Me, My Life, My Wallet

Me, my life, my wallet

KPMG Global Customer Insights

kpmg.ie © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 3 The multidimensional In an era deﬁned by uncertainty, the companies that get closest to their customers will emerge ahead of the pack. This begins with an “outside-in” view, building new ways customer of understanding how and why people make decisions.

ou already know that that employs a multidimensional Five Mys customer behavior is framework to engage what is now a changing. Power has multidimensional consumer. Presenting the Five Mys — Y shifted from companies a framework to help navigate to consumers, the mobile phone Genesis of our ﬁndings the complexity of consumer has become the remote control decision making of our lives, trust in institutions For several years, we’ve worked and traditional advertising has shoulder to shoulder with clients The underlying drivers of human diminished. Customer trade-offs to understand customer attitudes, decision making have become and decisions are more opaque and behavior and expectations in our exponentially more complex in recent moving faster. present era of disruption and years. Yet transactional data, traditional You’re already aware that the uncertainty. Faint signals of change market research and demographic structure and composition of grew louder and bigger patterns began profiles alone are proving inadequate industry has changed. New entrants to emerge beyond one individual sector, to explain not just what customers are with radically new business models building a sense of urgency and leading doing, but why. are enacting disruption across the to our belief that we’re witnessing a As a result, many of our clients value chain, reshaping ecosystems structural change, not a temporal one. have found themselves out of step from sector to sector. Meanwhile, As our teams constructed a new way with a changing, more informed and company lifespans are shrinking and of thinking about a changing customer, more empowered customer. They’re the paths to billion-dollar valuations we embarked on a multifaceted struggling to understand customer are accelerating. research program to validate our motivations and how these translate All these challenges are well thinking and bring to bear the voice of into new products and propositions, documented across business media, the consumer. new services or ways of doing research reports and conference Combined with the extensive, business and, crucially, how they presentations. But how should you worldwide experience of KPMG’s should align their organizations to keep use this information to understand network of member firms, this driving growth. not only where your customers are has enabled us to identify how We start by taking an outside-in view today but where they’ll be tomorrow? best to engage the 21st-century of customer behavior that enables How can you rethink the basis of consumer, and our approach companies to understand the multiple competition and pivot your operations provides a tangible framework layers and related calculus of human and business models to win in the to help companies identify, decision making. battle for growth? understand and respond to today’s And our research has led us to It’s time for a new approach. One changing customer. focus on five key dimensions of

customer behavior — motivation, » 05 My wallet How consumers Customer wallet attention, connection, watch and adjust their share of the wallet across wallet. Considering any one of life stages and pivotal life events is Introducing the customer wallet — these dimensions in isolation tells changing, creating a ripple effect of the reality of how we spend and save only one aspect of a customer’s change across not just one, but all story. Together, however, they categories to which they allocate While potential earning power and enable companies to navigate their money. disposable income have long been used the complexity of consumer in segmentation and in determining decision making, and build a richer Deﬁning the Five Mys customer attractiveness, the forces understanding of changing attitudes, that open and close our wallets are needs and behavior. undergoing significant change. My motivation – Characteristics When, where, how and why we » 01 My motivation Trust, authenticity that drive behavior and expectations spend is becoming more complex, and social values are critical but My attention – Ways we direct our influenced by a greater variety intangible motivators of the choices attention and focus of forces and greater availability today’s consumers make. My connection – How we connect to of choice. It’s becoming less » 02 My attention The fight for devices, information and each other predictable, as demographic and consumer attention has never My watch – How we balance the economic shifts challenge the been more intense, exacerbated by constraints of time and how that changes accuracy of legacy earning and unprecedented volumes of content across life events spending trends. And the trade-offs at our fingertips. My wallet – How we adjust our share we’re willing to make across different » 03 My connection Today’s of wallet across life events categories are constantly evolving, technology connects humans powered by mass adoption of new to information and each other technologies and the rise of the on- 24/7, driving shifts in our social In the first part of this report, we demand economy. interactions and behavior. explore each of the Five Mys in detail, The complex, unpredictable and » 04 My watch The companies that illustrating how they contribute to a changing nature of our wallets calls understand the constraints of time deeper understanding of the changing for a new way of thinking about the and anticipate how that changes customer and potential impacts on the interrelationship among income, across life events are best placed to customer wallet. Based on our in-depth borrowing, savings and spend. We engage customers in the moments research, we discuss how these forces need to consider this mix in the of greatest impact and to meet their manifest across different generations context of why we’re making the needs head on. and in different parts of the world. choices we are and how the mix

changes across generations and is attractiveness as customers. life events that introduce new forces influenced by pivotal life events. But things are no longer happening on the customer wallet. Later in the report, we focus on the at the same time, or in the same Change isn’t looming in the customer wallet, a framework which, order, as with earlier generations. Life distance. Instead, it’s the reality being when used in concert with the Five stages are shifting and extending, faced by companies all over the Mys enables companies to go beyond and life events aren’t as reassuringly world and no company, regardless the limitations of socioeconomic predictable as they once were. of maturity or sector, is immune profiles and credit scoring. To help companies ride the from these forces and competitive waves of change, we’ve developed pressures. It’s demanding fresh ways Generational surﬁng generational surfing, a fresh way of of thinking about the customer. thinking about the changing patterns The Five Mys, customer wallet Introducing generational surﬁng — of consumers’ lives and anticipating and generational surfing combine the unpredictability of our life patterns their needs, behaviors, trade-offs to provide that fresh thinking, and choices as they move from one bringing companies closer to their For years, companies have life stage, or wave, to another. multidimensional customers, meeting relied on assumptions about In the third part of this report, we them where they are and on their our life stage, using age as a explore how life events are “drifting” terms, and helping them navigate the proxy, to determine our spending among generations and reveal where change and disruption of both today power, likely needs and relative our research has found new, pivotal and tomorrow.

The three dimensions of how Influencing events customers make decisions Events of my formative years that shaped my values and influence Until now, there has not been my behaviors a compelling, comprehensive account of how to understand Five Mys customers or consumers as the My motivation, real living, breathing, complex my attention, my connection and my human beings that they are. trade-offs between time and money The holistic view of me as a customer can be gathered by understanding three key dimensions to know me better. Life stage Where I am in my life stage journey

Source: GMC

The multidimensional customer Customer centricity Chasing customers across the world The multidimensional customer 03–05 The Customer-centric ecosystem 40–42 Understanding the customer in full context A holistic look at consumer behavior United States: A brave new world 60–64 Industry view 43 The ubiquity of the tech platform Paying attention to the right signals 11–12 The customer through the sector lenses A closer look at the signals of change United Kingdom: Data becomes king 44–46 The connected consumer 65–70 Combining data to know the customer The rise of the digital nation STEP events 13–14 The events that shape who we are Curated by me, for me 47–49 India: Leapfrogging towards digital economy 71–76 Embracing the era of personalization Understanding the Five Mys 15–23 A ‘continent’ in the ascendancy Deciphering the complexity of human decision making The empowered patient 50–52 Putting healthcare in the hands of the patient The eastern boomer effect 77–78 The Five Mys profiles 24–27 Reverse mentoring across the generations A multifaceted view of the consumer In search of a simplified financial life 53–56 China: window into the future 79–83 Taking the pain out of financial experiences A consumer empire on the verge of going global

Reorienting around the person, not the risk 57–59 One app to rule them all? 84–85 Me, The technology revolution in insurance WeChat: the platform behemoth The perfect storm

The perfect storm 86–89 my life, Experiencing the age of disruption Customer wallet

Customer wallet 28–31 The fight for a share of the wallet

Generational surﬁng 32–37 Predicting the trends before they break my wallet Life event drifts 38–39 Life event shift across the generations

A glimpse into the technologically Checking our phones is the first thing we powered world of today through do in the morning consumers’ own words, sentiment and actions — and a preview of the research themes and insights explored throughout this report. First thing I do in the morning is check my Me, My Life, My Wallet draws on an in-depth body of research, notifications, so that’d be combining trends analysis of social, technological, economic from Facebook, Instagram, and geopolitical data; ethnographic interviews with consumers WhatsApp, or iMessage. on four continents; and a proprietary quantitative survey of Texts first and then move consumers in China, India, the UK and the US. Consider this small preview of the detailed insights explored over the course to social media.

of this report and ask yourself: Do I really know my customer as Avantika, 25, millennial well as I think I do, or as well as I should? Pastry chef, Mumbai, India

While greater anxiety is associated with losing one’s wallet globally, the connectivity of people in China swings the balance the other way

Percentage who would rather lose phone China India UK US

Percentage who would rather lose wallet

29% 57% 61% 74% To [lose] my phone...I would

feel anxiety. 71% 43% 39% 26% Nomophobia.

Zi, 28, millennial Curator, Taiyuan

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 8 88% of people in China use WeChat or >1 in 4 Alipay to purchase goods or services millennials glance at their phone screen at least once every five minutes without being prompted by a notification 83% First thing I do in First thing I read in of millennials in China open the morning is the morning are their phone or mobile device to check TimeHop WeChat, Facebook relieve boredom on Facebook to and Instagram The US has the highest percentage of technology see what to catch up laggard boomers, and China has the lowest happened before with friends. in my life. Stay in touch. China boomer 9% Emma, 34, millennial Annie, 23, millennial Life coach, Norfolk, US Student, Hebei, China India boomer 22%

UK boomer 24% My phone is my alarm clock, so the ﬁrst thing I do US boomer in the morning is check what 26% notiﬁcations I got. If I posted an Instagram before I went to I use WeChat every minute, every bed, I want to check if I have a hour to chat with friends, family, lot of likes in the morning. brands and get my news.

Kelly, 30, millennial Helen, 52, boomer Marketing, New York, US Teacher, Guangzhou, China

Trust in platforms and devices used regularly

US 79% 22% 19% 54% use platforms* have complete trust in platforms use a smartwatch regularly use a tablet regularly

UK 73% 28% 71% 60% use platforms* have complete trust in platforms use their laptop regularly use a tablet regularly

China 91% 64% 21% 48% use platforms* have complete trust in platforms use a smartwatch regularly use a portable battery regularly

India 88% 28% 14% 38% use platforms* have complete trust in platforms use a feature regularly use a mobile website hotspot regularly * Adoption rate for the highest used platform

Payment methods used

US UK China India

72% 90% 72% 88% 38% 60% 34%

use credit cards use debit cards use PayPal use WeChat use bank’s use Paytm use Bank’s mobile app or Alipay mobile app

Frequency of using mobile device to pay for goods and services

Total US UK China India

48%

41% 41% I would do online grocery

38% shopping like they have in England, but it doesn’t exist in America. 33% Emma, 34, millennial 31% Life coach, Norfolk, US

28% 27% 26% 25%

20% 20%

15% 15% 14% 13% 12%

8% 7% 6% 6% 5% 4% 4% 3% 2% 2% 2% 2% 2%

Less than once a month 1–5 times per month 6–20 times per month 21–50 times per month More than 50 times Never per month Percentages rounded to nearest whole number

Paying attention to the right signals Making sense of signals of change is critical to keeping up with changing customers.

round the world, Short-wave signals Take Lily, a married Gen Xer from from sector to sector, Shanghai with two children. For the companies are locked Short-wave signals emanate from micro last ten years, she and her family have in a battle for growth. events and extracts of information taken a week-long summer vacation A Facing intensifying that tell the complex story of our lives at the same Ritz-Carlton hotel in Hong competition, many are struggling to as consumers. They include with Kong’s West Kowloon district, at the understand the wide variety of trade- whom we connect and follow and our same time of year. This year, however, offs customers are willing to make and social media likes and interactions; the Lily changed jobs and now works the forces impacting their decisions. information and media we consume; remotely. Instead of her traditional And for many, the past is no longer a where we go, when and how we get vacation, she invested in renovating reliable indicator of future behavior. there; what we buy, when and where a new home office. Does the hotel A variety of macro- and we buy it, whether online or offline; and assume that Lily, a loyal Ritz-Carlton microdemographic and economic where we have it shipped, how often customer for years, has switched to shifts, along with accelerated mass we reorder it and how we pay. another brand? Or that the family’s adoption of new technologies, are The vast data trails emerging from holiday needs have changed? Purchase having multifaceted impacts on our deepening relationships with behavior alone doesn’t reveal that the consumer behavior. These shifts are technology and the pervasiveness of travel share of Lily’s wallet has been signals of change, and they can be our devices provide contextual data reallocated to a completely different detected in two forms — short wave or clues on almost all facets of our category: home improvement. and long wave. lives. This short-wave data reveals what we did, but it doesn’t explain our underlying motivations or divulge the Finding the right ways to mine “why” behind our decisions. Making and analyze these signals will decisions based on this data likely help companies better predict assumes the future looks like the past. their customers’ changing needs and expectations. Colleen Drummond Partner in Charge, Innovation Labs at KPMG Ignition, KPMG in the US

Long-wave signals Consider Steve and Jane, two Short- and long-wave signals boomer parents. They married combined Long-wave signals are external, macro early, secured blue-chip jobs, events that impact our experience, bought a house and had two Short- and long-wave signals are influence our values and behavior and children. They invested and each important, but the real power provide context for what motivates lived through the highs and lies in putting them together to and drives us. They influence how subsequent lows of the dot-com understand the macro and the micro we connect to each other and the bubble and bust. After 9/11, in context. Finding the right ways world around us and where we focus they purchased a bigger house to mine and analyze these signals our time and attention. Long-wave to secure a tangible place in will help companies better predict signals emerge over time, in the form an uncertain world. When the their customers’ changing needs and of demographic shifts and STEP 2008 financial crisis hit, they expectations, and what’s more, the (social, technological, economic and sold their stocks. Real estate forces that influence when, where, market, political and regulatory) events values plummeted, pushing how, and why we open and close experienced by each generation. their new home into negative our wallets. In isolation, long-wave signals can equity. Steve lost his blue-chip appear too removed to detect a direct job as the prolonged downturn impact on a customer purchase or continued, and their equity is behavior. However, for companies tied up in a house that’s become paying attention to them, these signals a burden. The value of their help get to the “why” behind human cash and bonds is limited by decision making and, importantly, how low interest rates. Now they lack it’s changing. the ability to fund a looming retirement. Their life events have influenced every purchase choice they have made and the shape of their wallet in the future.

