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A New Business Model Helps a Southeast Asian Bank Attract Millennials

A major bank charts a new course to attract younger customers who want simplicity and solutions.

An established Southeast Asian bank was seeking growth and believed that the youth market could represent a huge opportunity. Not only were customers under 30—the so-called Millennial generation—a large proportion of the population, but they also were less likely to have a strong banking relationship. Moreover, while customers aged 20-24 were unprofitable, consumption of financial services ramped up at around 25 years of age. So the challenge was to find a profitable way to capture Millennials early to build lifetime loyalty.

The bank’s traditional model was not well positioned to win over Millennials, but neither were the models of its rivals. These customers sought a simpler, more customer-centric approach that offered the freedom to bank when and where they wanted. They wanted a bank that was still safe and secure, yet also provided solutions rather than bureaucracy, friendly service, and a sales approach that wasn't a "hard sell"—a bank that listened.

To capture these customers, BCG worked with the bank to define a new, innovative sub-brand with a separate business model. Important elements included new high-tech paperless branches, a Millennial-focused product suite, online banking, and fast marketing, credit, and risk management systems.

The new business model has been a measurable success—and has been hailed as a revolution in retail banking by local media. It’s capturing the target segment at twice the rate of the traditional business model—and doing that with operating costs more than 50% lower and loan productivity significantly higher.

Strategy
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