there is a new paradigm of “liquid expectations” that will eventually flood the banking system.
“The importance of ‘the moment’ means banks will discover that some nomadic realities are harsh. If Nomads can’t get the information they need at that moment (e.g. the quotes that meet their price points, or a real-time service that meets their quality expectations) they will shop around, using their digital skills to quickly find other providers,” Green told AB+F.