The Global Financial Crisis in 2008 created change for many people. What was not well understood at the time though was the lasting impact that it would have on the youth (10 to 16 year olds) of society and the ramifications of this impact on commerce as this generation became both adults and ‘spenders’ in the following years.
When combined with the fact that this generation was the first to be online from as soon as they could hold their parents’ smart-phones, then unpredictable and new outcomes became possible.
In short, a wariness of long term credit and debt; plus an appreciation of not being ‘locked-in’ and having an availability of choice and experience was seen as highly desirable.
More broadly, a desire to be “safe” prevailed. It was as though the messaging from over-doting parents had come true in the form of the GFC and safety became paramount.
Compounded by the Hayne Royal Commission and the negative connotations attached to existing financial institutions, new financial services entities such as “Buy-Now, Pay-Later” businesses prevailed. They provided choice and access to small amounts of finance without traditional entry fees and friction and with repayment flexibility that was appreciated by the younger consumer. On top of this, it was seen as a ‘modern’ way to pay for small purchases, supported by ever improving postal and distribution networks, facilitating faster access to goods.
Fast-forward (a 1970s cassette term we note!) to 2020 – Covid-19 is the event that will naturally define the next decade and influence business and consumer choices.
Using the assumption that Covid-19 will reinforce the need for perceived safety and create additional fears pertaining to strangers and physical interaction, the question is: how should you position, adapt or radically alter your business to provide the product or service that the present and future (i.e. the current 16 year old) consumer wants?
Unlike the GFC, Covid-19 has the potential for an immediate health impact, materially strengthening the ‘safety’ desire, both individually and on a household basis; most likely creating a “safety bubble” generation of consumers.
Businesses that were well prepared for high volumes of non-physical transactions; with strong data and reporting capability, were well placed initially to not only address the concerns of their debt-funders but also stand-out from their peers struggling with the burden of management reporting.
Furthermore, rapid solution based responses to consumers and their queries generated trust, assuring business flow in future periods.So how are you adapting your business, both front-of-house and back-of-house, to support and transact with the next generation of financial product consumers? Do you have the right product design? Can you sell it? Can you fund it? Can you report on it promptly? Can your risk function adapt?