Millennials and Gen Zers expect more of financial institutions, from getting their first paycheck and applying for a credit card, to investments and retirement planning.

The needs of the two groups – aged between 21 and 34 this year – differ significantly from previous generations.

Young adults are digital natives. They tend to gravitate towards online banking rather than turn up at physical branches.

So, too, their ASEAN counterparts. The UOB ASEAN Consumer Sentiment study, conducted in July last year, found that close to four in five (79 per cent) ASEAN consumers across all ages have switched to banking apps in 2021.

Among millennials and Gen Zers, the increase in usage of banking apps was at 79 per cent and 80 per cent respectively.

Around 3,500 respondents – aged between 18 and 65 – from five ASEAN countries were polled, including 1,000 from Singapore and more than 600 each from Indonesia, Malaysia, Thailand and Vietnam.

ASEAN consumers are also performing different types of transactions digitally. These activities include opening a new bank account (64 per cent), applying for financial products (74 per cent), registering for bank loans (61 per cent), and even checking the status of their rewards programme (86 per cent).

So what makes millennials and Gen Zers stand out? In ASEAN, these young adults are part of a growing population of underserved and increasingly affluent consumers, says Mr Kevin Lam, UOB head of TMRW and Group Digital Banking.

As they graduate from one stage of life to the next, their financial responsibilities grow. This will lead to more touchpoints with banks.

The e-Conomy SEA report published by Google, Temasek and Bain & Company in October 2019 noted that around 198 million in South-east Asia are “unbanked”, or do not have a bank account. Meanwhile, another 98 million are “underserved”, which means that they have a bank account, but lack access to credit, investments and insurance instruments.

Mr Lam explains: “These are the people who could have just started working and are becoming financially stable. They have needs such as getting a credit card, or might want to take up a loan for their new home purchase, and it’s a great time for them to start investing.”


Serving the underserved

To meet the banking needs of millennials and Gen Zers in a way that syncs with their lifestyles, UOB created the TMRW (pronounced as “tomorrow”) mobile banking app.

First launched in March 2019 in Thailand, the app provides users with smart insights to help them simplify financial matters, including expense tracking, cash flow analysis, and personalised advice on how to grow their savings.

The app was subsequently launched in Indonesia in 2020, and Singapore last year.

Mr Lam says: “UOB TMRW brings together best-in-class artificial intelligence (AI) and data analytics solutions, complete with UOB’s established technology infrastructure and deep understanding of ASEAN market trends and customers built up over the last eight decades.”

While young professionals and young families were the key target market for the TMRW app when it was first launched, the Covid-19 pandemic accelerated the adoption of digital banking among other age groups.

As of this month, UOB has digitally acquired over a million customers within ASEAN. Of this, 75 per cent are new customers. The bank aims to digitally acquire an additional 500,000 customers by the end of the year.

“UOB is now serving the full spectrum of our retail customers with TMRW, and our app is able to do that through hyper-personalisation,” says Mr Lam. “It adapts its user interface and content to various user segments.”

For example, users have now control over aspects such as app themes and, in time, personalised content and visual delivery including dynamic font sizing.

Leveraging data and AI, UOB TMRW’s AutoSave function also provides personalised advice to users to help them grow their savings. The AI engine within the app picks up patterns in the user’s cash flow, including when the user’s pay comes in, and their regular expenses.

“When it notices that you have surplus cash during a certain time of the month, the AI can help you shift the extra cash from your low-interest rate account to, say, an insurance or investment account,” Mr Lam says. “This helps you to take advantage of the higher interest rates in real time.”

Top 5 digital transactions by ASEAN consumers

Close to four in five ASEAN consumers across all age groups chose to rely more on banking apps in 2021, says the UOB ASEAN Consumer Sentiment study conducted in July last year. Their top digital transactions include:

  1. Checking status of rewards (86%)
  2. Applying for financial products (74%)
  3. Buying insurance and investment policies (66%)
  4. Opening a new account (64%)
  5. Registering for bank loans (61%)


Gamifying money management

Starting to manage financial responsibilities as a young adult can be daunting. A UOB ethnographic study in 2017 found that while millennial consumers appreciate guidance to help them keep track of and manage finances better, they respond better to interactive and engaging prompts.

UOB TMRW addresses this by helping customers meet saving goals in more fun and easy ways through an in-app game called City of TMRW.

Currently available in Thailand and Indonesia, City of TMR allows users to build a virtual city as they save money. As they level up, they unlock various options to enhance their virtual city, which also moves through different eras – from the prehistoric to the medieval, and then industrial era, and so on.

“The idea is to give users a more visual representation of how much they have saved, by breaking it down into smaller, more fun goals for them – such as earning the next badge in the City of TMRW,” Mr Lam says.


Accessibility for young users

Among the young and new-to-credit consumers without credit cards, deferred payment services such as buy now, pay later (BNPL) are enjoying increasing popularity. These services often offer flexible payment schedules, with zero interest rates within stipulated instalment periods.

In Indonesia, UOB launched TMRW Pay, a BNPL service that helps young consumers in the country manage budgeting needs more conveniently. It lets them pay for their online purchases in multiple instalments, with no interest rates for up to 90 days.

“The median age in Indonesia is only 29 years old. The country has a population of 279 million people, which also means it has a pretty large underserved segment,” Mr Lam says.

He explains: “Many are fresh out of school, and starting on their jobs, so it’s going to take a few years before they get access to a credit card.

“With TMRW Pay, they can get earlier access to credit, using forward-looking data, which could increase the acceleration of the country’s digital economy.”


Building resilience through financial literacy

Amid uncertain and inflationary times, money remains a worry for ASEAN consumers. The UOB ASEAN Consumer Sentiment study found that about six in 10 respondents across all age groups were uneasy about increased household expenses (64 per cent), meeting long-term financial commitments (63 per cent) and a decline in their savings and wealth (65 per cent).

To help, UOB has launched various financial literacy initiatives to empower customers across the region.

In Indonesia, the bank launched a savings personality quiz on social media platforms to help customers better understand their savings style, so that they can personalise their goals and approach.

In Thailand, UOB launched UOB Money 101, an online financial literacy programme for underprivileged students nationwide, in September 2021. The programme was designed to introduce students to the concepts of budgeting and goal setting, enabling them to start financial planning early.

Singapore consumers are more active in investing. The same UOB study found that 38 per cent of consumers in Singapore put more money into investments in the last six months of 2021, an increase of eight per cent from the year before. Leading the way are millennials, with 46 per cent indicating that they plan to invest more.

“UOB is focusing on democratising wealth management to help the customers in Singapore keep pace with the rate of inflation, and provide them with the knowledge and resources to set up a diversified investment portfolio that gives them steady, long-term financial returns,” Mr Kevin Lam, UOB head of TMRW and Group Digital Banking, shares.

He adds: “By nurturing our customers through their wealth creation journey, we hope to improve their financial lives and help them build long-term financial resilience.”

The Future of Finance is a series that explores how digital solutions can empower individuals and businesses, creating a smarter, more sustainable world.

This article was originally published on The Straits Times and was written by Kareyst Lin, Content STudio.


Source: The Straits Times © SPH Media Limited. Permission required for reproduction