A video on the Microsoft Office Labs site shows their ‘futuristic’ vision of how customers will bank in future. Considering that we’re very nearly there, one thing is certain – both banks and their customers will look quite different few years from now.
 
Three things will determine the type of customer banks will serve in the next 5 to 10 years. The first of these is migration from rural to urban areas, which has gone up tenfold in percentage terms over the last 100 years to swell the ranks of the middle class. Aspiring for upward mobility, migrants are entering the lower rungs of the market for goods and services including banking, in numbers that are hard to ignore. If in the past banks pitched for the business of select classes, in future they will draw value from these masses.

The second factor is demography. Currently there are 1.2 billion people in the 15-24 years age group who will progressively enter the productive and consumptive force. We already know that these Gen Y members are a change force to reckon with. Just imagine the kind of impact they will make once they’re armed with earning, spending and decision making power, which incidentally will be evenly shared with the 583 million females in this age group, demanding an equal say in things. These people are the quintessential “Customer Next” – educated, confident, assertive, emotionally connected, demanding and highly fickle. It will be much harder to hold on to these customers who won’t think twice before dumping one bank for another that promises more or services better. This is doubly tricky for banks, which will not only have to manage Gen Y customers, but also teach Gen Y employees to serve their tough demands using the tools and channels of new technology.

The third influence may be found in the pattern of lifestyle and behaviour. ‘Customer Next’ will be unabashedly digital, tech-savvy and a real networker. The opinion of peers and the “here and now” matters a lot more to her than lineage, size or brand power. She will not go seeking a bank; rather, the bank has to reach out on her turf, on her terms.

It will be interesting to see what kind of engagement strategies banks adopt to attract business from “Customer Next”. I wouldn’t be surprised if they go back to a relationship-based banking model, playing the role of trusted friend and guide, in order to bond with these customers on that all-important emotional level.