019 KPMG,an Irishpartnershipandamembe r firmoftheKPMG networkofindependentmemberfirms affiliatedwithKPMGInternational Coope rative (“KPMG Internatio India United Kingdom United States China STEP events STEP Education Independence Independence 1945 1945 from Britain movement Wo End of Wo End of We Foundation ofthe Nationalization rld War 2 rld War lfare State rld War 2 rld War Ac Coal shortage Council houses t independence Indian Cold Wa assassinated Mahatma Gandhi over Kashmir Wa NHS Marshall Plan r r withPakistan China established People's Republicof the pound Devaluation of 1950 1950 Low unemployment "golden" age Adve Color Civil rights constitution Framing ofthe a republic India becomes Mao-ism rtising Wa TV ge rises Boomers 1940–1965 Telephone food rations End of Te India Institute of 1955 1955 chnology (Nehru) launches ITV of thebus to Rosa Pa move influenced key generations in their formative years. formative their in generations key influenced events those when with aligned countries, four across events STEP reflects visualization This and wallet. watch connection, attention, motivation, our influence and cultures our define to combine factors regulatory and political market, and economic technological, Social, rks refuses to Kennedy elected theback as president First motorway The CultofMao Forward policy Great Leap Ta sector manufactu Decline ofthe service sector Rise ofthe 1960 1960 x cuts Revolution Green ring feminist movement Rise ofthe with China India loseswa ground troops to US sends Vietnam assassinated President Kennedy on Washington MLK mar at 16years old Leaving school launches (1+2) 1965 1965 nal”), aSwiss entity.Allrightsreserved. r BBC Radio ch schooling Comprehensive Rise offeminism Liberalization oftherupee female prime minister Indira Gandhiisfirst Revolution Great Cultural Woodstock landing moon First Latch Gen X1965–1980 Glastonbury first elected Stagflation Wa Thatcher ke scandal te y kids rg Ireland riots Northern ate Color on themoon First human 1970 1970 Gold Standard TV UK joinsEEC Ro End ofthe e v. Movement launches Green Rachel Carson Counterculture

Wa de 1975 1975 Gen X1965–1980 and study abroad China opento compute Personal birth control Compulsory AIDS epidemic death Mao Birth control © TV 2019KPMG, anIrishpartnershipanda member firmofthe KPMG networkofindependentmember firms affiliatedwithKPMG InternationalCoop erative (“KPMG International”),aSwiss entity.Allrightsreserved. assassination until 1980 compute Personal Only one Privatization channel ’s r attempt Reagan begins 1980 1980 travel policy One child r Indian dramas economic zone Creation ofspecial fast food chains re Comic Relief volution (soaps) Arri hits 1billion Population Live Aid Te val of ch Mobile phone 1985 1985 Housing crash Economic re Impr cession Millennials 1980–2000 roads GCSE oved telephone First wireless Sky launch Recession The we Gulf Clinton elected Inte TV 1990 1990 Wa protests Tiananmen Square WWW (internet) rnet comes b r to Outsourcing middle class Rise ofthe Dot-Com boom Labour Pa to India India Princess Dianadies Amazon starte universities become Polytechnics easyJet as sear Google founded rt d established Hong Ko y inpo 1995 1995 Return of school violence Netﬂix ch Inte ch we engine Columbine annels added ng rnational ch 50 r established Population > 1billion annels TV

Source: Innovation Lab at KPMG Ignition, KPMG KPMG Ignition, KPMG at Lab Innovation Source: Social Technology Baidu fees introduced University tu Digital TV 2000 2000 established Alibaba Child tax bust Dot-Com TV credits (social netwo elected Bush G W implications 9/11 social 9/11 attack ition Rise ofOrkut iTunes store established Iraq invasion goes up Great firewall in space First human 2005 2005 established Facebook launched Hosted 2008 iPhone rk Olympics End ofIRA London bombings Financial ) Political Economic crisis in the US the in launch BBC iPla Facebook arri First female president credit crunch Financial crisis and 2010 2010 High-speed train Uber established Obama elected iPhone launched We Double 11 Alibaba first ye Independence r ibo established Male/female state pension broadband Streaming, Events are representative and not intended to be be to intended not and representative are Events Influence Low ve established WeChat Generation-defining events Generation-defining s day Pa

age equaledto UK rt y 2015 2015 inﬂuence High Shanghai opens Disneyland Tw Demonetization Brexit vote 65 o-child policy elected Tr ump 2020 2020

comprehensive

United States United China India Kingdom United 14 Me, my life, my wallet 16 Understanding My My My My the Five Mys attention connection watch wallet Ways we direct our How we connect to How we balance the How we adjust our Understanding the complex underlying drivers attention and focus devices, information and constraints of time share of wallet across of human decision making has become each other and how that changes life events across life events exponentially more important as the disruption of the digital age accelerates. My motivation Characteristics that s consumers, our Five Mys drive behavior and are both interconnected and expectations constantly changing. If a company looks at any of these Aunderlying drivers of our choices in isolation, or through the lens of a specific industry or a single life stage alone, they will miss out on the richer story of customers’ unmet needs and their trade-offs between time and money. Instead we urge companies to understand the breadth of, and interrelationship between, these five forces that influence our decisions and to explore all aspects of customers’ lives, not just the category you serve. 70% 41% 30% 48% 77% Our Five Mys framework is designed to help identify the real drivers of customer behavior, increase, since 1987, of of people feel totally of millennials glance at of professionals in India of UK postgraduates along with the critical trade-offs among consumer spending on live overwhelmed with their phone screen at are ready to forgo a top will never “pay off” experiences and events information and avoid least once every five position with a high their student debt purchase decisions across the breadth of the relative to total US consumer it if they can minutes without prompt salary for flexible working customer wallet, leading to more targeted spending or a notification arrangements and contextualized experiences, products and

services that create value for both consumer Source: KPMG global consumer Source: KPMG global consumer Source: “Top Attractors” survey, Source: Institute for Fiscal Source: U.S. Department of Commerce, Bureau of Economic Analysis and company. survey, 2017 survey, 2017 LinkedIn, 2016 Studies, 2017

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 17

My motivation

Characteristics that drive behavior and expectations

Today, our best experiences have given you. But I may be willing to share become our expectations — we more information if that means you no longer just compare a company can give me better insights, know my to its closest competitors but to challenges better and deliver the value I whomever sets the standard for our need on my terms. best experience as consumers. We crave convenience and more intuitive, Value me. personalized experiences. We value peer reviews and social reference, and Make me feel like you care about many people place more confidence keeping my business. Relationships in individual influencers than in matter, whether the interaction is companies and institutions. physical or digital. Think about what For companies, the message from you’re doing that may signal to me that consumers is simple: you don’t value me.

Make it easy. Business Find ways to make it easy for me to Questions to ask engage with you. Make the tasks I impact don’t care about easier to execute. » Where are the key expectations Help me figure out if I’m choosing the Knowing what customers and friction points on the customer right products and services for my really value in an experience journey? needs. Remove friction and make my and what’s setting the » How do I obtain insights to experience with you simple, intuitive benchmark can help understand better the key and pain-free. eliminate wasted efforts drivers of behavior for my most profitable customers? and focus on the ones that Know me. » How can customer data already make a difference. provided be used to create and/or Show me that you know me as well as enhance a better experience? the data you already have about me, » How do we get behavioral data to the preferences I’ve already revealed understand the customer’s whys? and how I engage with you. Don’t ask Our best experiences have » Where does environmental me to reenter information I’ve already become our expectations behavior fit?

We’re all subject to unprecedented nothing short of an all-out assault on Questions to ask volumes of information at our fingertips, our attention. increasingly available whenever and Consider these statistics: » How do I get my customers’ wherever we want it. This abundance » There is more media created in 60 attention in a way that won’t add to of information collides with constant seconds than can be consumed in a their information overload? pressures on our attention. As our time lifetime. » What are the moments that matter has become more fragmented, we » Of the 205 million emails sent daily most to customers, and how do I are making fundamental shifts in how around the world, only 30.6 percent build value around these? we process and filter information and are opened. » How do I maintain value once I have otherwise divide our days. » Data is growing faster than ever, captured my customers’ attention? Although our patience thresholds are and by 2020, about 6GB of new » How will advancements in falling, we continue to make time for information will be created for every machine learning and artificial the things that matter to us individually. human being on the planet, every intelligence become “personal Understanding how individual consumers hour of the day. assistants” for customer? prioritize and marshal their time and attention is essential to break through the noise and the chaos and to build deeper, more meaningful relationships.

Information overload

The sheer volume of information, communication, content and media that we’re exposed to every day is

Business impact

Knowing how to get customers’ attention can help target investment at the moments that matter, maximizing return on investment.

cultures, macro and micro trends, and To the more significant aspects such as… groups that share commonalities. Understanding the shape and patterns » Booking a vacation of these wide-ranging interactions and » Staying in touch with family networks is central to understanding and friends My how decisions are influenced, when and » Investing and banking by whom. The companies that cultivate » Managing health and wellness such an understanding and how it could » Looking for a relationship. evolve as technology further permeates connection our lives will be those best equipped to Questions to ask engage with customers on their terms. How we connect to devices, » How do I help customers get information and each other Remote control smarter about the way they engage with my brand? With the promise of a simpler, » How do I get smarter about faster, cheaper or better life, we’re customers through their increasingly offloading our lives to connections? As technology adoption accelerates, technology. From simple things like… » How can we help the customer new devices and tools are gaining deal with connection and more users in less time. While it took » Remembering disconnection anxiety? 13 years for the mobile phone to reach contact » What experiences 25 percent of the US population, it information could be created to took the iPhone just 2.5 years. » Way-finding connect customers As a result of our increased and navigating to each other? connectivity, we are having more to a » How do I apply the digitally “connected” interactions. new destination same thinking to Consequently, we’re getting smarter » Managing a my organization about the world, and the world is calendar and leverage getting smarter about us, who we are » Consuming technology? as individuals, about other “people music, photos like us”, and about communities, and videos » Ordering and paying for goods Business and services impact

Getting smarter about customers through thi e r connections contextualizes big data and generates actionable insights.

ven the mere thought of leave their device at home, also found misplacing your phone can evident among 36 percent, 35 percent evoke a mix of feelings we and 21 percent of Chinese, US and UK refer to as (dis)connection 30% consumers, respectively. Eanxiety — the paradoxical of all millennials glance at their phone screen On the other hand, some of us feel feeling of being both disconnected and at least once every five minutes without being irritated and overwhelmed by the too connected. prompted by a notification prospect of constant connectivity itself If you’ve ever lost your phone or left — the inability to unplug and switch it charging at home while you spent the what some call “nomophobia” or no off, the feeling of being trapped by day at work, you’ve experienced the mobile phobia, a term coined in 2008 pervasive access to our work emails or rollercoaster of conflicting emotions: by YouGov, an international data and an initial sense of dread, sometimes analytics group. followed by the relief of remembering While there is some debate over where you left your device. Typically whether the feelings meet the clinical I panic when I accidental and often disconcerting, definition of a phobia, some of us feel truly leave my phone. there is some solace to be taken in the fearful and anxious about the prospect of I feel handicapped. realization that you’ll have a day’s respite losing connection to our digitally powered from your always-on life. lives. According to our survey, 42 percent Anchint, 27, millennial Mobile devices have enabled of Indian consumers told us that they Airbnb employee, ubiquitous connectivity, giving rise to feel a strong sense of anxiety when they Calcutta, India

the unspoken social pressure to respond Anxiety over losing phone versus wallet immediately to a WhatsApp message because we know the sender can see While greater anxiety is associated with losing one’s wallet globally, the the read receipt, indicating we’ve seen it. connectivity of people in China swings the balance the other way Having our phones with us not only provides a sense of comfort and basic Percentage who would rather lose phone Percentage who would rather lose wallet security, but it’s also the tool that many China India UK US of us have to use to help manage our lives because we’ve offloaded so many critical tasks. When that’s suddenly removed, we sometimes feel helpless and desperate. In our survey, for 29% 57% 61% 74% instance, 71 percent of respondents in China said they’d rather lose their wallet than their phone. So if the thought of being separated from your phone freaks you out, you’re 71% 43% 39% 26% not alone. But as one of our survey respondents noted: “I accidentally and unintentionally leave my phone at home sometimes. You were born without a smartphone, so it’s OK.”

