This story probably spans four generations.  I have tried to map the lifestyle of people across these four generations to financial services. Though there is no single definition of these generations, for the sake of simplicity , let’s assume my dad is a baby boomer, I am from the gen x or gen y and then folks born in the 90s are the gen z, and then we have gen alpha too!

There is a reason why I talk about three generations within a span of 3 decades (x-y-z). It’s because there is a considerable generation gap in culture and lifestyle in such a short span of time. Hope you agree with me and trust me, I don’t have any intentions of coming across as experienced (read, age old) in this blog.

Against this backdrop, let’s analyze lifestyles and how banking products are interwoven with lifestyles of customers.

Please note that I am writing this mostly from Indian context, but a similar pattern probably exists worldwide too.

Demographic details of Baby boomer generation:

Their parents: Very few were elitists in terms of education and profession, others mostly didn’t have much formal education and followed traditional professions. They mostly had on an average about 5-8 kids and sometimes one for each year until one parent passed on (no offense or disrespect intended, just trying to generalize a bit).

Education: First generation that probably had basic education and quite a few of them went onto hold bachelor’s degree, few did masters too and very few Ph.Ds.

Occupation: Made their careers in public sector companies/banks, government jobs, postal services, railways, large manufacturing companies, educational institutions, lawyers and CAs.

Family life: Count of kids came down drastically to two with few exceptions of going up to 4 or 5, wife would mostly be a house executive with few exceptions of working women either as government official/teacher/doctor etc.

Lifestyle: Most were in jobs which required them to work from 9-5 PM and everyone seemed to have a lot of time for family and relatives with one movie once in 2-3 months followed by dinner at a restaurant, bought what is required and always wanted to save for the future. Life for them was – work from 9-5 PM, educate kids, get them married and retire and look after their grandkids! Basically this is a generation which faced lot of hardship in life, is value based and mostly content in life supported by PENSION.

Financial lifestyle: Savings account, deposits – primarily RD (roughly translates to today’s SIP), chit fund investments, pigmy, education loan, home loan, PF and finally PENSION (derived as a percentage of their earlier salary which gets credited to their bank account every month, provided they visit their office once a year and declare that they are still alive! And if not, wife will get the pension, after them) and people loved to visit bank branches if not for anything else, just to have a chit chat with the friendly branch staff!

For this generation, strange working hours of branch, though inconvenient, were still acceptable as humans worked at branches, hence lunch time, early closing time, holidays on as many possible festivals were all norms of the day. Standing in queue was ok, as that would have been factored in their planning for the day/month. Remember these were the days when there were no ATMs, hence people used to plan well in advance on their cash requirements. Cheque, DD were the primary payment instruments, being literate was of great pride for these purposes and “instant” was only gratification of meeting branch staff and not payments.

This was the time where people went to banks and banks could dictate the experience!

Current state: Though this is a dwindling population, I feel there is still a largely untapped segment craving for true personalized banking products and services as they trust banks more than anyone else!

A revised personal finance plan with doorstep advisory services can unearth huge potential of profitable product offering to this segment, but due care must be taken of their risk appetite because these are really good people to bank with. This generation is also opening up to the idea of going on vacations across the globe with their friends, hence travel packages with financial instruments into them can be quite a welcome change. This generation also believes in gifting all that they have to their kids, grand kids and hence, a smart personalized relationship manager can really create unique experiences around the same. As with the age, their health conditions also would have become a worry point, hence personalized products can bundle appropriately designed insurance products too.

Also, though quite late to use social media, but am seeing a lot of them becoming very active on WhatsApp at least, to stay in touch with their kids! And I think, this is a learning for us/banks as to how a simple UX can lead to higher adoption rates. In the era of digital banking, it should be inclusive banking for them too, not excluding them. Newer products can be designed around their current financial status, which is probably way better than what it was when they were working!

Now, the gen x-y, my generation:

Hmm, I don’t know what to say about our generation, probably the most confused and tensed generation!

We were suddenly exposed to the possibilities with IT and that created a whole new set of creatures.

Demographic details of gen x-y:

Our Parents: Mostly could afford good basic education for us and somehow we could become only engineers or doctors. Our parents wanted us to achieve those dreams which they could not fulfill for themselves! For more details, refer to baby boomers section above, ding!

