Moderator: Scott Nelson
Interviewee: Kenneth Gronbach
Panelists: Zach Kimball, Jena Morgan, Shea Huston
Generation Y, also known as “the millennials”, have grown up and entered the market with the full force of their numbers. As millennials get older and branch out from their families, they are entering the market in new ways. Gen Y is 88 million strong which is 10 million more than the Boomers and 20 million more than Gen X. The sheer numbers of millennials sets them up to define the market over the next 30 years.
At the Annual ELFA Convention in San Antonio last month Scott Nelson moderated a panel on how millennials will shape the market over the next 30 years and how equipment finance businesses should be preparing for change. The panel was kicked off by an interview with well-known demographer, Kenneth Gronbach, and featured panelists: Zach Kimball, Jena Morgan, and Shea Huston.
In the interview Gronbach detailed the importance of paying attention to generational shifts. In the next 10 years the 35-45 age range will see a 30% growth. We will see 25% more start up founders and 100,000 more franchises. Soon the millennial generation will have 5x the wealth to deploy. Ready or not, the millennials are here.
What do they need?
To know how to best appeal to this generation we need to first understand the traits that define them as a vertical market. We know that the millennial generation is inherently a digital generation. Digital capabilities have been readily available for most of their lives. For this group it isn’t a nice bonus, digital is expected.
Gen Y is also defined by their experience of using versus owning. A large portion of millennials today own very few of the commodities that their parents, the Boomers, owned. Panelist Zach Kimball, the resident millennial from this discussion, shared how in his own life he had been living in rented Airbnb’s for the last year. From phones to cars to houses, more and more millennials aren’t signing on for ownership. This has created what experts have deemed a “subscription economy”. This concept is based around the idea that people today avoid the commitment of ownership preferring to be able to pay for what they want and exactly what they use.
But the trend toward usage-based isn’t only limited to millennials, across all generations we are seeing a shift in mindset away from cover all flat rates to pay per use. This is also becoming the standard in most areas of life from basic consumer needs to business leasing needs.
In equipment finance we need to start evaluating how to respond to the “have it your way” economy. This can mean using more composable API’s so that you can build exactly what works for you. This also means learning to look at disruption as an opportunity instead of being weighed down by change.
“Figuring out how to build relationships with millennials requires having a different view of relationships.” – Jena Morgan
We must also evaluate how we can recruit and maintain top talent from this generation. The panelists suggested that this isn’t a matter of creating major changes in the way that we do things but instead finding ways to appeal to what millennials value in an employer.
Jena Morgan described how she’s seen millennials in her organization wanting to feel like what they are doing has a purpose, that what they are doing is contributing to something bigger than themselves. They don’t want to feel like just another number, they want to feel like a piece of a puzzle. Individually they are different but together they are creating something greater.
Another way to view this is the idea of employer transparency. Millennials are hard workers and will go above and beyond if they understand the purpose of what they are doing. Right along with this is a desire for clear expectations. From job postings to in the office, this generation wants to know what their employer wants and expects from them. This doesn’t come from a lack of initiative but instead a desire to be successful in the position they were brought on to fill. Millennials want to succeed in their role just as much as you want them to.
Technology Drives Change
It’s no secret that technology has changed immensely in the last 10 years. We’ve seen the development of bitcoin, software as a service, and technology that enables people to work remotely. While people have been working remotely for more than a decade, the pandemic forced many companies who had never thought that to be an option to make the switch.
With so many companies still opting for employees to work remotely it only makes sense to wonder how business relationships will change. How can we preserve or improve business relationships without the element of being face to face? How can we maintain business when our customers now have expectations of remote capabilities?
The solution to these questions can be summed up in that each company must find ways to meet customers where they are at. One of the best examples of this noted by Shea Huston is the transition we’ve seen banks make over the past two years. Before the pandemic banks wouldn’t accept almost any form that didn’t have a wet signature on it. Now here we are almost two years later, and some banks won’t even accept a wet signature now that they can opt for e-signatures.
The subscription economy is on the rise with no sign of stopping in sight. It is only natural to wonder how this will affect the way that we have approached traditional transactions in the past. Are credit scores on their way to being obsolete? If the younger generations no longer feel the need to buy, then the traditional credit scores will no longer be accurate or useful.
“Credit scores are great as a simplification, but they are an oversimplification by necessity.” – Zach Kimball
When discussed with the panelists, Zach Kimball shared that from his perspective, if we can alter credit scores to forecast a company’s ability to pay back a loan today and, in the future, then credit scores will remain valuable. If not, then like many other things they may just become a thing of the past.
This time of disruption is an opportunity for companies to reevaluate their models and consider embracing new methods and models. To be successful it is time to start leveraging AI capabilities so you can look forward and not rely on information of the past.
“You are either going to be disrupted or be the disruptor, which one do you want to be?” – Shea Huston
The technology disruptions we are seeing are giving companies the opportunity to grow and be better. To bring improved efficiency and customer experiences to the table. If you begin to embrace risks and you deliver a better experience, then you will have the ability to grow in scale.
Gen Y is going to define the marketplace and workplace for most of us for the next 30 years. Companies need to consider how to better serve them as a market segement and had better be ready to consider their needs as employees if they want to survive. This panel discussion provides some insights on how to do both and thrive is what Kenneth Gronbach described as the bright economic future driven by the numbers of the millennial generation.