My watch

How we balance the constraints of time and how that changes across life events

How much time we have, or think Questions to ask these pockets as part of my we have, influences how we interact segmentation strategy? with other people, services and » How do I reduce the time and » For the customer who places companies. We’re increasingly using effort it takes for my customers to a premium on time, what are technology to automate or accelerate purchase or engage with me? the opportunities to deliver a tasks throughout our lives, whether » How do we discover the pockets differentiated experience? with recurring grocery and household before pivotal life events? » What are the ways to demonstrate orders or the use of algorithms to » How do I start to build in value with my customers early help guide us on what to purchase, in their experience with me and watch or listen to next. throughout the journey? By understanding the impact of life » How do I apply the same thinking events and the trade-offs of time and across my organization and make it money, companies can engage with Business easier for my teams to connect with consumers at the time of greatest impact my customers? impact, identifying and addressing » How can I help them prepare for unmet needs. Identifying the pockets life events? before life events yields new opportunities to build customer loyalty and stickiness.

My wallet

How we adjust our share of wallet across life events

Often in a symbiotic relationship with » How do I identify how my customers time, the shape of our wallet changes are spending and sharing their wallet? according to major life events. How » How do we get to people who will much money we have, how we earn more in the future? choose to allocate it and our attitude » For the customer who places towards it shifts based on myriad a premium on quality, what are factors, not just our salary or age. the opportunities to deliver a Understanding the relationship differentiated experience? between income, consumption and » What are the ways to build trust with spend mix, and how this changes for customers early in the experience or different generations, viewed through journey to gain a share of their wallet? the lens of life events, provides a level of intelligence beyond that offered by traditional demographic models. How the new customer wallet is Business changed by our motivation, attention impact and connection will drive the next generation of business models and Understanding the determine the companies that thrive trade-offs customers in the race for the evolving customer. make between time and money can identify the Questions to ask best future customers » How can I help customers manage and expectations. their wallet and budget?

On paper, Shikha and Aanchal are time researching honest and authentic While a smartphone user active on one and the same. Both are female products, brands and experiences. many of the same apps as Shikha, millennials around the same age. She proactively harnesses technology Aanchal places greater value on Both are single, living in first-tier to ensure she doesn’t miss a beat her time offline, viewing reading cities in India. And both are earning across her social networks, viewing her akin to meditation and welcoming a comparable wage in skilled, device as the primary connection to her disconnection from technology. She The Five Mys profiles professional roles. But a deeper look friends, family and memories. Social places greater priority on travel and at their Five Mys reveals very different activities are the priority for her time new experiences, and this drives For years, marketers have touted demographic segmentation for targeting drivers resulting in very different and money, seeing her sacrificing travel her allocation of time and money customers. Looking at demographics alone, however, risks missing the multifaceted patterns of behavior. convenience for small savings that can — sacrificing the convenience and way in which people make decisions. Shikha is fundamentally driven by be reallocated to dining out. flexibility of dining out or ordering take social connection. She values organic In contrast, Aanchal’s primary driver out in order to reallocate her spend to produce and provenance, investing is the diversity of her life experiences. her core motivation. Millennial comparison: India

Shikha, 32, millennial My motivation Aanchal, 31, millennial My motivation Editor at men’s magazine, Data analyst, “Everything organic. I will research for “I’m always driven to try new Mumbai, India Bangalore, India hours to make sure what I’m buying, eating things. I’ve lived abroad and Single Single or experiencing is honest and authentic.” been exposed to many new experiences.”

My connection My attention My connection My attention “Being without my phone “I glance at my phone constantly “I welcome disconnection. “I try to follow headlines gives me anxiety! I would with notifications. I get alerts I read spiritual books these but wouldn’t spend hours lose connection to people for everything happening in my days and wouldn’t mind reading on the net. I I love and all my photos.” social network and news. I want having an uninterrupted prefer to read fiction — to be the first to know.” day of peace without my it’s meditation for me.” more Indian phone, WhatsApp and millennials report Facebook.” 13% being without their phone is greater of Millennials in cause of anxiety than India report being witnessing a crime 51% interrupted by their primary device at least once every 10 minutes

My wallet My watch My wallet My watch “I have started taking 21% “Spending time going out to “In order to save money, 17% “I believe time spent traveling 13% uberPOOL to save money. It only of Indian dinner and drinks with friends takes longer to get places, but millennials would cut is what keeps me happy. My I learned how to cook. of Indian millennials is the most important thing I of Indian millennials’ I have more money to spend dining out/take out social life is my status and my It takes longer, but it’s a would cut travel/ can do. Spending time on new budget is allocated going out with a small trade- if their budget was everything.” trade-off that affords me vacations if their budget experiences with loved ones is to leisure and off of my time.” reduced by 10% more budget to do what’s was reduced by 10% critical to my happiness, my life.” entertainment important to me.”

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 27

Armed with this level of behavioral, contextual insights, These stark differences are by no passion, is the life event we call of illness. He’s part of the minority of An active user of technology and companies can anticipate the patterns of consumption means limited to younger generations. FROOM (Fear of Running Out Of UK boomers who shun social networks social media, he’s adopted behaviors and spending that make up these individuals’ wallets Tom and Bob are both married Money). Part of a generation that’s and online platforms, generally avoiding from his grandchildren to enhance with far greater precision — and get to know the person boomers of a similar age. Both are living longer than their retirement both the cost and complexity of new his connection to them. He’s keen behind the demographics. retired, and both are living in large cities incomes were intended to support, technologies. Consequently, he has a to ensure his time and money are of a similar economic profile in the he’s keeping a sharp eye on his pension virtually nonexistent digital footprint. allocated to family and values making a North of England. income, all too aware of the potential In contrast, Bob’s focus is family, difference to them more than investing The primary driving force influencing impact of medical and care costs, with and this has a profound impact on his in experiences or products and services Tom’s wallet, beyond his football a spouse going through a recent period behavior, his choices and his wallet. for his own enjoyment.

Boomer comparison: UK

Tom, 68, boomer My motivation Bob, 73, boomer My motivation Manchester, UK Retired electrician, Liverpool, UK Retired, “I am a lifelong fan of Manchester Married “I like to think of myself as a City Football Club. I schedule my Married caring person. I want to take life around matches.” care of my family, and now in retirement, I can do more of that.”

My connection My attention My connection My attention “I still use my paper “I am just me. I don’t have “My grandkids taught me “I have been calendar to schedule any presence online that how to use Facebook and volunteering at the appointments. And I use my I know of. And nothing FaceTime. I’m always on local hospice. home phone. I don’t have interrupts me except my iPad now.” I learned from time to learn a new iPhone salesmen at my door.” the patients how that changes every year.” important it is to of boomers in the UK be present.” of boomers in the UK report that they are not of boomers in the report that they would 4% on any online platforms UK report that they 77% prefer to lose their phone 59% use Facebook over losing their wallet

Boomers in the UK report that My watch My wallet Boomers in the UK My wallet report that only My watch “I am worried about “My wife has been sick, so I’ve “With the holidays outliving my pension. 82% spent more time taking care of coming up, I want to “The only thing I’m afraid of is missing out on time with Now that I’m retired, I of their wallet goes her lately.” make it extra special for 7% my grandkids.” have more time than toward necessities (vs. luxuries) my family.” of their wallet income.” goes toward savings and investments (next generation’s inheritance)

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 28 Customer

of millennials identify their parents as a wallet source of income Many organizations still prescribe to the dated In India, the figure is as high as belief that their primary competition is a rival company in the same industry — but their only true competitor is the customer wallet. 35%

e’re all subject premium on-demand and delivery to finite income I pay $30 a class for those workout classes services that bring speed, ease and (Soul Cycle and so on), which is a pretty flows and certain big guilty pleasure. I know it’s insane to convenience to shopping and meal unavoidable fixed pay that much for a spin class. I know that times. These responses appear to costs that must money is way better spent elsewhere, but be directly at odds with their cost- W I’m totally caught up in the cult-like ways. It factor into calculating our available saving behaviors. was very smart of them to attach spending spend. But regardless of income a lot of dollars to the endorphins and luxury and demographics, all consumers treatment you get from a fancy workout I get a subscription box of snacks and class. It’s the best feeling when you leave one present contradictions between their makeup each month and I spend a lot more of those classes, like a high that you think can rhetoric and actions. They stress the money on it too. only be achieved by paying another $30. Also, importance of budgeting but then since it is a workout, it ties into insecurities of Avani, 37, Gen X show a willingness to forgo value in trying to lose weight and be fit, so you think Entrepreneur, Delhi, India favor of convenience, for example, or the only way to get what you want in life is by paying that much. self-improvement. This is where we see Brittany, 25, millennial interplays between watch and wallet Event planner, Miami, US And as humans are complicated and motivation and wallet. creatures, you can’t account for For example, consumers in our study simple impulse spending and emphasized how much of their time rationalization around it. outside work was devoted to self- In terms of watch and wallet, we improvement. As our “leisure upgrade” found these trade-offs especially I bought myself tickets to Vietnam recently, trend states, consumers want the time evident in our respondents with but the prices have fallen a lot, and then spent on leisure activities to yield more young families. For them, their I bought myself an iPhone 6, but it was a than just simple enjoyment; they want family is one of the primary drivers pretty stupid move because the iPhone 7 is out soon, so, yes. to learn new skills or improve their behind a budget for groceries and health. These goals may prevail over other necessities. However, the Jia, 25, millennial Travel blogger, Delhi, India the spend mix of their wallet. family also drives a desire to pay for

Share of wallet by generation

Household spend dominates the wallet but increases as a proportion with age

Millennials (1980–2000) Gen X (1965–1980) Baby boomers (1940–1965)

Household 33%

Leisure and entertainment

37%

Health and well-being

Savings and investments

43% 15%

14% Loans and debt Transportation 12%

11% 15% 8% 12% 11% 10% 7% Other 9%

12% 6% 11% 11% 9% 8% 6%

Source: Innovation Lab at KPMG Ignition, KPMG in the US

Share of wallet

New customer value chain/changing channels The customer wallet Luxuries Necessities We have researched changing customer demographics and resulting impacts on income and spend, including how people are spending money, Baby boomers (1940–1965) what they are doing with their money and how they are changing what they New ways to explore, buy and receive products and services spend and where — including the new customer value chain and channels. 80%

% 0 2

Explore Plan Purchase How we discover How we compare options The buying process and a need for certain and make trade-offs and experience products and services decisions » » » » Frictionless » Inspiration » Influencers experience Income Consumption Spend mix » Information » Aggregators and including in store » Personalization curators » Unlimited channel » Tools to plan and options manage » Automated and Net debt service Housing consumer lock-in Gen X (1965–1980)

Consumer loans Home improvement 73%

Student loans Food and beverage

Mortgage debt Driving Products Receive Engage 2 and services Transportation/Auto The products and The way products and How relationships we build services to meet our services are delivered with brands and providers new needs to us influence decisions » » » Income Power and utilities » Customer- » On-demand » Social and brands centric value delivery that tell a story props » Flexible pick-up » Customer service Telecoms and media » Bundling of » Flipped store » Instant products and model gratification and services (DIFM) loyalty Savings » Personalization Millennials (1980–2000)) Insurance and convenience Wealth management Increased expectations: Frictionless experiences, know me better, bring me value 71 Healthcare %

Taxes Pharmaceuticals

Home/Personal care Payments 2

Clothing Loyalty programs

College and education Delivery

Leisure Platform business models

Source: Innovation Lab at KPMG Ignition, KPMG in the US Source: Innovation Lab at KPMG Ignition, KPMG in the US Pets

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 32 Generational

With extending life stages, drifting life events and new life events emerging, riding the waves between generations isn’t srfi as predictable as it once was

urfers watch ocean generational surfing, whether this patterns so they means adapting to a customer’s can time and catch needs as they move from one life S the big waves. The stage to another or serving one life best ones are shaped like arcs, stage and catching the wave of each and experienced surfers look new generation entering it. for the pocket that precedes the breakpoint. As the top of the wave Shifting life stages begins to fall, the ideal spot to catch a new ride emerges. Across generations, companies When the wave you’re riding have relied on assumptions about begins to peter out, you face three life stages, using age as a proxy, possibilities: time it right and to identify when and how people catch the next wave; time it wrong will be in the market for certain and crash out; or ride firm where products and services. you are, with the inevitable fade Moving away from home. into obscurity. Graduating from college. Getting It’s a similar story for companies. your first car. Getting your first The big waves are their customers’ job. Buying a home. Getting life stages, including young married. Having a child. Retiring. adulthood, young parenthood, For years, such events have empty nesting and retirement. The provided clues to the likely shape companies that understand these of the customer wallet. stages and look for patterns of However, while certain life stages change will be primed to succeed at may be enduring, the way different

generations approach and move and liberation. Notwithstanding the through them is showing signs of differences between individuals in change. As our survey across China, rural and urban locations, you could India, the UK and the United States predict it would happen between revealed, more than two-thirds the ages of 15 and 18, depending on of millennial respondents had yet country driving laws. to purchase their first home. As a You could predict the increased cost consequence, companies’ assumptions of insurance and the financial support about this generation may be off by needed to buy a car. You could predict several years. how driving and transport patterns Meanwhile, new stages are would change in given parts of the emerging. Baby boomers are country. You could anticipate how the redefining their next life stage relative newly qualified driver’s spend mix to their predecessors. Many are facing would evolve, as they suddenly had to unfunded retirement, increased life factor in the cost of fuel while, at the expectancy, rising healthcare costs and same time, their new-found freedom the potential need to provide extended presented new opportunities to do financial support for their millennial more and go further, changing the children and possibly their parents as trade-offs they’d have to consider well. As a result, what should have between time and money. been their peak spending years have The reasons behind this shift are been disrupted, leaving them facing a many and varied. Some are simple new set of challenges. practicalities that have changed their “mys” — motivation and connection. Moments that punctuate lives Being able to drive used to be a way to connect with friends. But It’s not just life stages that are now teens connect via their devices important determinants of customer and don’t have the same need to needs and behavior, but life events — get together. What’s more, they’re the watershed moments that punctuate growing up in a world of car-sharing, our lives and create new pressures mobility for hire and the convenience on our wallets. Yet like life stages, of on-demand transport through the life events no longer follow the same likes of China’s Didi, India’s Ola or pattern, sequence and timing as in the Western equivalents Uber and Lyft, past. so they may not need to own or drive Consider two examples where we’re a car at all. already seeing evidence of these shifts: Looking at the customer wallet in the context of this shift also serves Teens are increasingly putting off to demonstrate the ripple effects of traditional markers of adulthood – change, from driving lessons, insurance Twenty years ago, getting a driver’s or car loans to needing to cope with the license was considered a pivotal impact of fluctuating oil values on the moment on the journey to adulthood price at the pump.

