In recent years, consumer behaviour has changed drastically worldwide – more than in the last three decades combined. Consumers of the next generation, the so-called Next Gen Consumers1, are not only much more environmentally conscious, they also demand more transparency and, above all, a reduction in complexity. The perma-crisis that has become the norm – the pandemic, wars in Ukraine and the Middle East, energy shortages, the rising cost of living and climate change – is growing individual exhaustion. It is prompting many to increasingly focus on the basics away from an excessive lifestyle and prioritise their own well-being. Traditional values such as freedom, health, family, and honesty top the values ranking of Next Gen Consumers (Werteindex Update 2024).
Next Gen Consumers are used to having the whole world at their fingertips thanks to the internet – information, products, services and experiences are just a click away. Although this almost limitless choice and unrestricted access seems like an achievement at first glance, it is increasingly becoming a stress factor for many Next Gen Consumers. Consumers feel overwhelmed by the extensive options and suffer from choice. The rapid transition from an analogue to a digital world, accelerated by the coronavirus pandemic, has overwhelmed many. They are confronted with the consequences of society’s pursuit of progress, which has led to too many shortcuts and has instead brought only minimal improvements in quality of life, social relationships and well-being (Avantgarde Group).
| 1 By Next Gen Consumer, we mean the emerging group of consumers who differ from previous generations in their unique behaviours, values and preferences. With this term, we include younger generations such as Millennials (born between 1981 and 1996) and Generation Z (born between 1997 and 2012), but also younger segments of Generation Alpha (born after 2012). (See PwC and afterpay) |
Why is this development relevant for the financial sector?
A notable trend among consumers from age 18 is the desire to spend less time on social media, gaming, news or smartphones (Forerunner Ventures). The ability to access anything at any time and from anywhere is giving rise to a desire for less choice and simpler solutions that are tailored to personal interests and preferences and save time. This longing for personalisation is becoming a key factor in the design of future customer experiences. Finance teams must rise to this challenge in order to adapt and optimise their products and services accordingly.
Over the next ten years, a number of disruptive technologies will continue to significantly influence our consumer behaviour. Blockchain, 5G, IoT, cloud computing and human interfaces are just a few examples of the technologies that will lead us to becoming even more connected in the future and the boundary between the analogue and digital worlds will continue to blurr. One thing is already clear: artificial intelligence (AI) plays an essential role in this change and is already an elementary tool for developing products and services that aim to fulfil the wishes of the Next Gen Consumers. AI is significantly driving the transition from access and optionality to personalisation and self-determination (Forerunner Ventures). AI-based products and services make it possible to automatically understand and realise user preferences. They can adapt offers depending on the context and make it easier for consumers to choose by filtering content according to relevance.
What exactly do these developments mean for future financial products and services? We have taken a look at five key features that will be relevant when designing these products and services.