Education: Though most of us somehow ended up being engineers or doctors, almost all types of engineers ended up being a software/IT engineers and only few succeeded in holding their forte as “non-IT engineers”! Of course, our generation also saw most migrating to the so called advanced country- USA to do their MS and those who could not, still found their way to USA through H1B!

Occupation: Everything was IT or around IT and kind of destroyed quality professionals in other streams and of late, this generation is bitten by entrepreneurial bug and some have had self-realization in life and are heading back to their roots, organic farming etc.

Family life: Started as DINKEY – Double Income No Kid Yet, then to one kid and at max two, as career aspirations would always confuse us between our priorities (again, no disrespect to anyone here, just generalizing my thoughts) and also those set of folks, who have stayed single embraced single parenthood too.

Lifestyle: Our generation is the first set of globetrotters and with that started lengthy official calls across time zones, working 24X7 leading to weekend culture for family time and taking time off once or twice a year for vacation! We were the early adopters of apartment culture, swanky cars, credit cards, laptop usage, mall goers, air miles, bermudas and denims (whether it fits you or not, you need to fit into it)! And if you connect these dots, it’s quite clear that this kind of lifestyle is full of TENSION and has led to health issues – diabetes, back pain, hyper tension, obesity being the most common.

Though we are not mobile native, it’s definitely a prestige symbol for most of us and somehow we too have managed to be smart! We are a generation that mostly came from middle class backgrounds but then moved to upper middle class or became HNIs. As I said before, this generation is quite a confused generation as many firsts happened for us, like the internet revolution, mobile and smartphones, previously unheard of 5-6 digit salaries and thus we kind of took everything for granted (nature, relationships, health) and questioned many laws of nature too as we thought we knew everything and we need not care for anything or anyone!

To summarize, this is a confused generation sandwiched between two worlds but finally taking a hybrid lifestyle. People from this generation became quite materialistic somewhere along the way, and their lives revolved around the proverbial ‘I, Me, Myself’, and they primarily live a life of TENSION.

Quite a few of us seem to have reached a state of been there, done it and hence want to follow our passion (of being an entrepreneur, a biker, chef, wild life photographer, first time author, etc.). After much disillusion we now want to see life in a proper perspective but, for some of us, we are in a flow now, want to float around for a few more years.

Detox, yoga, meditation, going for vacation with friends, women only vacations etc., are becoming the order of the day for us and of course, there are some who want to give it back to the society too.

So if we read between these lines, the financial product offering too needs to be designed with personalization as a key pillar and around an ecosystem which plays to a person’s strength around the person’s lifestyle.

We do not like to be disturbed by too many text messages, ping and also set – best time for banks to reach us yet we go with our friend’s wisdom and of course google baba’s!

Financial lifestyle: Started with student loan, then credit cards, vehicle loan, personal loans, home loan, stock trading and then mutual funds, probably reflects the lifestyle also in that order and order of tension too! This generation witnessed the biggest technology revolution in the recent history – internet, hence are quite comfortable with internet banking, online trading, can do most of their banking needs, themselves without visiting a branch, unless otherwise for some paperwork. Some of us design these systems and are consumers of it also, including me and that’s where we are comfortable being consumers of channel banking.

Current state: A lot of us are talking about retirement at the age of 35-45 and going back to roots or following our true passion, finally! The way this generation accesses banking is not the only change, but the way banking is perceived has also changed. Providing personalized banking services is a given, where really the banking has to evolve for this generation is in terms of providing very efficient service with minimal paperwork, time taken to service with minimal friction, advisory services not on products offered but to complement businesses, investments of this generation and ease of doing business across the globe.

What I am not sure of is, whether technology led to open banking or current generation’s lifestyle, but there is definitely need for accounts and payments aggregation, dashboard, analytics based insights and that’s where this generation will see banking being of use to them. Essentially, we do see banking as a need but in an evolved avatar.

Then onto my favorite, gen z/alpha:

This is a generation which defines our future for the next 30 years or so and is quite a different breed altogether!
This is a generation which is cloud native, mobile first, guided by Google and can be mostly found on Facebook and Instagram.