The trade-off between time and money between generations

Student Single Married/ Kids Empty Retirement Cohabitating nest

Salary increase + Prime saving years Retirement income Prime spending spending increase Part-time job Starting years (work-study) salaries Money Tension 0 1 2 3 4 5 Time Not much free time

More free time Some free time More free time Lots of Lots of free time free time

Buying a home for the first time In the UK, more than half of graduates – Home buying is another life event live with parents to pay off debts, while where previous age assumptions are globally, according to our survey, the fast becoming invalid. Companies proportion of millennials living with traditionally targeting this life parents has surged to 38 percent, event, from mortgage providers to reaching as high as 68 percent in India. insurers and the home improvement If companies can become adept sector, will ultimately experience at spotting and responding to these the economic impacts of delayed “drifts” in life events, they’ll be better household formation, which has a able to position new propositions and domino effect across the wallet. Will experiences with greater precision, millennials spend more on leisure, opening the opportunity to move travel or entertainment while free from ahead of the competitive pack. the responsibility of home ownership? Or will they double down on loan New life events repayment and savings to get a mortgage as quickly as possible? At the same time, new life events are And what about their parents’ emerging, each bringing new forces on wallets? To make serious inroads our wallets. Consider three examples on student debt or saving for home that have become increasingly ownership, growing numbers of important for younger generations: millennials are returning to live with their boomer parents and for longer, if My first smartphone – Arguably more they ever moved out at all. important than getting a first car, a

with no fixed repayment period and their main reason for working past the prospect (for many) of living for 65. Compounding the situation, decades with this debt. In the US 60 percent of US households have alone, student debt has grown to more no money in a 401(k) or similar than $1.3 trillion, an increase of over retirement account, while in the UK, 80 percent since the Great Recession the state pension age is being raised of 2008. And the implications can be from 65 for men and 60 for women far reaching. While education costs to 68 for both by 2039, presenting have always been a factor in life, the UK retirees with the prospect of sheer scale of modern student debt several unplanned years of unfunded has made paying off a student loan a retirement income. In contrast, 36 major event in its own right. Behaviors percent of US retirees worked past 65 are altered and a new window of mainly because they enjoy their jobs opportunity is opened for credit or want to stay involved, while in India card companies, banks and retailers 66 percent are opting to continue to engage a receptive and newly working in some capacity to keep financially liberated audience. active and engaged. The implications for the wallet are significant, with impacts on traditional Delayed assumptions about the products gratiﬁcation and services, either for purchasing or investing, appropriate for older smartphone has gone from functioning Our analysis found studies in multiple markets members of our populations. as a device to becoming a wallet, pointing to significant numbers of millennials thereby driving convergence across delaying marriage, the decision to start Thinking differently about patterns the Five Mys. It’s become the key to a family or a house purchase as a direct of consumers’ lives their attention, and their connection to consequence of the burden of student debt. In friends, family and the world around India, for instance, the median age of marriage Life stages and life events undoubtedly them. The freedom and diversity of has increased by approximately three years for remain a powerful way of understanding opportunity provided by a smartphone men and four years for women over the course customer context and predicting needs, makes its influence on the customer of the last three government censuses. In the aspirations and, ultimately, behavior. But wallet nothing short of profound. UK, 43 percent of students say student debt relying on assumptions from the past is has delayed their decision to start a family. not enough. Free of student debt – Indian And in China, the share of unmarried women For companies, this evolution millennials are entering young between the ages of 25 and 29 has quadrupled means anchoring everything you adulthood already carrying a significant since 1980, reaching 22 percent by 2014. do to your customers and looking debt burden, due to the requirement afresh at their motivation, attention, for college loan EMIs (equated connection, watch and wallet to monthly installments) to be paid off anticipate their needs, behaviors, the moment graduates take their first Unretirement – Almost 20 percent trade-offs and choices as they job. In contrast, UK and US students of Americans aged 65 and older move from one life stage, or wave, can accumulate alarming loan debts remain employed, with three in five to another. That’s the essence of as they progress through university, retirees citing financial problems as generational surfing.

ehavior transfers between millennials and their baby-boomer parents are happening more rapidly than in the past. Technological improvements and economic realities have B entwined two of the largest generations in Western history and, as a result, are accelerating the rate of Western technology adoption. Technology is enabling closer connections between these two generations. Some 30 to 40 years ago, when boomers were in college, making contact with their silent-generation parents typically involved a short phone call on a rotary baby- phone, down the hall from their dorm room, with a line of people behind them waiting for their turn. With few brief communications, less information was exchanged. And when they graduated, fewer of them came back to live at boomer home than we see today. eho eet Millennials are inﬂuencing their baby-boomer parents — and boomer parents are inﬂuencing their millennial children

The way I learn is from my daughter,

Technology adoption lag in son and friends. the boomer generation Connie, 64, boomer Grandmother, Napa, California, US China India

UK US Fast forward to the present, shared the wonders of Amazon Prime and millennials and their boomer and Prime Now with their boomer Millennials living parents can be in near-constant parents, showing them how to get the with parents contact, able to communicate necessities delivered and save them a 68% anytime and anywhere via text, trip to the store. WhatsApp, Facebook and a host of The reverse is also true. As other channels. millennials face financial and other In addition, according to Pew important adult decisions for the Research Center in 2016, student first time, boomer parents are loan debt and underemployment often trusted influencers. Where are resulting in nearly one-third should I open a bank account? 34% of millennials living at home with What insurance do I need? Which their boomer parents. As a result, insurance companies would you 24% 25% millennials are bringing their parents recommend? What’s a 401(k)? What along on the technological wave. should I look for in a car? How do I It comes naturally from simple get the best deal? interactions: “Hey Mom and Dad, Understanding the baby-boomer have you used Uber?” “What’s that?” echo effect is key in reaching both “Here, let me show you, it’s super easy generations. On one hand, it can help and really useful.” “Wow that looks companies reach both millennials and Boomer interesting, I’ll give it a try.” “Here, give their boomer parents as influencers laggards me your phone and I’ll download it and of each other. On the other, it also set up an account for you.” means taking a more nuanced look In all geographies, boomer Millennials living at home can have at both generations. The boomers’ laggards is less than might strong views about technology, age demographic would traditionally be expected, given traditional technology adoption curves. media and telecoms, and introduce indicate they are late adopters of the their parents to new media apps and latest tech trends and unlikely to be devices, such as Apple TV, Roku, large consumers of those channels. Chromecast, Netflix, Amazon Prime With the baby-boomer echo Instant Video and Hulu. effect, we’re seeing boomers adopt 9% Changes in purchasing behavior can technology at a higher rate, upending even go further than just what content assumptions about their behaviors 22% the family consumes. Millennials have and expectations. 24% 26%

ur research shows how of childcare for their young children, On average, millennials are traditional life events in addition to elder care for aging play out differently parents. The layover is the period of over generations. time millennials wait before beginning This life event drift the next traditional life stage. 10 years Odemonstrates both how new life Baby boomers, on the other hand, events and stages emerge. are the first generation to retire on older than boomers when they Businesses have built their operating defined contribution plans and with have their first child model based on life event norms, increasing life expectancy creating Life event drifts and those are primarily based on the something we call FROOM (Fear of On average, millenials are boomer generation that created the Running Out Of Money). mold. We started to see with Gen Milestones are being added and Life events used to follow a predictable script, but modern X an aberration of young adulthood disappearing. Where once your first generations are improvising, forcing businesses to adapt and stretching out due to social changes car was a milestone that provided embrace the opportunities these new life stages create. and economic conditions, including a connection to the world, it is no 10 years student loan debt. This has been longer one that millennials or Gen older than boomers when they amplified in the millennial generation. Z value. This raises the question, buy their first home Gen X has also been saddled with will the smartphone ultimately the burden of double day care where replace the car, particularly in urban they are caught covering the costs environments? Average age

20 30 40 50 60 70 80 90

Boomers

Childhood Young adult Young family Mature family Empty nesters Retirement

HS College First First child graduation graduation Marriage child in college Retire

Birth First job First house All children Last child purchase graduate leaves home Teenagers Yuppies college Froomers

Gen X

Childhood Young adult Young family Mature family Empty nesters Retirement

HS College First First child All children graduation graduation Marriage child in college graduate college Retire

Birth First job First house Last child purchase leaves home Teenagers Slackers Double day care

Millennials

Childhood Young adult Young family Mature family Empty nesters Retirement

HS College First house First child Birth graduation graduation First job Marriage purchase in college Retire

First All children Last child child graduate college leaves home Tweens Teenagers The layover

Source: Innovation Lab at KPMG Ignition, KPMG in the US Future events are forecast based on synthesis of relevant demographic prediction models

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 41

ns of my life and m ensio y wa Dim llet

Communication

Customer-centric Work Transport

motivati ecosystem: y on M Mind y attentio M n Personal from push to pull to predict media

wal “Get closer than ever to your customers. So close My let that you tell them what they need well before they Slice of realize it themselves.” — Steve Jobs the wallet Customer

nderstanding customers and get smarter at buyers to “pulling” Home consumers’ lives. extracting insights from it, they customers into new Traditionally companies can assemble those insights to ways of experiencing My watch focused primarily on form a more precise, often real- a personalized offering. Body U M n their own slice of their consumers’ time understanding of what their Now the challenge and y connectio lives and wallets — what their customers want. opportunity is to predict where the customers bought through point Both Apple and Google, for customer is going next, so they can of sale, loyalty programs and example, are leveraging the new get there first. promotions — and used that technologies in smartphones to To do that, companies need to information to improve campaigns understand the context of their understand: Shopping News and and engagement. customers’ lives — the when » Customers’ Five Mys — entertainment Today opportunities are arising to and where of their behavior and motivation, attention, connection, make sense of insights around the purchases. Facebook seeks to watch, wallet — and how they Finances broader aspects of customers’ lives understand their customers’ social work together — where they go and when, what graphs — who is connected to » Customers’ context — their lives, they buy, what they look at or “like”, whom and who recommends what needs and the forces that open and what they watch and with whom to whom. close their wallets they are connected. Thus companies have evolved » The ecosystem, not just the As companies capture an from marketing or “pushing” industry, in which you and your increasing amount of data on their products they hoped would find customers interact

Source: Innovation Lab at KPMG Ignition, KPMG in the US

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 42 Customer-centric ecosystem: from push to pull to predict

Using the insights differently but also building From push to pull throughout the organization products differently based on real- to predict and the ecosystem. time customer insights. From there, What could putting customers companies can leverage those Push – where we’ve been: first mean in reality? Like people insights across the organization, a world in which customer focus meant developing everywhere, companies are facing within the supply chain and and distributing products and services based on information overload. The challenge is among partners, to create a value the assumed or created needs of broadly defined in finding ways to use information to exchange with the customer and customer segments improve customer centricity, but not others in the ecosystem that have a just to retain or find customers for the shared interest. Pull – where we are: business as it exists today. Rather, the in an age of digitization, companies are increasingly goal should be to use information to able to refine and verify their understanding of evolve the business so it can anticipate what customers want, and then personalize prod- customer needs and thereby improve ucts, channels and new ways to engage the experience for all customers over the long term. This analysis might Predict – where we need to go: point to products or experiences that an evolving era in which the most advanced you can only deliver by gathering new companies take steps to understand and analyze a insights or forming new partnerships sophisticated array of customer information so they within your ecosystem. can anticipate and meet customers’ needs when, or The new era is not only about even before, customers know what they want engaging with customers