What Next Gen Consumers expect from financial products and services
- Simplicity: Next Gen Consumers demand simplicity from financial products and services. They prefer intuitive, easy-to-understand solutions with minimal steps and choices. They focus on curated, customised offers that are time- and context-sensitive. Financial service providers need to filter relevant content and present only the most important options in order to concentrate on the essentials and avoid superfluous content – in line with the principle of « less is more ». (Forerunner Ventures)
- Trust: Trust is crucial for Next Gen Consumers. This trust concerns all aspects of a company, from service to sustainability. Authentic communication, transparency, data protection and ethical behaviour are important aspects of gaining and maintaining customer trust. Companies should be open and honest with their customers, provide insights into their values and mission and clearly communicate their integrity. (Drapers Online)
- Emotional connection: Emotional connection creates long-term brand loyalty. Next Gen Consumers want to feel the sense of being included in a (brand) community. In an increasingly digital world where many feel lonely, unique experiences are crucial. 62% of adults aged 18-34 prefer to buy a product that gives them access and belonging to a specific community (Horizon Media 2023). Companies can strengthen emotional connection through special events, customised services or personalised experiences. (Avantgarde Group)
- Independence: The increasing complexity of the world and the ongoing crisis mode have weakened Next Gen Consumers’ trust in institutions. This leads to a desire for self-determination. Next Gen Consumers not only want personalised offers, but also the opportunity to help shape them. Adaptive interfaces and modular products that provide control over important settings and configurations enable independence and greater creative freedom. (Forerunner Ventures)
- Seamlessness: Next Gen Consumers expect a seamless, consistent and integrated customer experience. The traditional linear customer journey is being replaced by an endless loop in which interactions between different channels and touchpoints are fluid and uninterrupted. A true omni-experience provides a personalised and consistent experience throughout, enabling users to seamlessly access relevant information and services anytime, anywhere. Finance teams need to work in a coordinated and data-driven way to ensure this high quality and integrated customer experience. (campaign)
How digital debt collection responds to the wishes of the Next Gen Consumers
With its digital debt collection approach, PAIR Finance has set itself the goal of meeting the expectations of Next Gen Consumers, particularly through the use of AI and behavioural science. The combination of technology and psychology makes it possible to design a customised, user-friendly and self-determined debt collection process. AI-powered systems analyse users’ behaviour and payment habits to develop personalised payment plans and communications that are tailored to individual needs and preferences. With the help of AI, we provide over 30,000 options for the best personalised solution (more on our use of AI here). Behavioural science approaches help us to translate these insights into effective strategies that offer users a positive and customised experience.
These techniques not only contribute to greater efficiency, but also strengthen consumer trust by offering transparent and understandable processes. This trust is also reflected in our excellent TrustScore on Trustpilot (read more here). The use of AI enables us to create personalised notifications and recommendations to help consumers better manage their finances and make informed decisions. By applying machine learning, we design the debt collection process to meet the specific needs of each individual, resulting in a 10-15% higher repayment rate and an overall better customer experience.
Stephan Stricker, CEO and founder of PAIR Finance, explains: « The next generation of consumers wants curated and individualised services to counteract digital overload. At PAIR Finance, this is exactly where we come in to reduce the complexity of debt collection processes and make them as simple as possible. Our goal is to exceed consumer expectations through 24/7 self-service and smart assistance. Consumers want to manage their financial affairs in a self-determined and flexible way via their smartphone. That is why we have focussed on transferring this principle to the debt collection process. This way, we enable them to settle their outstanding amounts at any time and on their own terms, which significantly increases the chances of successful repayment. »
By using AI for personalised, digital debt collection processes, we not only promote self-service, but also reduce the total Days Sales Outstanding (DSO) – resulting in faster responses, with 40% of people engaging with our communications within two hours.
When the channel, timing, tone of voice and payment methods are customised to the consumer, the efficiency of the debt collection process improves significantly. AI is therefore the key to the professional implementation of a customer-oriented debt collection approach that meets the modern requirements of Next Gen Consumers and offers an optimised customer experience.
Conclusion
The financial sector is facing the challenge of adapting to the changing expectations of Next Gen consumers. These consumers seek autonomy, seamless experiences, and simple, personalised solutions. To meet the demands, the targeted use of AI will be crucial. Although only one in eight companies in Germany currently employs AI (Statistisches Bundesamt), this technology will shape and change the future faster than any previous technological innovation. This is especially relevant to online content: according to Europol, by 2026, 90% of this content will be generated by AI. (Breitbart)
The use of AI enables brands to create tailored offers that resonate with the individual needs and preferences of customers. Through intelligent data analysis and personalised interactions, financial service providers can facilitate a flexible and self-directed use of their services while simultaneously enhancing efficiency. A consistent, integrated customer experience, supported by modern technologies, is crucial for boosting satisfaction and loyalty in an increasingly fast-paced and digital environment.
Financial teams should therefore prioritise fundamental AI competencies when selecting a service provider. This approach not only meets the demands of Next Gen Consumers but also helps to bring a bit more security and stability to their complex daily lives.
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