Demographic details of gen z/alpha:

Parents: Mostly well educated, well settled in life, love to experiment and firmly believe that how their parents behaved/taught them was not the right thing to do, but they know it (googled!), better. Also, believe in giving financial stability to their kid/s and provide loads of options, so that the kid/s can choose whatever they want to become and without an expectation. For more details, refer to Gen x-y section.

Education: Well, it depends! Bearing the fruits of their parents’ work and thinking, this generation is not constrained by finance, hence does what it likes, how it wants, when it wants and it’s ok if it doesn’t want it too, because there is google, anyway! An MBA/MS is a given, but a lot of them have taken to ventured into unconventional areas too, which is a welcome change.

Occupation: Quite difficult to put them in one basket, because they have the FREEDOM to choose, which has resulted in people getting into fine arts, documentary movie making, acting, photography (3 idiots!), digital marketing, forensic psychiatry (yes!), hospitality industry, airlines, data science, travel guides (it’s quite cool to travel around the world where someone else pays for your trips!) and some are entrepreneurs by the age of 25!

Family life: Too early to talk about it, however their belief in institution of marriage seems to be dwindling. Their parents also expect them to be independent and hence, staying together as a family is not really an ask.

Lifestyle: Most lead a life of pizza, burger, cola, café culture with their life being an (open) Facebook filled with selfies, groufies, bothies, biking is a rage and growing beard too and those tattoos and some weird sense of fashion (better I say nothing about it, though they say that they like to wear what they like to and who are we to comment!).
Their day is decided by the Googles and Alexas of the world and at times people of this generation feel orphaned and handicapped if mobile network is not there! This generation looks-before-they-leave, loves to get likes for their pics with cute puppy, celebrates birthdays, new year as if there is no life tomorrow and zoom and zoom to see who is wearing what dress in these pics, likes to be a kid by playing games all the time (someone told them that they should never let their inner kid die and they have taken that quite literally!).

What is admirable though is, quite a few of them genuinely care for nature and have taken a liking towards joining politics, and UPSC is becoming a career option again, though I would say this is still in very small numbers. And my respect also goes out to those early twenties entrepreneurs too, but please be clear of what you are doing and don’t do it, because it is cool to be an entrepreneur.

Financial lifestyle: We live each moment, cannot wait for anything – that’s the motto of this generation and hence, savings, taking home loan are not what they look for (their parents anyway have ensured all that for them) and definitely do not know what is a branch banking. Those early twenties entrepreneurs are taking route of Tokens (virtual shares) too and bitcoins are becoming quite the thing to own.

What banks need to do is recruit some of these gen Z and start rebranding, repositioning themselves, if they want to stay relevant after 10 years, in the retail banking space.

In a generation where same gender sex is Freedom, commenting anything and everything on social media is tolerance and FREEDOM, banking too needs to be sensitive to this behavior and present itself in multiple forms and be there where this generation is, much ahead of them.

The message is loud and clear on the walls of Facebook (!) for banks from this generation – for them banks have got to become invisible, but banking embedded into their lifestyle. Banks need to be pervasive and not invasive into the lives of their customers.

As a summary, the three generations of customers of banks – Pensioners, generation living with tension and then the freedom seekers in a way reflect onto the three generation of bankers too – those who recently retired or about to retire from their illustrious banking career, then those who are sandwiched between traditional ways of banking and the digital wave and finally, Open banking era, hope you are able to appreciate the parallels being drawn here with lifestyle of customers and that of banking/bankers.

Banking in the Fourth Industrial Revolution

In 2016, Klaus Schwab, the Executive Chairman of the World Economic Forum wrote that we are currently experiencing the fourth industrial revolution. According to him, this revolution is “unlike anything that human kind has experienced before” 1 in its “scale, scope, and complexity”1. The fourth industrial revolution is characterized by an amalgamation of physical, biological borders and technology. The impact of the fourth industrial revolution will be felt across our way of life, and will have broad impact on every industry.

For example, the automotive industry has been facing changes due to technology evolution – from changing views on ownership – platforms like UBER providing easier options to ride without ownership to changing views on operation – autonomous driving changing our views on driverless cars. While some of it sounds like science fiction, there is concrete work being done on this front. Several car makers (new entrants and traditional) are focusing on driverless technology – ranging from assisting a driver to fully autonomous cars which don’t require a driver. In fact, earlier this year, Nissan revealed their research on “Brain to Vehicle” technology, which reads the user’s brain signals to make driving decisions – proving the point that physical, biological and technological worlds are increasingly interconnecting.