Industry view

All around the globe, our survey Time will tell whether a digital respondents had the same message — This is a very exciting time in the they’re crying out for companies in every healthcare industry. As we have seen in wallet is any more convenient industry to understand them as people: other industries disrupted by consumers than the real thing. Customers complex, evolving and unique. demanding products and services anytime, anywhere; healthcare is not tend to prefer removing the unique, and we are beginning to really friction in a transaction, with he better “connected” a experience this consumer-centric seismic shift. These changes are a reality now efficient and speedy payment at company is to its customers’ and are creating significant pressure checkout the Holy Grail. I think lives and the various on traditional providers of healthcare convergence between financial services to innovate and transform ecosystems they inhabit, their enterprise. The organizations services and wearable tech- T the better it can understand that readily embrace this will create a enabled biometrics is inevitable. its current share of watch and wallet. differentiated brand, gain operational efficiencies, and build customer loyalty I imagine a day where simply And, in concert with insight into their in the markets in which they serve. blinking, tapping my wedding motivations, attention and connections, Michael Beaty ring or swiping my Fitbit at companies can begin to develop a US Healthcare Leader, checkout will be all that’s Patient Access and Revenue Operations roadmap to gain greater share of their needed to make payments. customers’ time and money, with an Jeremy K. Balkin optimistic view of the future. Consumer and retail Head of Innovation, HSBC Bank US In the following pages we explore Customers’ behavior and expectations have changed and in five sectors, considering the most order to keep up with demands data noteworthy signals of change, how they driven insights must be utilized at all The multiplicity of brands in the could play out, and how companies can levels of the organization wardrobe, bought from a variety anticipate and get ahead of disruption. Media & of channels for various reasons telecommunications and occasions, is reflective of Customers are curating their own today’s customer. How to engage content ecosystems, demanding The industry is seeing a pace of change more personalized and responsive with them across different and disruption that we’ve never seen, product and service offerings mediums, providing new reasons even coming out of the financial crisis. for them to shop across various It is changing in enormous ways. You’re Healthcare going to have consolidation, disruption channels, has become the and a shakeout in the industry. You’re New digital healthcare options are going to see the emergence of new challenging the legacy, provider- objective of every fashion brand players. You can look at it with centric nature of health services and retailer. That is the profound pessimism, that, ‘Oh, my God, all of change we have seen from this is changing,’ or optimism, to say Retail banking perhaps this is the time to rewrite The traditional value chain has been the distinctly mono-channel, some of the rules and rebalance the unbundled by a flood of fintech start- brand-loyal and occasion-driven competitive equation in the industry. I’m ups and out-of-sector entrants, but a customer of yore. in the latter camp, and I’m looking at the rebundling could yet be in the cards world and saying, ‘Interesting times’. Bijou Kurien Indra K. Nooyi Insurance Strategy Board Member, Chairman and Chief Executive Officer, Simplicity and convenience are L Catterton Asia PEPSICO starting to take center stage, rewriting the rules of play

Consumer & Retail Data becomes king Technological and demographic shifts have disrupted the ecosystem for consumer goods companies and retailers, with both facing threat and opportunity in equal measure

etailers and consumer changed customer behavior goods manufacturers and expectations: are among the most sophisticated researchers Democratization of Rin the world, benefiting from a information – wealth of data and a long tradition In a world of information of seeking to understand their abundance, customers can rely consumers’ motivations and lives. on a wide variety of influences Whether through focus groups, when making buying shop-alongs, in-home research decisions. and diaries or test labs, leading firms have gone to great lengths Always-on lifestyle – 24/7 to understand what’s important connectivity has created to a shopper and what really tremendous advances in drives decisions at the moment of how we live and work, but purchase. This understanding would getting consumers’ attention then be translated into meaningful is harder. product claims, brand messages, packaging design and advertising Rise of personalization – As campaigns, which resonated with a technology increasingly reduces large portion of the population and a market’s cost of entry, a generated strong sales lift. greater choice of business models, services and products The world has changed is now available to customers in something of an endless virtual In the last ten years, three key aisle from which to choose. developments have dramatically

How to respond

Catering to customers in this world requires a level of granular understanding that was once impossible to achieve and, indeed, can remain difficult. By developing a detailed understanding of customers’ Five Mys — motivation, attention, connection, watch and wallet — at multiple points in their day and life, companies will have the foundations to identify how, where and when to engage them. premium to save time, while others insist For example, the trade-offs customers on touching a product before buying, continually make between their time even if it means an extra 45 minutes to drive, park and walk through a store.

I’m ok with brands New view on consumer insight capabilities taking my data for market research. Getting to a clear understanding of I don’t mind being how consumers view these trade-offs requires new forms of data and research a guinea pig. to generate the right depth of insight. Kanika, 25, millennial With more data than ever, insight should Chef, Mumbai, India 56% be guided by four key principles: are “concerned” or “extremely and their money provide a wealth Customer level – Understanding concerned” about the way companies handle and use their personal data of information. While most brands and grouping insights at a segment understand the relative price position of level is relevant and important, but their products, very few measure and it’s often most valuable to generate analyze the time investment required by them at the lowest level of the customer. What’s more, high-level granularity that can be actioned. In Sharing my data research techniques rarely capture the other words, if you are able to take with companies trade-offs any given customer is willing a one-to-one action, you should to make at any given time. use individual customer insights. does not bother me. One customer may stick to a tight And if you are not taking a one-to- What bothers me is budget for weekly grocery shopping but one action, it is worth considering the number of calls splurge on a shoe wardrobe. Later, the whether technology and innovation I get when they get same customer may buy shoes with could help you do so. sale discounts so he or she can afford that information. organic pet food for a new puppy. Some Dynamic – Monitoring and Kanika, 25, millennial customers are absolutely willing to pay a assessing individual customers’ Chef, Mumbai, India

Trust in buying products online

China

preferences as they change over 83% time and throughout categories is critically important. Yet this effort India must be balanced with enough stability for the organization to UK make decisions. 78%

Multidimensional – With so many factors that go into purchase 73%

decisions, relying on one core US attribute in today’s market can be dangerous. Similarly, assuming that all consumers who value product quality also have a certain price 76% they are willing to pay is a fallacy. These are dynamic and interrelated and actionable. For instance, while starting with the decisions and levers decisions. We recommend thinking it’s still valid to ask consumers that can be pulled by your brand, and of your customers as having an how important time savings are then work backward to the best source underlying “DNA” of preferences to them, it may be more scalable of data and insight. rather than simply bucketing them and actionable to measure the Before that, however, companies into one “need state”. drive time from their home to a must ensure they challenge the thinking store. New data sets are constantly on the levers that can be pulled. Scaled – It was once acceptable becoming available to make this Historically, brand marketers may have to research a representative analysis more achievable. thought, for example, that they could sample of consumers and use only influence packaging at the shelf. But it to predict the attitudes of the Putting it into practice with new technologies and innovations, whole. Still a common technique, many more possibilities are available and manufacturers and retailers must Often these ideas resonate with brand are often overlooked out of habit. constantly reexamine if a data set marketers, but the challenge lies in Once you are clear how to action more is available that would make the acquiring the data and capabilities to granular data, sourcing it among many same basic insight more granular put them into practice. We recommend options will require some creativity. You may decide to buy data, partner with a firm or simply use the extensive public data now available. The right option will The customer comes ﬁrst is one of the depend on your end-execution needs, oldest clichés in business. But that adage time frame and budget. has taken on a new meaning in the digital Ultimately, an organization’s decision makers need to understand and buy into age. Not only is the customer ﬁrst, he’s the need for the data and perceive how it telling you how to run your business. can improve decision making. After that, incentive changes, new processes and Willy Kruh tools and training can help enable your Global Chair, Consumer & Retail, KPMG International colleagues to operate in a different way.

Media & Telecommunications Curated by me, for me

The battle for attention and a share of the customer wallet is intensifying, as consumer demands and new entrants change the rules of the game.

News – WeChat subscription is powerful and blowing your mind every morning. First thing I check every morning.

Cathy, 28, millennial Journalist, Chengdu/NY, China

t used to be simple. In an era of are catalyzing a potentially seismic mass production, mass distribution shift in the entertainment landscape. In and mass advertising, goods and Not that long ago, our media addition, live and on-demand video has media grew together. When the consumption was attributed become of central importance to social I TV set was introduced, the value to speciﬁc occasions, networks such as Facebook, YouTube proposition was straightforward — buy a centered around a large and Twitter, giving consumers access TV and get the content free, since it was screen in our lounges — to an explosion of peer-to-peer and funded largely by advertising. watching the morning news semiprofessional content. As TV captured more attention, before work, eating a microwave meal (even it became the dominant channel Television in our pocket referred to as “TV dinners”) for advertising and helped drive the in front of primetime shows rise of mass-market industries and or relaxing in front of a With the proliferation of smartphones brands. This partnership was mutually Saturday night movie. No globally, each of us carries a personal beneficial — one needed the other to longer. Our media television within a device that is becoming reach the customer wallet. consumption has shifted the remote control for increasingly But the generation that grew up from a screen we converge numerous aspects of our lives. with the television set is no longer its around at predictable Not only is this constant connectivity largest addressable market. Millennials moments to a device we impacting consumers’ attention and are now the dominant consumers of carry around in our pockets their behavior but it’s also generating content, and they’ve influenced all throughout the day. Media massive amounts of contextual data that consumers to expect choice. and content are now can be used to personalize interactions converging around — and with greater precision. Consequently, ﬁghting to reach — us, and platform businesses such as Netflix, nowhere is the shift in power I use social media Apple, Amazon and Facebook have a way more than from producer to consumer more evident than the media distinct advantage over the incumbents I watch TV. and telecommunications whose understanding of customer behavior is largely tied to a single screen. Cathy, 28, millennial sector. Journalist, Chengdu/NY, China With smartphones serving as a gateway to a self-curated portfolio of The resulting demand for greater Timothy J. Zanni content, their disruptive influence has personalization, compounded by the Global and US Technology also forced the sector to challenge Sector Leader, KPMG International growing influence of social networks legacy definitions of both programs and platform businesses, has and advertising. already dramatically reshaped the media and content landscape, and MOBILES ARE SMART change is accelerating. Traditional cable operators have In its relatively young lifespan, the smartphone has grown at a staggering pace, with China expanded and diversified their offerings becoming a distant leader. Consider that 87 percent of smartphone users say their device over recent years, but while the average never leaves their side. And that more than half of millennials check their cable-connected household now phones at least once every ten minutes, even without being prompted by receives 206 TV channels, 72 percent a notification or alert. And there are already more than two billion of these of people regularly watch only 20 or devices active around the world. Its impact on the technology, media and fewer of them. More than 110 over-the- telecommunications sector cannot be underscored enough. top (OTT) networks, including Hulu, Source: Innovation Lab at KPMG Ignition, KPMG in the US HBO Now and Amazon Prime Video,

Technology has become so embedded in our daily lives that consumers now view instant access as the norm. They are accustomed to the immediacy of ﬁnding information or buying things online, and expect the same ease and optionality for their entertainment choices. Consumer expectations of immediacy will continue Gone are the days when content content at lower cost. But OTT can’t to drive the speed and largely came in 30-minute episodes or offer everything traditional TV does. nature of the changes we 90-minute movies, or when adverts Not yet, at least. are seeing across the were a dependable 30-second spot. Instead of buying big, expensive, content ecosystem. A Snapchat story can be ten seconds predetermined bundles from long. A YouTube video, two seconds. cable companies, consumers are Paul Wissmann US National Sector Leader, Netflix recently created Stranger increasingly opting to “self-bundle” Media & Telecommunications, Things, an eight-part series made to their favorite OTT options and to follow KPMG in the US be watched as a single entity. WIRED the people, producers and brands magazine called it “basically an eight- they value online, creating their own hour Steven Spielberg movie”. personalized ecosystems. And technology companies are starting Advertisers and media owners are In response, several cable providers to spend on sports. In 2016, Twitter grappling with platform, device and have embraced the reality that is invested $10 million for the rights to channel-hopping consumers and becoming unbundling, providing stream a ten-strong series of NFL games, are still experimenting to find the consumers the skinny option of cheaper, available to viewers via apps and Xbox optimal advertising frequency, format more customizable packages. As consoles, with Google and Yahoo! as and duration for these new content attention continues to shift to digital syndication partners. This year, Amazon destinations, the latest attempt being devices and OTT consumption, the pay- scooped the same for $50 million. seven-second spots, each with vastly TV industry is losing a historically high A small number of people who want different effectiveness and economics. number of subscribers. access to everything right now are Sports and news content only putting a larger share of their customer Reaching the wallet available through the traditional TV wallet up for grabs. But value is likely ecosystem stands as the final defense to motivate a larger section of the Over the last six years, the cost of to full democratization or, in the eyes of market. And if DIY bundling emerges pay-TV subscriptions has risen faster consumers, the last barrier to overcome. as the best way to get it, industry than the average consumer’s monthly However, even this barrier is starting to incumbents will have to make sure income, while OTT offerings are crumble. News is already widely available that, when the dust settles, they are serving up more and often better online, via mobile and social channels. on the right side of the trend.

Healthcare The empowered patient

Traditional healthcare systems are built around the linear, event-driven process of diagnosis and treatment. Increasingly, customer expectations are for wellness- focused self-management and empowered decision making outside this traditional system.

surge in health apps, give consumers the immediacy wearable devices and control they demand, but can and services such also go some way to alleviating as daily monitoring pressure on already strained A and self-diagnosis healthcare systems for some of are providing a growing number the most common conditions of new digital healthcare options affecting the mind and body. to patients who crave instant “A truism across many gratification and on-demand healthcare systems is that services on their terms. they tend to be designed In a challenge to the legacy, for the providers and for the I don’t mind paying provider-centric nature of health professionals, and not for the extra for organic services, start-ups around the patients,” says Dr Ed Fitzgerald, groceries and will world are addressing friction global healthcare executive to pay extra to preserve points and unmet needs KPMG’s health practice global throughout the value chain. chairman. “I think the successful my health. From advice and consultation providers and systems of the Suman, 59, boomer to diagnosis, prescriptions to lab future will turn that around, and Professional Homemaker Mumbai, India work, these innovations not only start designing healthcare for the

In the healthcare sector, patient privacy has always been sacrosanct, but that notion was formed in a world where sensitive information was largely confined to conversations in a doctor’s surgery or behind drawn curtains on a hospital ward. Today, the story of our health is played out across an amalgam of devices, apps, platforms and companies, and the issue of privacy is infinitely more complex. It differs by country, by culture and by generation — there’s no one size to fit all.

