Have loans, will succeed

Indian consumers have always been uncomfortable to take a loan or live a life on credit. That partly explains why there are only 21 million credit card holders in a country with 1,300 million people and 900 million mobile phones and nearly 700 million bank accounts. The number was much higher seven years ago — when banks used to dump credit cards on unsuspecting customers.

But a young set of customers is bound to change all that. A recent study by research agency Ipsos called “Millennials India” for social network LinkedIn and media services company MEC points out that India’s affluent millennials are happy to take on debt to fund their lifestyle goals.

The “Affluent Millennials” — identified as respondents who were 18-34 years of age with more than ₹30 lakh but less than ₹2 crore net investible assets, excluding real estate, and use the internet — were very comfortable with incurring debt. According to the survey, 68 per cent of this group owned at least one credit card and 52 per cent had a personal loan.

Pointing to their entrepreneurial spirit, at least 27 per cent had a business loan. Among the key findings in the study were factors like this one, for instance: nearly 54 per cent of Affluent Millennials conducted their own research before making an investment. However, they consulted with an advisor to validate their own research before taking a final call.

They also had a low dependence on salaries. Salaries were losing prominence as the primary source of wealth as compared to the GenX Affluents (defined as respondents of 35-49 years of age with more than ₹30 lakh but less than ₹2 crore in net investible assets, excluding real estate). The Millennials were 1.8 times more likely to have gained their wealth from royalties, 1.6 times from self-employment and 1.4 times by way of grants and scholarships.

A large majority (68 per cent of this set) expected to be successful and advance quickly in their careers through their own hard work, and not through their country’s prosperity. The study revealed that 86 per cent of them used social media to obtain financial information. They looked for financial institutions which offer a great degree of privacy and have a positive buzz online. On social networks they often searched for peer opinions (93 per cent), thought leadership (92 per cent) and informational resources (90 per cent). All of this influenced their choice of brand, particularly in the BFSI (banking, financial services and insurance) space.

They were also highly loyal and trust the financial institution they work with. More than 75 per cent of Affluent Millennials, with multiple checking accounts, hold all of them at the same financial institution. This is much higher compared to GenX, where only 31 per cent of respondents did so.

Also, more than half of Affluent Millennials (51 per cent) were more likely to say they are very loyal and plan to do more business with financial institutions they work with.

The study points out that there are a number of opportunities available to financial services companies to alter their marketing strategies. Companies need to personalise and socialise their approach, provide expert advice in order to establish trust and enable independence and build a loyal customer base at an early stage.

“Millennials are an incredibly crucial audience for marketers. Going about how they choose investment option, social media is the beginning of the funnel before identifying where to put their money,” says T Gangadhar, MD, MEC India.

He adds that search and social are two gateways for consumers to know more about brands. While the BFSI segment is present strongly in search, there is now a case to build a very strong presence in social media as well.

The BFSI segment could also explore other interesting spaces on social media where millennials would least expect to find a financial brand. For example, food and fashion brands queue up for a medium like Instagram. Could a BFSI brand make a mark on that platform? “There is a lot of merit to establish and nurture social assets,” says Gangadhar.

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