The impact is being felt in banking as well – banking industry is perhaps one of the industries that has seen leading indicators of this revolution. Digitization of banking services and processes is gaining ground, not only in enabling smoother customer journey but also in fine tuning internal processes. Future of banking will be truly digital – like the fully autonomous cars. It will be integrated in the day to day activities of the consumer, not requiring a separate interface for banking.

A typical customer journey would be seamless, completely integrated, and intuitive. For example,

The common thread running across the various stages is that human involvement will be minimal, with technology enabling most of the processes. While the above example is retail focused, corporate customer service and product offerings will also reshape in the fourth industrial revolution. For example, IoT information for tracking of shipment can be integrated with trade finance which can automate the trade finance process.

The same will be extended to the banks internal processes as well. Activities like product design & distribution, marketing, customer management, operations etc will be automated – technology will augment humans in some cases and will completely replace in others.

Fintechs and neo-banks are already down this path, using technology effectively – their extensive use of APIs, advanced analytics, AI, IoT etc enables them to provide better products and services to their end customers, at a fraction of the time and cost of the traditional banks.

The ball is now in the banks’ court, to use the technologies available in their processes in order to turn the tides to their advantage or to step into the future without the tools to survive.


Artificial Intelligence for Financial Inclusion

Next Tide: We need to be ready

The Indian Rural Banking landscape has just seen a major transition, by way of Financial Inclusion under the guidance of RBI. It started with Small savings accounts, Agency banking channel, Aadhaar number, Pradhan Mantri Jan Dhan Yojana, BBPS, BHIM, AEPS payments, UPI etc.

First time in the history of India’s Banking sector, the RBI gave out differentiated licenses by way of 10 Payments bank1 and 11 Small Finance Bank Licenses2 in 2015.

At the other end, urban banking is witnessing another wave of transitions with a number of Fintech players competing to offer banking services by way of Robotics and AI to automate banking by machines.

HDFC’s Ira, the first ‘humanoid’ branch assistant, City Union Bank’s ‘Lakshmi’, and Canara Bank’s ‘Mitra’ are just a few examples of how banks and financial institutions are integrating AI and robotics in their services.

Keeping in view the above two trends and if both these paths merge, sooner or later it may be wise for the Banks to think of ways to take Automation to Rural banking. Furthermore, regulation might also require compliance that can be significantly simplified with automation. banks and the solution providers need to be ready and need to be able to identify what all can be done to employ Artificial Intelligence to enrich Financial Inclusion.

The Journey has just begun!!!

What sources of data do we have, what processes of rural banking can be enriched, who all could be the immediate stake holders, what enhancements would a technical solution require and finally what is the revenue model? These are some of the questions that banks may not yet have ready answers to, since we are still in the starting phase of our AI journey. As I write this thought paper I do see some ready clues which both banks and solution providers can pick and proceed.

Sources of Data: its already there

As on Aug 2017 Over 9.3 crore3 PAN cards linked with Aadhaar numbers.
Recent initiatives of Govt. to link Pan card with all bank accounts, and then to link Aadhaar to PAN Card and mobile number, sets the right path for the required source of data. This can be a good starting point for our data scientists in the AI Journey. Using the Aadhaar linked Database, the government is able to track the number of SIMS a person may have, the number of gas connections, the amount and volume of transactions done on his/her accounts. It facilitates a single Point of tracking and also an easy KYC.

AI Applications: Give it a thought

From the existing banking landscape and the rural customer experience, some of the applications of Artificial Intelligence in Rural Banking that the solution providers and banks can explore are:

Major Stakeholders: What’s in it for me?

Word of Caution: The below view holds good for both rural and urban banking.

Is it worth it?

Considering the small ticket size or value of transactions, banks and technology solution providers might have a tough time testing the economic viability of AI enabled robots in rural areas and villages. So is it really worth it? Yes, and No. Although the transaction values are low the volumes are definitely significant. The initial investment may be high and one may need to wait for the results to come in. However, considering the enthusiastic Indian crowd and the way we welcome new things – the robot will be the center of attraction and can be the overnight hero of the village. As the future unfolds itself, the early risk-takers will have an added advantage as Automation and AI are here to stay for a way long time.