Mark Britnell Senior Partner and Global Chairman, Healthcare, KPMG International

patient and the profession, and long-term conditions, a growing actionable insights in wellcare to self- providers will fit around that.” consideration given the changing management that avoids reentering While the nature of healthcare demographics of healthcare the health systems. Organizations systems can vary widely from one provision, technology is beginning to that capitalize on this opportunity will country to another, they also face some demonstrate its potential. In diabetes, build the model for the healthcare common challenges. These include heart disease and lung disease, for system of the future. rising healthcare costs compounded by example, where treatment tends to a growing population. require material lifestyle changes, The shift from acute care to chronic patients can access a growing number Ping An Good Doctor long-term conditions is exacerbated of apps and devices that help them by an aging population with increased manage their condition outside the In China, more than 2,000 health apps life expectancy. This has resulted in hospital or general practitioners’ office. providing medical advice, appointment growing demand for immediacy of Combining remote monitoring, booking and niche services are access to, and control over, health behavior modification and responding to demand from consumers services. This is compounded by the personalized intervention by the distrustful of local clinics, in a country added pressure of labor supply, with patient’s own care teams, these where access to doctors, particularly the World Health Organization’s A innovations address the dual goals in rural areas, is limited. Ping An Good Universal Truth: No Health Without a of empowering and motivating Doctor, backed by insurance group Ping Workforce report estimating a current patients to take better care of An, offers free diagnosis and treatment shortfall of 7.2 million health workers, themselves, while also avoiding and enables users to consult doctors rising to 13 million by 2035. more serious and costly conditions through text, pictures and video. Valued down the line. at $3 billion in 2016, the company Ounce of prevention From tracking exercise patterns to claims to deliver more than 400,000 motivational messages and electronic diagnoses every day to its 27 million Consumers’ relationship with their medication alerts, the opportunity to monthly active users. health and wellness has evolved nurture patients to do more between and now takes a greater focus check-ups is ripe and provides care in their increasingly connected teams with even more rich data about lives. Thanks, in part, to better patient behavior. This growing role of New-era healthtech understanding of the links between technology across the healthcare value behavior and health outcomes, 44 chain is building vast amounts of data In the more regulated European and percent of US consumers say they that has game-changing potential. US markets, healthtech start-ups have changed their view on health are innovating across the patient and wellness in the past few years. Patients as consumers experience, responding to consumers’ Increasingly, their definition of expectations of the same immediacy health is expanding to well-being, There is a disconnect in the patient of service and informed choice they giving rise to greater interest in value chain. Even the most modern receive in other aspects of their lives. nutraceuticals and food as medicine healthcare systems are built around From scheduling tools such as Zocdoc — the notion that “wellcare” the linear, event-driven process of and Docplanner to virtual consultations can help people avoid entering solving a health problem. Increasingly, with tools such as Dr On Demand, traditional healthcare systems in the patient expectations are around technology is helping to reorient care first place. living a healthier lifestyle — wellcare around the patient and his or her — and better managing conditions needs, rather than asking the patient to Empowering behavior change or caring for the sick. There is a work within a system designed in and bridge to be built in the patient value for a different era. For patients living with chronic chain that could connect early and

Retail banking customers are facing an increasingly confusing array of options to manage all aspects of their money, creating fragmented ﬁnancial lives.

or today’s retail banking discount,” says Mitch Siegel, principal, customers, technology National Financial Services Strategy brings with it an implicit and Transformation leader, KPMG in promise of making our the US. “Fintechs have been singularly F financial lives easier. But focused on simplicity, but where is the the sheer number of financial-related true simplicity in a bundle of services? apps has exploded, ranging across the These loyalty programs and apps wallet from payments, money transfer, designed to help us to manage our checking and savings accounts, wallet are so focused on one little slice borrowing money, managing wealth of the wallet — so what they’re doing and budgeting, among others. As the doesn’t seem to be about me and ecosystem around our wallets has my life, it’s just a growing number of become more complex and more companies trying to get a piece of it.” fragmented, our financial relationships have “unbundled” in the process. “Managing our disparate array of apps, wallets, providers and I don’t use my bank’s passwords is becoming burdensome investment or savings — it’s confusing and it’s reaching the app because they bite point where companies are at risk of their customers giving up, frustrated me with fees. by the effort it takes to build a few Bob, 75, boomer more points or get that nominal Retired electrician, Liverpool, UK

Everything we do with our wallets ultimately falls into one of two categories — spend or save. Historically, the delineation between where and how we spend, and where and how we save, was clear. But today, the boundaries have blurred and new opportunities are forming across the ecosystem. This presents traditional retail banks with the opportunity to break out of today’s pattern of disruption and redeﬁne their relationship with the customer. At the same time, this could mark a rise in competition from major platform and technology businesses as they strive to move up yet a level further.

Judd Caplain Principal, Head of Global Banking & Capital Markets, KPMG International

Unbundling ﬁnancial offering a better experience and in data. They’re being pushed further relationships changing the ecosystem. away from a complete picture of their These fintech players have created customers’ lives and losing access to For most of us, the traditional experiences akin to Amazon, Uber and the behavioral, contextual data that “bundled” offering from retail banks Spotify. There’s Apple Pay as your new helps to explain the “why” behind seemed to work well enough, or so digital wallet, containing your payment customers’ choices. we thought at the time. That bundle cards, loyalty cards and airline and Customers’ positive response to enabled us to receive income and train tickets; Venmo for peer-to-peer recent innovations may be about to make payments with checks or payments in the United States; Alipay falter, offering incumbents or, indeed, wire transfers, take out loans for a aggressively tackling payments, loans new entrants the opportunity to mortgage or car financing, service and savings across China; and Atom redefine their relationship with the day-to-day borrowing with credit Bank and Monzo offering mobile-first, customer. The unbundling trend, while cards, manage our savings goals or digital-only personal banking with met with enthusiasm to date, has a investments and often fulfilled our limited product offerings in the UK. A downside, causing fragmentation of our home or travel insurance needs. look at customer ratings in the Apple financial lives. Combined, the potential App Store shows the top banks at a customer backlash that may lead to Spending and saving 2.66 rating and the top fintechs at 4.13. a rebundling of our financial services, need to be seamless, These are great experiences, but and the blurring of how and where we just a sliver of capability. These spend and save, presents a profound and the management players aren’t re-creating the bundled opportunity for traditional retail banks to of our wallets has to feel nature of a traditional retail bank in a recapture or redefine the role they play as good as our best new digital capacity; they’re slicing, in their customers’ lives. new experiences dicing and fulfilling limited aspects of But rebundling and the promise of the function of our wallet better than a simplified financial life can’t involve Over the last ten years, technology the bundled incumbents. a degradation of experience. Any has opened the floodgates to a And customers have liked it, moving attempt to rebundle financial services wave of unregulated new entrants away from the historically limited and integrate how we spend and save that have both changed the way numbers of institutions servicing their must be as good or better than the in which we manage the flows in wallet to a much wider portfolio of experiences offered by each individual and out of our wallet, while also providers, unbundling the relationship dramatically raising our expectations. with their bank in the process. In 2015, more people in the United According to the Viacom Millennial I don’t have to States did their weekly banking Disruption Index, 60 percent of bring cash with me by mobile than at a branch. Retail millennials think big banks aren’t anymore. We use banks watched as a flood of fintechs designed to service their generation, (financial technology start-ups and and 33 percent believe they won’t WeChat and Alipay for new entrants) broke into the sector, need a banking institution at all. The everything in China. picking off bits and pieces of that cost to traditional retail banks isn’t just Zi, 28, millennial bundled customer value chain, in cold, hard commercial numbers; it’s Curator, Taiyuan, China

88% of people in China use WeChat or Alipay for payments #1 payment method in the UK: debit cards provider in isolation. Indeed, spending and therefore simplifies, our financial and saving need to be seamless, and the lives. These companies are already well Source: British Retail Consortium, 2017 management of our wallets has to feel versed in tapping into the rich vein of as good as our best new experiences. contextual and behavioral data. That’s why they’re a force to be reckoned with Opportunity and threat come hand in the retail banking sector. in hand

The opportunity for traditional retail banks involves more than reclaiming a prior dominance in the management of Managing our disparate array of apps, wallets, their customers’ wallets. While they’ve providers and passwords is becoming always had great insight into what we spend, where and how often, they’ve burdensome — it’s confusing and it’s reaching typically lacked the data that explains the point where companies are at risk of their why we spend what we do, and that customers giving up, frustrated by the effort it enables a shift to predictive. That’s takes to build a few more points or get that what is at stake today. At the same time, this isn’t just an nominal discount. opportunity for the incumbents. Amazon, Mitch Siegel Alibaba, Google or Apple, no means an Principal, National Financial Services Strategy exhaustive list, are all primed to enter this and Transformation Leader, KPMG in the US race and be the player that consolidates,

n a world where consumers have seen the removal of friction points across countless aspects of their Insurance I lives, questions about the insurance industry cut to the heart of the centuries-old business: “Does insurance really need to be so complex? Why does buying insurance have to be so hard?” New customer-centric insurance Reorienting start-ups are aiming to answer these questions, making a play for simplicity and convenience, and taking cues from around the person, other sectors. In 2016, Ladder Life launched, offering direct-to-consumer, term life insurance online, with the promise of being “instant, simple and not the risk smart”. It aims to make insurance quotes and policy choices as fast and Technology is transforming customers’ frictionless as possible, asking only expectations of insurance, but the evolution higher-risk customers to undergo of the industry has only just begun. medical tests and provide samples. The process of designing your policy takes just minutes, involves no paperwork and has an aesthetic that feels more

like using an app to order coffee than mitigating your mortality risk. And it’s not just new entrants that The technology and shifting consumer behavior that has driven are rewriting the rules of play. The US’s much progress in other sectors is firmly taking hold within largest publicly held personal lines insurance.” The companies that embrace disruption will be the insurer, 85-year-old Allstate Corporation, ones to spot the opportunities emerging among the threats. recently launched and spun out its own This is a time for the sector to shed its laggard status and tech start-up named Arity, focused on redefine how it creates value for customers across all aspects telematics and transportation analytics of their lives, in ways that exceed their expectations. designed to improve risk management and innovation in the sector, rather than sit back and wait for insurtech start-ups Laura Hay to do so. Head of Global Insurance, KPMG International The trend in frictionless, simplified and contextually relevant insurance processes is only set to continue. insurance, enabling consumers to insurance company, has led the With an explosion of data sources and insure only the products they truly charge, now offering some 300 corresponding advances in machine value, rather than the full contents of insurance products and having written learning and artificial intelligence, their home. What’s more, coverage is more than 7.5 billion policies for over companies such as Carpe Data are provided only when needed, so you can 535 million customers. bringing insight into people and life toggle the protection on and off from Not so in the United States, where events from online and social streams your smartphone. despite regulators demonstrating an into risk profiling. If life insurers can In the UK, pay-as-you-drive disruptor increasing openness towards working motivate large pools of consumers Cuvva is bringing the same philosophy with new players, securing licensing to opt in to providing access to vast to car insurance. Emerging from the through 50 different states remains a pools of data, such as medical records founder struggling to lend a car to a slow, laborious process. and social feeds, the implications for friend for a quick, one-off occasion, the Successfully capitalizing on the underwriting are profound. digital start-up now offers insurance opportunities presented by new by the hour, as well as a low-cost consumer expectations and new Insurance on my terms subscription-based policy, allowing low- technologies means putting the true use drivers to pay for the times they’re customer at the center of business Workers in the on-demand economy, actually on the road. strategy with a value proposition that whether it be an Uber driver or an shifts the model from check writing Airbnb host, might object to maintaining Enabling innovation after the fact to prevention and year-round coverage for something actionable insights for the customer. that only requires it on occasions. That In response to changing demands opens the door for companies such as of consumers and the emerging Slice, a start-up backed by Munich Re, response from the insurance sector, which offers on-demand insurance on China’s sole state insurance regulator The trend in a transactional basis — just pay for the has helped create a framework frictionless, simplified days you have passengers or guests, that supports quick and easy online and contextually not for the ones you don’t. sale and fulfillment of policies via relevant insurance Trov, another digital start-up providing platforms such as Alibaba, WeChat insurance underwritten by AXA, and Baidu. Alibaba-backed Zhong processes is only challenges the concept of home An, the country’s first online-only set to continue

Chasing customers across the world

pportunity looks spaces in the US, understanding different in every the cultural context of a market country. While we is a prerequisite to understanding currently see some the customer. Companies entering O similar trends in the India, for instance, must recognize US and the UK (such as the effects the importance of a mobile- of urbanization) and between first strategy to keep pace with China and India (with their rapidly demonetization and the explosion expanding middle classes), each of mobile payments while ventures market presents unique advantages in the UK must balance investing and challenges. to benefit from the nation’s rapid Factors ranging from digital adoption of technologies, with infrastructure to availability of the realities of competing with human capital can affect which prominent, established players and businesses are positioned to the looming cloud of political and enter and successfully capture economic uncertainty. consumers in the modern digital In the coming pages, we explore landscape. From China’s tech some of the forces at play in super-adopters living the majority China, India, the UK and the US, of their lives through super-apps illustrating how customer behavior on a smartphone, to the growing is evolving differently. divide between urban and rural

he consumer landscape in the United States has become increasingly fractured. An asymmetric Teconomic recovery has widened disparities of income and wealth, sparking new motivations from customers, and leading to the need for new products and services for this United significant portion of the population. The companies that have best succeeded in bridging this divide are the large tech-enabled platforms, which are using their data advantage to provide various groups with the personalized experience they desire.

