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NITIN

CHEENEEBASH
CHARTERED MARKETER

Management Report

An investigation of customer attitudes of Millennials towards Financial products/services in


Mauritius

Introduction

This report is targeted towards marketing practitioners from the financial services sector in Mauritius. It
provides recommendations on how to better serve the Millennials generation, a cohort made of all those
born between 1980 and 2000 (aged 17 to 37 in year 2017). This customer segment is going to represent the
core of financial organisations’ client base in an impending future due to its growing financial influence.

The report has been prepared using primary data collected specifically for the purpose of investigating the
attitudes of Millennials towards financial products/services in Mauritius, but in some cases information
from secondary sources have also been used to further enlighten the reader.

Sub-groups within the Millennials

While Millennials are often regarded as one single block like an homogeneous cohort, it is in fact possible
to segment Millennials into smaller groups on the basis of demographics. Older male Millennials, aged 31
to 37, earn the higher salaries. They are also more financially literate, and financial institutions could target
this sub-group within the Millennials generation for higher prestige products such as Private Banking or
Platinum Cards. Female Millennials on the other hand, irrespective of age, have been found to be more
loyal than their male counterparts. This entails that in general, it would be difficult for a financial services
provider to tap on competitor’s female Millennials clients.

Catching the online bandwagon

An aspect of Millennials’ attitude that is the most irrefutable is their propensity to use online channels to
do their financial transactions, mainly because this generation is highly technology ready. In Mauritius,
most Millennials were found to clearly prefer using the internet when dealing with financial products/
services, rather than physically travelling to a bank or insurance branch. Financial institutions are
thus recommended to ensure they have the adequate platforms to facilitate online transactions. Those
institutions that lag behind on this front could face the risk of being unattractive to Millennials. In fact,
another researcher (Smith, 2012) has even suggested that online channels of distribution could have the
potential of reducing the disparity between large and small financial institutions.

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When financial institutions deploy their online marketing strategy, they are recommended to extensively use
graphics through email advertising, coupons and side-panel advertisements. Pop-up advertisements have
been found to annoy Millennials and are as such not advised.

Great interest rates are not everything

Would Millennials choose high interest rates with financial institution X? Or does their preference go
for institution Y with lower interest rates, but accompanied with associated services such as contactless
payment, ‘virtual wallet’, internet banking and balance on text message?

Interestingly, Millennials in Mauritius have been found to have equal chances of choosing financial
institution X or Y. This implies that smaller financial services providers that cannot compete on interest
rates could create their own competitive advantage through the provision of associated services. Since it
was also found that Millennials are technology savvy, it is further advised that such associated services be as
digitally enabled as possible.

Talking financials

Millennials, specially the older ones, are highly educated and financially literate. When administered a
questionnaire containing both straightforward and complex questions regarding several products that make
up the financial services sector in Mauritius, the Millennials have demonstrated above average financial
knowledge. Therefore, it is expected that this generation would look deeper into the contracts they sign,
be more at ease with comparing the service proposition of different financial institutions, and be able do
determine between good deals and bad deals. It would be advisable that service providers tighten up their
service provision and eliminate all grey areas surrounding hidden costs or unprofitable interest rates, as
these are very likely to be picked up by Millennials. One example of this is when banks over advertise their
interest rates. While other generations might potentially look at interest rates independently, Millennials
would be more predisposed to check interest rates against inflation, in order to determine whether or not
those interest rates proposed by banks are profitable.

The fear of risks and loss

Millennials in Mauritius despise risks, and in situations of financial uncertainty, they would prefer to avoid a
loss rather than enjoy a gain. Although it was found that Millennials who were more financially literate took
a little bit more risks than Millennials with limited financial knowledge, this generation in general should
still be considered as highly risk averse across the board. Therefore the amount of risk that Millennials
were willing to take was not incremental enough to affect the types of financial products/services they use.
Banking and insurance products were definitely more preferred than complex products such as stocks and
treasury bills that command more risks but potentially more gains.

A strategy for stockbrokers and other financial institutions (e.g Bank of Mauritius is the institution that
issues treasury bills) should then be to exploit the fact that Millennials are financially literate, and further
educate them about the potential gains that products like stocks and treasury bills can bring to them. It
appears that such products are less marketed to the Mauritian public, and their sales are mostly targeted to
commercial banks or large organisations. There appears to be a scope for larger Millennials participation,
in the event that the service providers can mitigate the risk aversion of this generation. Financial education
specific to such complex products will here be key in changing the attitudes of Millennials towards risk.

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A loyal client base

It has been sometimes believed that Millennials switch brands easily, as evidenced by a past study conducted
in Austria. An interesting finding that has come up from the study specific to Mauritius is that Millennials
are highly loyal and are very likely to recommend and continue using their current financial services
providers. In light of this, it appears difficult for Millennials to change service providers as they age up.
Financial institutions should as such deploy the appropriate efforts to secure clients in the Millennials
generation in their early ages.

Products like bank accounts and insurance policies have a long-term focus, and if Millennials are choosing
their banks and insurance companies as early as in their teenage years or when commencing adulthood, it
can become a very tough for competing brands to make them switch to their own service offerings. Some
banks like The Mauritius Commercial Bank seem to clearly understand this situation and have introduced
products like the ‘12-17’ bank account which is targeted towards children aged between 12 and 17 years old
(MCB, 2017). This represents a target that is even younger than the Millennials generation.

Family and friends as a marketing ally

Companies spend a lot of money on advertising and promotion. For example, in the US in 2014, the top
200 advertisers collectively spent $137.8 billion on advertising according to Johnson (2015) in Advertising
Age magazine. It is expected that the amount spent on advertising in Mauritius is also consequential and it
is generally accepted that such marketing strategies improve brand visibility and can ultimately bring new
clients. Interestingly, in Mauritius it was found out that Millennials deemed advice from family and friends
as more trustworthy than commercial sources of information. This is a clear indication that unhappy
Millennials can cause collateral damage by giving bad recommendations about a financial institution, to
people in their immediate entourage. Conversely, keeping Millennials satisfied can turn them into advocates
that spread out the good word about their favourite financial services provider(s).

Conclusion

Millennials in Mauritius are demonstrating strong loyalty and do not like taking risks. They are financially
literate but prefer less sophisticated financial products/services like bank accounts or insurance policies.
Younger Millennials (aged 17 – 23) are for a majority without an income and as a consequence are less
active in the financial market, but this segment within the Millennials generation should remain a key
target, even though they are less profitable at the outset. Millennials have been found to be loyal, and when
they mature into mid-age (24 – 30) and older (31- 37) Millennials, it is difficult to make them switch from
their current financial services provider(s). Those financial institutions that think long-term and are patient
with less profitable younger Millennials will be in the driving seat when those Millennials inevitably turn
profitable in an impending future.

Reference

Johnson, B. (2015). Big Spenders on a Budget: What the Top 200 U.S. Advertisers Are Doing
to Spend Smarter. Available at: http://adage.com/article/advertising/big-spenders-factsstats-
top-200-u-s-advertisers/299270/ (Accessed 13 Sep. 2017).

Smith, K. T. (2012) “Longitudinal study of digital marketing strategies targeting


Millennials”, Journal of Consumer Marketing, 29(2), pp. 86–92. doi:
10.1108/07363761211206339. Page 3 of 3

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