Five ways millennials are changing the world of private banking

Generation Y prefer to be more involved in sustainable investments that align with their values

Millennials prefer to use digital tools to manage their assets in real time. Getty Images

Are the expectations of millennials really so different from those of their elders when it comes to their finances? In substance, not really. But in form, certainly.

Almost 80 per cent of millennials would like to use digital tools to manage their assets in the future, versus only a third of baby boomers, research by EY shows.

This research is also backed up by the Capstone Millennials project launched by Lombard Odier to better understand the financial hopes and concerns of new generations.

Based on the studies led by students from two top French business schools — ESCP Paris and IAE Nice — in 2021, private banks today must offer the next generation real online and offline investment experiences and, above all, respond to their desire to be involved and align their investments with their values.

We have discovered five key trends and expectations of millennials that we can observe in private banking and are also relevant in the UAE.

1. Involvement: I want to decide my own investments and challenge the financial analyses

Millennials want to be key players in their wealth management and a majority want to be actively involved in decision-making.

They often obtain information of their own accord and don't hesitate to challenge their banker on their analyses and proposals. They want a degree of autonomy as well as access to their assets at all times mainly through digital channels.

2. Communication: my bank must adjust to my pace

Communication methods are crucial to millennials They expect a high degree of transparency and access to information at any time. But this does not mean they are looking for a digital-only relationship.

They appreciate face-to-face contact for matters that require careful thought and discussion but for everyday matters, they prefer email or instant messaging.

In their eyes, it’s the institution that must adapt to their preferred channels and habits, and not the other way round. They expect a high degree of reactivity but they also want to make contact through less formal channels.

3. Knowledge: I want to understand what I am investing in

A strong desire to learn emerged from all the surveys. Millennials don’t only want to invest in opportunities; they want to understand what makes them opportunities.

Their age, their lack of financial awareness — which they admit to — and their habits as consumers of content mean they expect clear, educational explanations and prefer short, digital formats.

4. Network: I prefer a banker I can identify with

Even though they expect a high level of experience and professionalism, millennials want to detach themselves from certain formalities and aren’t impressed by the “decorum” of private banks.

They also want a banker they can identify with, whether it’s in terms of age, mindset or shared interests. In short, someone who could be part of their personal and professional ecosystem, with whom they expect a mutual development of their network.

5. Sustainability: measuring the investment impact is key

Sustainability is a major aspect and goes far beyond awareness. Millennials want specific, innovative investment solutions that are designed thematically to deal with the issues that concern them the most and align their investments to their values.

Investing via a sustainable strategy is not enough for them. They want to be able to gauge the concrete effects and the impact, understand the mechanisms and their footprint and avoid greenwashing.

To them, sustainable investing does not mean relinquishing returns. Millennials want financial performance, sustainability and they favour clear reporting on impact — through digital and interactive tools.

In these fast-changing times with rapid digitalisation, sustainability and ever-changing models, millennials can teach us a lot. They inspire us and challenge us every day.

Their needs are constantly changing, but their initial expectations remain much the same: they want to protect and grow their wealth. And it is up to us to strike the right balance between heritage and innovation.

Arnaud Leclercq is Partner Holding Privé and head of new markets at Lombard Odier