States: Recovery, but uneven

Although the US economy has A brave new world steadily recovered since the 2008 recession, the progress has been uneven. Trends show significantly New tech platforms have upended the more job growth in urban areas old ecosystem, with the ripples reaching than rural areas. Furthermore, consumers in unexpected ways. technological advances have helped to improve quality of life in cities while leaving rural areas wanting. In addition to high-paying jobs, new technology has brought the on-demand economy of WeWork, Lyft and DoorDash — a new web of on-demand services — to big cities. As one of our survey respondents We believe innovation and a customer-centric put it: “I have never used Uber or approach are at the core of the successful Lyft because I live in a small town. 21st-century enterprise. Truly understanding It’s not an option for me.” For the nuanced nature and complexity of the many in rural America, being left behind by advantages provided by changing consumer landscape is critical to technological advancement is all part creating value for customers and sustaining of a recovery that never quite came. competitive advantage. This divide also has geographic nuances. Of the US participants in our Lynne Doughtie survey, we found that the proportion Chairman and CEO, KPMG in the US

Many of the customer’s underlying needs have not changed. Some have. What the platform players have done is change the way the old and new needs are met and served. And in the process they are doing it more effectively and efﬁciently, creating a customer centric platform business. Julio Hernandez Principal, Global Head of Customer Center of Excellence, KPMG International Google, Amazon and Apple for due to more jobs and more new server space, processing power, services, the cost of living has marketing and distribution. As such, skyrocketed. Since 1980, the housing of millennials (born 1980–2000) who the cost of a start-up has decreased prices in New York City, Boston, Los say they are “very interested in new significantly since the 1990s. Angeles and San Francisco grew on technology and usually the first one average 137.3 percent after inflation to buy a new device when it comes X-tech compared with 18.4 percent for the out” varies between 62 percent in the US as a whole, according to The Northeast and 28 percent in the South. Similarly, customers, especially in urban Economist in “American House These differing levels of participation areas, are flocking to X-tech, tech for Prices: Realty Check”. with the digital economy were also a key everything across the customer wallet. Moreover, as urban dwellers migrate theme in our ethnographic interviews. These investments have given rise to to new cities seeking a lower cost of competitors about which traditional living, they will bring their new habits Technology disruption businesses are becoming increasingly and preferences with them. Those concerned. Retail? Meet retailtech, deeply entrenched from experiences Despite this divide, tech giants are still creating a service around every retail in urban environments will carry over finding ways to encircle the consumer. experience. Financial services? Meet and create opportunities for a new Some 64 percent of US households fintech, unbundling every service a bank generation of consumer companies to subscribe to Amazon Prime. Facebook provides. And the list goes on, from expand and grow. has 203 million users in the US, 63 insurtech to wealthtech to healthtech. Areas that were hot spots of the percent of the country’s population. These companies provide customer- 20th-century economy are reinventing Google is responsible for 86 percent of centric, tech-first, frictionless to adapt to the new technology US web search traffic. And there are experiences that solve unmet needs revolution. We’re already seeing 90.1 million iPhone users in the US, 40 and make their customers’ lives easier. evidence of skills, people and capital percent of the population. In urban spaces, we are also seeing converging to reinvent or refocus Perhaps even more impressive an evolution from DIY (do it yourself) cities tied to the power centers of old. is the way these companies have to DIFM (do it for me), giving rise to For example, Albany in upstate New made it easier and more cost on-demand services for everything from York is newly focused on nanotech. effective for start-ups to build food delivery to laundry to pet grooming. For Akron, Ohio, it’s polymers. For atop them. Where a decade ago Minnesota, medical devices. Portland, companies would need to build How do we see all this playing out? Oregon, has technology. Pittsburgh, all their own infrastructure, today Pennsylvania, has autonomous start-ups like Uber or Airbnb can As urban areas have become vehicles, robotics and IT. Buffalo, use platforms built by Facebook, increasingly popular places to live, New York, has battery technology and

Connie, 64, boomer My motivation Innkeeper, Napa, CA “We own two hotels in Napa. Healthy and premium Married, is our expectation. I pay full price for healthy or new grandmother fresh and I don’t care how much it costs.”

My attention My connection “I am on my iPhone “I can’t stand to go all day long. I use a lot without my phone. I of texting and store was 30 minutes into my voicemails and take commute on the freeway photographs for work when I found out I left my as well. Communicating phone at home, had to through photographs via turn around and pick it up mobile has been very and was over an hour late useful to our business.” to my appointment. And I love chatbots.” of boomers in the US report that their of boomers in the US report 47% trust level for buying that they would be very products and services 22% anxious if they left their phone/ online is very high device at home 48% in China 35% in China 56% in India 47% in India 42% in UK 12% in UK of boomers in the US report that My watch of boomers in the US My wallet dining out/takeout would be the report that they feel 36% first thing they would cut from “I hate brands that use my 68% very anxious about “If I’m saving $2, I will not their budget if reduced by 10% personal information. I actively online privacy breaches travel a mile. If it’s going to try to avoid it. I have felt this way 55% in China cost me a few dollars, I’m not 15% would cut travel/vacations forever. I am willing to retype my 61% in India going to waste time.” 13% would cut clothing information EVERY TIME.” 62% in UK

clean energy. Fargo, North Dakota, is ‘there’s a better way to do this’.” What a growing scene for tech start-ups. is different is how you understand your consumers and respond to their unmet So what can you do? needs. The companies succeeding 63% in the US are able to deliver a curated of the US’s population The key fundamentals of business have personalized experience. To bridge the are Facebook users not changed. Julio Hernandez, Principal, country’s divides, companies will need Global Head of Customer Center of to look at how the customer’s decision- Excellence, KPMG International, says: making process changes and his or her “Things haven’t changed and the new Five Mys. platform players aren’t discounting these fundamentals. They’ve simply said,

US: My My My My My emerging motivation attention connection watch wallet » Decrease in trust in » Highest media and digital media consumption » Smartphone adoption near » Blurring lines between work and » High student debt traditional advertising compared to China, India and the UK universal personal life » Stagnant real wage growth » Experiences increasingly prioritized » Nondigital TV still biggest media » Explosion of platform companies » Delay in traditional household » Generational wealth transfer themes over material possessions, consumption channel but mobile and adoption formation especially for millennials increasingly displacing desktop/laptop » Internet of Things and Artificial » Increase in on-demand services, » Rise in social influencers » News consumption through social Intelligence taking off spending and expectations An increasingly media increase, precipitating rise and digitally savvy impact of filter bubbles population amidst tech explosion. High student loan debt and uneven wages challenge some < 2 in 5 1/2 74% 64% 72% consumers wallets. of people in the US trust online reviews of people in the US glance at phone of people in the US would rather lose of people in the US open their is what people in the US spend as share of without being prompted by a notification their phone than their wallet phone to relieve boredom wallet on necessities versus luxuries at least every ten minutes

80% 57% 43% > 1 in 4 1. Dining 2. Travel 3. Clothing increase in the average student loan debt of people in the US like technology and apps of people in the US get a notification people in the US spend more than 30 minutes Categories that people in the US cut first if amount over the last ten years that automatically filter information to help at least every ten minutes each day commuting to work disposable income reduces relieve info overload

I used Mint.com to budget, I will mindlessly I use my phone I have never used Uber I will buy generic over but I had my student loans in check my iPhone way more than or Lyft because I live in name brand 60%–70% of there too. It kept showing me to kill time. my laptop. That’s a small town. It’s not the time if it’s cheaper. that I was in debt and it was my gateway to an option for me. depressing, so I stopped. communication. I walk.

Kelly L, 28, millennial Carlos, 36, Gen X Kristen, 30, millennial Rene, 24, millennial Tom, 69, boomer Children’s media marketing, New York, NY Administrator, Miami, FL Digital marketing, Los Angeles, CA Recent college graduate, Canton, OH Hotel consultant, Napa, CA

Source: Innovation Lab at KPMG Ignition, KPMG in the US

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 65 United Kingdom: The connected consumer

If you want to see the future of a connected consumer, get on a plane to the UK.

very force that’s shaping the third-largest international market for British connected consumer as fodder the connected consumer Amazon. And with Amazon’s 2016 UK for overseas giants. After tasting the revolution is operating at revenues in excess of £7.2 billion, if a offerings from across the Atlantic, full strength on this island standalone British company, it would they have driven the local companies E nation. According to British comfortably be a member of the local they know and love to raise their regulator Ofcom, its citizens are more FTSE-100 stock index. digital quotient. likely to watch streaming TV or use The result has been a virtuous As an example, after getting their first the net to shop, bank or order a taxi circle of cutting-edge services finding taste of Uber in 2012, they demanded a than those of any other comparable a willing market among connected similar level of service from homegrown nation. And the UK’s compact size British consumers — which in turn players. The result: operators like DPD means that any disrupter that needs spurs the next round of innovation — Local, Just Eat, RingGo and AppyParking physical infrastructure can quickly roll both digital and physical. offering smart apps with intuitive out a service (and just setting up in If there’s one number that underlines experiences and real-time tracking are London and its hinterland means you how far the revolution has proceeded in thriving, in categories from transport to have access to a third of the country the UK, it’s this: e-commerce will make delivery to dining, to name a few. It’s already). Broadly, logistics is a breeze up 7.9% of the nation’s GDP in 2017, the a demonstration of how the best new and the government is tolerant — if not highest of any country in a study of more experience becomes the new normal for encouraging — of digital disruption. than 30 countries. That’s far higher than demanding, connected consumers. The UK was the largest market outside the 5.8% of second-place China and Scale helps in what is, after all, the US for Alphabet, parent of Google; dwarfing the 2.3% of the US. Europe’s second-largest economy. the second-largest market for eBay; and But it would be a mistake to see the Yet the advent of hyperlocal services

is creating a new dynamic, knitting together networks of local suppliers The UK’s connected consumer undoubtedly and helping Britons discover them. The represents a compelling opportunity for growth- clearest example of this is the success of app-based food delivery, with two of minded companies. But winning with this digitally the big global platforms being based in astute population demands companies to take the the UK. rhetoric of customer centricity seriously. Those that The high level of digital engagement invest in truly understanding the drivers of behavior is driving the physical and digital worlds to blend and opening the door and choice within this hyper-connected nation — for numerous variations in plot lines, and mobilize an organization-wide response — will enabling companies to create more be best placed to create and iterate the experiences personalized value propositions. What’s more, this fluid movement between and propositions that hit the high-expectations of online and offline, mobile and physical the connected British consumer. — combined with the compact, urbanized geography — has made Bill Michael click-to-collect a very powerful business Chairman, KPMG in the UK model for established UK retailers such as Argos, House of Fraser and Curry’s. for which technology has been the Fashion retailer Burberry, for instance, The continued blurring of online and trigger,” commented Nick Griffin, has brought UGC on-platform and offline is underlined by the statistic global head, Global Strategy Group, publishes photographs of its customers that 65% of consumers collecting KPMG in the UK. “The ability to wearing its iconic trench coats on goods sometimes then go on to make connect with, and influence, a person’s its website. Or take homeware additional purchases — reinforcing that behavior from thinking to action and retailer MADE.COM, which in 2014 with the online/offline arena in the UK, beyond, has led companies to change launched “unboxed”, a UGC-platform both channels need to be best-in-class more than their propositions — but for consumers to showcase how with the user experience shaped most major companies trading today their newly purchased products have by ecosystems of insights. assembled their assets in and for brought life to their homes. These such Some online businesses have a different era. In this competitive examples are driving both an emotive recognized the power of their data environment, companies need to connection as well as engagement, beyond the digital world, spotting design insight-driven experiences that creating moments that matter in their opportunities for growth or deeper are consistent across all layers of the customers’ lives. customer engagement in the physical organization. Eliminating silos, customer In some cases, the needs of the world. Citymapper, for instance, a and operational teams need to work connected consumer are being met transport app that started in London shoulder to shoulder, harnessing digital by “gig economy” workers on flexible but is now global, identified important to drive value to both the customer and terms. The UK has long been tolerant of unserved routes that the city’s the board.” this type of casual working — so-called transport authority hadn’t discovered Increasingly, businesses are “zero hours” on-demand working has and is now starting to offer bus and harnessing the power of user- been common in the hospitality and shared taxi services to fill the gaps. generated content (UGC), particularly care home sectors for over a decade. “A chain reaction of data explosions given UK consumers’ intolerance But the numbers have sharply risen as has taken place over the last 10 years, of conventional internet advertising. app-based platforms gain real scale.

I go to Whole Foods because it’s the closest grocery store, even though it’s ﬁve times more expensive.

