Catch ’em young: More banks target millennials with digital services

Representative image.

Indian banks are luring young customers, smelling a big opportunity in the market.

For instance, Kotak Mahindra Bank ran a marketing campaign with new-age influencers like Tanmay Bhatt and Samay Rana, promoting Kotak 811, the lender’s digital banking arm.

Shanti Ekambaram, President, Consumer Banking, Kotak Mahindra Bank, said that Kotak 811 was designed to cater to the needs of the young audience who are venturing into digital banking.

“We focus on and appeal to young audiences the most for Kotak 811 due to the nature of the product,” Ekambaram said.

Similarly, Kerala-based Federal Bank has partnered with neo-banks like Fi and Jupiter to cater to the banking and finance needs of millennials. The lender witnessed the opening of 7.5 lakh new savings accounts in the October-December 2022 quarter, a growth of 19.5 percent on a quarterly basis.

Chitrabhanu KG, Senior Vice President and Country Head, Retail Assets and Cards, Federal Bank, said that the bank has seen a rise demand for credit cards from millennials.

“Close to 3/4th of the monthly card issuances have been to the millennials. Also, 60 percent of our housing and auto loan portfolio is from millennials,” Chitrabhanu said.

Also, state-owned Bank of Baroda, under its savings account segment, has a millennial savings account option, which saw a rise among that customer segment.

Speaking to Moneycontrol, Akhil Handa, Chief Digital Officer, Bank of Baroda, said out of the total B3 savings account, an entirely digital account-opening, 48 percent are opened by those in the age group of 18-25 years.

“To cater to the needs of this young customer base, we’ve also launched various rewards and benefit programmes like over-the-top (OTT) subscriptions,” Handa said.

Youngsters prefer customised or DIY services

Experts said rising demand for customised or DIY (do it yourself) financial services from the young customer base is pushing banks to roll out more targeted products.

"Younger banking customers or prospective customers are digital natives. They expect that their banking experiences will be anywhere and anytime and demand DIY services," said Sonali Kulkarni, Lead, Financial Services, Accenture India.

To be sure, the trend of new products and services which are generally specific to a certain set of customers, in this case, young customers, is not new. Earlier, banks introduced digital banking through mobile applications, and customised credit and debit cards by partnering with fintechs, etc., with an aim to simply introduce digital services and enter the respective market segment.

Ekambaram highlighted that young customers are ready to spend money on what they feel will add value to their lives. “It is all about giving control in the hands of the customer. In line with this, we are planning to keep adding products, DIY journeys, etc., in our portfolio,” Ekambaram said.

Handa also said that the younger generation want personalised banking experiences that cater to their needs and preferences.

“We’ve launched a new bob World Sapphire - Visa Signature Debit Card offering gender-specific privileges, attracting Millennials and Gen Z,” Handa said.

Banks forming more partnerships with fintechs

Of late, lenders are working on more fintech partnerships, alongside digital and other initiatives, to attract customers. This, experts highlighted, is majorly due to the huge potential in the customer segment.

“Banks are planning to go digital in their traditional banking approach. Other than new products, they have also started to partner with more fintechs for customer acquisition, and, mainly, to provide customised services,” said Ram Rastogi, Chairman, Fintech Association for Consumer Empowerment (FACE).

But the regulator has been cautioning banks about the need to ensure the safety of digital transactions.

Kulkarni of Accenture India highlighted that alongside the aggressive approach towards young customers, banks must also work on information content curation for the same client group.

“As this pool of customers expands, banks must invest in consumer education on relevant themes such as data security while transacting online or encouraging customers to build an investment portfolio at a young age,” Kulkarni said.