Millennials are far more likely than older customers to switch lenders if they find a better deal and are smart, price-sensitive consumers and not fans of big banks as show by countless surveys.
And banks do everything possible to ensure that these digitally native customers stay loyal once they’ve pinched their noses and opened accounts as they are also a huge, irresistible demographic for the financial industry. And hence a new end-to-end car-buying service by Chase that can be accessed via smartphone has been initiated as sophisticated social media, nimble mobile banking platforms are used in a bid to gain some fintech street cred.
“Many banks are not terribly well-prepared for the mobile, on-the-go, millennial consumer,” said Jeff Fromm, president of marketing consultancy FutureCast.
He said that the e vast majority of senior people running banks are probably not very representative of the population at large as they are over the age of 50.
In partnership with digital car-buying service TrueCar, thus latest offering from Chase, the U.S. consumer and commercial banking arm of JPMorganChase & Co shows that they’re trying. It layers auto financing onto online car shopping and is called Chase Auto Direct. Approved borrowers walk in to find their paperwork ready as they are routed to a network of Chase-affiliated dealerships that have the car they want who applied via smartphone or computer. The facility would be rolled out to all 50 states next year and Chase customers in 30 states can now avail Chase Auto Direct as of now.
“The reality is that customers are shopping for everything online, even cars. By pairing online financing with the car-buying experience, we can deliver pre-approved customers to our dealers and dramatically simplify the car-buying process,” said Bruce Jackson, head of retail lending at Chase Auto Finance.
Nora Ganim Barnes, a professor and director of the Center for Marketing Research at the University of Massachusetts-Dartmouth said that the stakes are high.
“This is not dissimilar to the challenge of newspapers, or of bar soap right now. There are lots of things millennials haven’t taken to as their parents did,” she said.
Paul Angone, the author of two books whose website, allgroup.com which focuses on the 18-to-35 demographic said that banks are scrambling to figure out how to capture those young consumers as they look at the transition of wealth that’s about to take place.
Rather than thoughtful, much of the financial industry’s attempts were labeled as receptive by him. He said that execution would be the key for Chase. “If it doesn’t work, it will generate a ton of negative feelings,” he says as Millennials don’t have a lot of patience for something that turns out to be clunky.
Steve Szakaly, chief economist at the National Automobile Dealer’s Association said that Millennials are more deliberate and frugal than their elders when it comes to cars even as millennials have started to buy.
The scale may be new even as the soup-to-nuts online car buying idea isn’t new. Ltting its members choose and finance a vehicle with the option of getting insurance too, an online car-buying service that works with TrueCar is run by USAA. Unlike USAA, Chase lends to the dealer, which then lends to you, tacking a few basis points onto the interest rate as it serves about 14,000 dealerships in the U.S. through its indirect auto lending business.
(Adapted from Bloomberg)