The opportunity in #fintech and #Insurtech is not as young as we like to think
Throughout your work life, you come across a myriad of presentations, reports and pitches on the fintech opportunity in Asia. Most of these presentations look and sound basically the same – welcome to the world of fintech clichés: Big dreams of a post-banking world, bluish black images of numbers, lines and network nodes, 3D-renderings of coins with imaginary currency symbols, illustrations of robots, and photos of teenagers immersed on smartphones.
Also, lots of user interfaces featuring thin fonts and funky gradients. Granted, finance is not known to be the most creative of sectors. Yet, what many of these narratives point to is an often idealistic, surface-level view of how fintech could reshape our global financial system.
One of the most persistently questionable notions in this mainstream view of fintech, as I see it, is a notorious focus on millennials as a target audience. I am quite guilty of this personally, as millennials are the generation I most relate to and understand best. Yet, even in Southeast Asia, they are not necessarily the opportunity we should be focusing on most.
Few of the millennials in our region have significant income to begin with. Many live with their families, and a vast number of them are still going through tertiary education. It means that this target group is likely to have the least disposable income and lowest need for finance. This applies as well to the working portion of millennials, since starting salaries around Asia are generally moderate to low, and career progression takes its time.
Also, it is not exactly an underserved space. Everyone is targeting millennials, especially in fintech. What we end up with is customer group with little resources, that is completely overloaded with marketing messages. Would you want to exclusively go after that?
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Once we take a closer look at trends in Asia, a different picture emerges. Around the region, we are seeing a backshift of major life decisions such as marriage or starting a family. Even in countries known for the prevalence of rather traditional gender roles (i.e. Japan), couples are tying the knot later and wives remain in the workforce longer.
Simultaneously, ageing populations are a major socioeconomic influence that impacts not only high-income Asian nations, but has hit the emerging economies as well. Many rapidly emerging markets in Asia are good examples of that – they are experiencing a shift towards an ageing society, whilst factors like rising cost of living and urbanisation bring varied challenges and opportunities.
Such trends are observable across the region, and give rise to a new segment with a distinct lifestyle: The millennially minded. This label essentially refers to mid and late-thirties, often single, working professionals that formally fall into the Gen X category. Their mindset, way of life and interaction with technology, on the other hand, is on par with millennial audiences.
Unlike true blue millennials, this group tends to be rather well off and has a clearer idea they life and what they want to do with their future. Most importantly for us fintech folks – this group also likely has a much more sophisticated understanding in terms of the value financial products provide.
The millennially-minded measure up or even trump their younger peers in many aspects of a digital lifestyle. From sticker usage to Snapchat and Instagram utilisation or Pokémon Go proficiency, the digital identity of this group bears striking resemblance to that of digital natives.
On the flipside, they still understand the old economy, know how to send a fax and does not mind thinking about important life events or the need to financially plan ahead. Millennials appear to have trouble with all of that, and will probably enter the history books as the generation that planned least, and with the shortest attention span.
Who do you think is a better bet for fintechs? The millennially minded, then, can be considered ‘same same, but different’ to the generation whose lifestyle they emulate. They want the same type of things millennials approve of, but have more wealth and financial literacy. It makes them a perfect (and possibly underserved) target customer for the new age of financial services.
We have been going down that path recently in a major Asian market. Known for its rather developed infrastructure, things are moving fast and in the right direction here. Fintech activity is starting to appear on the radar of most regulators and financial institutions.
Still, there are lots of work to be done. Progress on the insurance side, especially life insurance, is far from impressive so far. Products tend to be traditional and predominantly distributed via agency and Bancassurance channels. Digital insurance offerings are not yet well established, and possibly there can be much white space in the market to create them.
In an effort to shape a customer-centric offering in this domain, we conduct regular immersion trips to the markets with promising opportunities. Every time, our team gathers a treasure trove of insights and translates these into insurtech propositions with potential to shake up the market. These rely on deep customer insight and an intricate understanding of how insurance companies might use their respective positions in the market to create or respond to innovations in the market. In the course of our last few trips, we learnt that the emerging affluent in Southeast Asia are prime examples of millennially minded customers of financial products.
Among the target group aged 35-plus, social media usage and knowledge of financial services is impressively high. Many of the people we interacted with nevertheless expressed a need for simpler, more upfront financial products that did exactly what they claimed.
These are great news for anyone looking to establish an insurtech proposition, so long as they are brave enough to challenge the status quo and think outside the box. The more time we spent on the ground, the clearer it became to us that in order for insurance to transition to a new, better offering (aka digital), we needed to start appealing to this new segment; i.e. customers that understand the value of being financially protected, yet crave for experiences that fit their lifestyles of feeling younger than they really are.
Solutions for the millennially minded basically speak to an audience that is affluent like a 35 year old, but wants the same kind of messaging as a 25 year old. This is the target picture for a new era of wealth management and insurance propositions, because these kinds of products do make the most sense when customers have a sizeable amount of funds, which they need to make good use of.
An analogy from my childhood: When I was in first grade, I looked up to the ‘big’ and mature third graders, and loved it when people talked to me like someone older. This highlights the distinction we ought to make between who we are, and how we want to be seen at a given life stage.
The millennially-minded are a generational manifestation of this. By looking at their needs and preferences, we are able to target a vast population of emerging affluent in the Asia region. These customers appreciate where our industry comes from and know of the value insurance companies provide, and their credibility and trustworthiness.
Coincidentally, those are also the kinds of personas ‘real’ millennials aspire to: Mature adults that have made it, but still enjoy life in the same way as their much younger peers. Insurtech initiatives, whether they come from start-ups or corporate ventures spun out of incumbents, ought to give this promising new target group the attention it deserves.
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The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your article here.
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