Sandy, 26, millennial Public relations, Leeds, UK

often refer to their island as physically crowded, but it’s becoming increasingly digitally crowded too. The UK is higher up the adoption curve for digital services than most rivals, which means e-commerce growth in 2017 will be slower than France, Germany or Italy. In some areas, the “platform effect” is in full swing, with smaller players crushed as a small number of winners emerge that can reap the economies The UK may look small on a world into an export-led, Beatles-powered of scale. Online food delivery platforms map, but it would be a mistake for force that still, in 2016, contributed are an example, more than a decade outsiders to think it a homogenous £4.4 billion to the UK economy and after the first services were launched. market. Its regional differences are £2.5 billion to exports. It’s not clear whether the creation of well-documented; less obvious are the This time around, a whole layer market and platform champions such generational issues. of digital intermediaries is trying to as Deliveroo and Just Eat will give Among them: high local house help time-poor Britons select their them extra pricing power. prices, especially in cities such as experiences, from gyms to music The overall picture of the United London, Oxford and Cambridge, mean festivals, providing a digital glue Kingdom is that of a highly digital that many young Britons despair of between consumer and provider nation, gorging on high-quality purchasing their own home nor want with rankings, reviews, offers and offerings both local and international to. Official statistics show many aren’t a host of other digital features and — with discerning consumers putting saving for retirement either. This enhanced services. The best of them pressure on brands to offer a premium may be a long-term problem for the would measure well on our Five experience. The ongoing economic real economy, but it’s a boon for the Mys framework, particularly in their uncertainty, the timing of key events “experiential economy” and the digital understanding of the motivations, and the political response will all affect services that go with it. connections and changed thinking consumer behavior, the availability of We’ve been here before: the around time that characterize human capital and overall consumer rapid rise in disposable income by connected consumers in the UK. trust. Business leaders need to be youngsters in the UK in the 1960s But don’t think that the UK is an prepared to understand the effects helped turn the British music industry easy place to win business. Britons of these and respond in the way that

Stacey, 38, Gen-X My motivation Nurse, Liverpool, UK “As a new mom to twins, my drivers New mom of twins, right now are around taking care of my in long-term relationship babies. And sleep! I need sleep.”

My connection My attention “I measure my life in “We are in survival minutes between cries, mode. I glance at my feedings and naps. My phone so rarely right babies have my full now. If you’re not a attention 24/7 right now.” doctor or a delivery person, I’m probably not is the average share responding.” of wallet allocated 46% to household of Gen Xers in the UK report being interrupted by their expenses in the UK 34% primary device at least once 36% in China every 10 minutes 32% in India 33% in China 35% in US 50% in India 50% in US 30% My wallet of Gen Xers in the UK report that My watch of Gen Xers in the UK they use their mobile device to report that their trust “I have started taking uberPOOL “I don’t even have time 67% pay for goods and services up to level for on-demand to save money. It takes longer to to sleep right now. 20 times per month services is very high get places, but I have more money Everything on demand to spend going out with a small 88% in China means we can spend our 36% in China trade-off of my time.” 86% in India time with the babies.” 55% in India 71% in US 43% in US drives engagement and interaction. KPMG in the UK. “In the last year, just The Brits are demanding consumers, The companies that will be the 13 percent of UK and US brands were but equally ones that can be potentially most competitive are those that can able to deliver a clear improvement in lucrative and quick to win — for use data most effectively to adapt customer experience. I believe insights those companies that recognize and to changing customer needs in a are now firmly in the driving seat of embrace what the connected landscape that is constantly changing. tangible business change. We’ve seen British consumer means for their “Many of our clients want end-to- huge appetite from clients of all sizes organizations — not just in experience end customer transformation and use to move on from sterile debates about design, but in how they realign the latest advances in customer insight feedback and metrics, to focus on their operating models to deliver it, to guide their efforts and justify their making better decisions, redesigning and integrate marketing, sales and investments,” added Adrian Clamp, journeys and creating financially customer service capabilities to partner, head of Customer Advisory, grounded business cases.” become the connected company.

UK: My My My My My emerging motivation attention connection watch wallet » Decrease in trust in » Lower time spent with digital media » WhatsApp and Facebook » Delay in traditional household » Wealth primarily owned by traditional advertising compared to US, India or China usage dominant for social formation baby boomers » High on-demand expectation, » Fastest adopter of digital in Europe, » High use of contactless card » Shorter work week hours compared » High student debt themes but value driven expected to tip non digital media payment and increase in to US, India, China, but increasing » House prices in England and in » Lower trust in media than consumption in 2018 mobile payments concern with work/life balance particular London increasing Rapid tech adoption US, China, or India » News consumption through social » E-commerce and click-and- » High and increasing commute and move towards media increase, precipitating rise collect growth continuing times for UK workforce cashless economy has and impact of filter bubbles given rise to a truly digital consumer. 1 in 5 2 in 5 61% 62% 76% people in the UK trust online reviews people in the UK glance at their phone of people in the UK would rather lose of people in the UK open their phone of UK total wallet share is spent on without being prompted by a notification their phone than their wallet to relieve boredom necessities rather than luxuries at least every ten minutes

77% 44% 72% 1 in 3 1. Dining 2. Clothing 3. Groceries of UK postgraduates will never “pay off” of people in the UK like technology and apps of people in the UK use PayPal as a people in the UK spend over 30 minutes Categories that people in the UK cut first if their student debt to automatically filter information for them in payment method each day commuting to work disposable income reduces Source: Institute for Fiscal Studies, 2017 order to manage info overload

I plan on buying a house, I don’t use long If I forgot my phone I would To get 10% off, I We go on holiday 4 or 5 but I can’t until 50 years format news go back to get it; I can’t will research for a times a year, maybe more. from now if I want to live in imagine I’d be able to cope All of my income goes London. I started budgeting anymore because without. (When) running out few hours… I am a there and my husband’s for a house within the next 5 I’m so used to of battery, you’re in a total bargain hunter. goes to meals and rent. years, but not in London. Facebook. panic, feeling like you’ve lost a limb. Alec, 25, millennial Bob, 68, boomer James, 34, millennial Mandy, 43, Gen X Bethany, 28, millennial Product manager, London Retired electrician, Liverpool Therapist, Bolton Nurse, Manchester Self-employed and part-time student, Glossop

Source: Innovation Lab at KPMG Ignition, KPMG in the US

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 71 India: Leapfrogging towards digital economy

Increasing afﬂuence, a digitally native young demographic, a rising middle class, regulatory reform and mobile adoption are converging to accelerate India towards a truly digital future.

rowing urbanization, market ecosystems. Companies internet penetration seeking growth in India might and the proliferation best structure their strategy by of smartphones have approaching the market in the G set the stage for same way they would a continent, large-scale growth in India, whose focusing on each region’s unique population is predicted to overtake customer profile. China’s as the world’s largest in KPMG’s Head of Digital the early 2020s. It is also one of the Consulting Services in India world’s youngest populations, with Rachna Nath comments: 50 percent of citizens under the “Successful retail companies, age of 25 and more than 65 percent for instance, need to be far under 35. more responsive to the local customer context than you might A country or a continent? find in other countries. There’s no one size fits all, no one size Many companies have fallen fits one region or even one city. short with a one-size-fits-all Consequently, there’s no such strategy in India by failing to thing as an ‘India strategy’, in the understand customer needs by same way there’s no such thing as region. India comprises 29 states ‘Indian food’. As the author Rama and seven union territories, each Bijapurkar argued, everyone needs with vastly differing customer to create their own India.” behavior, cultural nuances, supply In recent years, the Indian chains, distribution networks and government has introduced a

India’s digital ecosystem is rapidly becoming inclusive and extensive. From unique digital identities to digital payments and e-commerce, digitization is transforming business and interactions at all levels, increasing transparency and speed. Alongside the growth in digital ventures in centers like Bangalore and Gurgaon, which are second only to Silicon Valley, the vision of Digital India is becoming real.

Arun M Kumar Chairman and CEO, KPMG in India

Yuvraj, 28, millennial My motivation Start-up founder, Delhi, India “I’m always learning. I have to keep up with the Single, lives with parents latest programming for my start-up. I teach myself new code by watching videos online and doing a lot of reading.” My attention My connection “I feel pretty clueless “I get products when I about what I want really need them and do to do in life. I don’t a lot of online research ever want to have my before I make a purchase. “ whole life mapped out, but any new skills of millennials in India report I can learn quickly will that they keep up with new keep my full attention 49% technology, but will only buy until I master them.” a new device after they see others use it of millennials 53% in China in India use an 90% Android phone 47% in UK 52% in US regularly 74% in China 59% in UK 65% in US My wallet My watch 70% “I will give up almost anything “I tend to feel suffocated when I’ve been in a place to save money. Except good of millennials in India report that their wallet for too long. I’d find a way to save and scrape coffee — it is my one luxury.” goes toward necessities (vs. 30% to luxuries) together enough to get me out of the country at 78% vs. 22% in China least every other year, even if it’s around SE Asia 70% vs. 30% in UK and cheaper countries close to home.” 65% vs. 35% in US

series of policies and reforms to Citizens then had a 50-day window to of digital payment technology. Now, help accelerate its citizens’ adoption either deposit outstanding currency according to our survey, 97 percent of digital payment technologies. into a bank account or exchange them of Indian consumers have used for newly designed notes intended to mobile payments. Demonetization of the rupee eradicate counterfeit currency. (DEMO) DeMo created a scarcity of Mobile banking for feature phones cash for almost two months, Prime minister Narendra Modi caught driving consumers and businesses In a country still heavily reliant on the nation by surprise in November alike to embrace digital payment feature phones, especially in rural 2016, announcing the immediate technologies for the first time, areas, the government introduced cancellation of 500 and 1,000 which the government now a digital payment service for the denomination bills, almost nine out continues to support through population of nonsmartphone users. of every ten banknotes in circulation. incentives such as a lottery for users Feature phone users can dial *99#

I use my phone for literally everything — all day everyday.

Anaika, 28, millennial Brand marketing, Bangalore, India

to make secure online payments without downloading additional software or apps. One individual in our survey commented: “I pay all my bills on my phone now. Shopping, like for groceries, I do that on my phone as well, which is something I wouldn’t have done earlier.”

Nationwide adoption of biometrics

Since 2010, the Indian government has collected fingerprints and iris scans from 99 percent of adults, What’s next? wallet. Understanding the wide making Aadhaar, as it’s known, the variations among Indian consumers, world’s leading domestic biometric “You have India and then you have as well as the cultural context behind identification system. Despite Bharat, the Hindi name for India, which larger changes throughout the country, being positioned as a voluntary commonly symbolizes the nation’s can help businesses understand how scheme, Aadhaar has reached such rural and heartland,” says Aditya Rath, to make effective progress in India. scale that the government has partner, Management Consulting, KPMG started to make it a requirement for in India*. “Digital India’s biggest impact essential services, such as paying will be to bridge the gap between India Interfaces of apps are income tax and receiving a death and Bharat, and to provide a uniform certificate. It is due to be extended experience to the consumer.” much more efﬁcient to services such as mobile phone The foundations for a thriving, and convenient. I use subscriptions and travel bookings, connected economy are in place, the internet to buy further enhancing the efficiency and the shifts in consumer spending and security of digital transactions, power are already underway. What’s more things that I while simultaneously helping the following now is a new set of haven’t in the past. government to tackle tax evasion consumer motivations, expectations, Gayatri, 31, millennial and corruption. aspirations and an evolving customer Corporate communications, Mumbai, India

India: My My My My My emerging motivation attention connection watch wallet

» Discount and cashback driven, » Lowest time spent with media » Lower cost of mobile data fueling » High level of women not participating » Demonetization driving move to digital themes looking for the best deal compared to US, UK, China dramatic increase in mobile data usage in the workforce wallet and payments are leapfrogging, » Young population with high » TV still dominant but digital » Rise of online marketplaces (Flipkart, » Relatively low number of vacation but cash is still vital percentage of millennials increasing, especially mobile Snapdeal), and WhatsApp and days; leisure time seems to become » Growing middle class A millennial heavy » Rising trend towards individualism » Mobile entertainment and live Facebook as dominant social platforms increasingly important population and streaming on the rise » Connect with brands via social media » Average time spent in school is less rapid mobile adoption lay the foundations of a digital economy. 41% 51% 57% 72% 68% of people in India trust online reviews of people in India glance at their phone of people in India would rather lose their of people in India open their phone of Indian total wallet share is spent on without being prompted by a notification phone than their wallet to relieve boredom necessities rather than luxuries at least every ten minutes

57% 80% 88% 1 in 2 1. Travel 2. Dining 3. Clothing of people in India feel a need to keep stress of people in India like technology and apps to of people in India use WhatsApp people in India spend over 30 minutes Categories that people in India cut first if under control to stay healthy (compared to automatically filter information for them in each day commuting to work disposable income reduces 42% global average) handling info overload

I pay full price for The ﬁrst thing I do in I’m an addict I would pay for a beautician I am constantly health supplements the morning is check to a bunch of to come to my home. It’s ticketing, so I use an because in India there my text messages, but screens. very crowded and congested app to ﬁnd the best are many fake ones. I’m super embarrassed outside. I’ll spend more to deals. I work hard stay comfortable. about it. on that.

Aditi, 25, millennial Mandira, 22, millennial Sunande, 36, millennial Suman, 56, boomer Kanika, 25, millennial Professional swimmer, Bangalore University student, New Delhi Talent marketing, Delhi Homemaker, Mumbai Chef, Mumbai

Source: Innovation Lab at KPMG Ignition, KPMG in the US

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet Eastern-boomer eho eet

The changing motivations and expectations of millennials are permeating the wider family unit in India — and it’s a trend that looks set to accelerate.

ehavior transfer between millennials and their baby-boomer parents isn’t a trend that’s Brestricted to the West, but it is playing out at a different pace, and against different technological and social contexts, in India. The concept of the family unit is generally regarded to be much stronger and more hierarchical in India than in the West. Fueled by significant increases in life expectancy, it’s commonplace to have three generations of a family living together. And while nuclear families — an isolated unit of a couple and their unmarried children — have recently been rising, India’s long-established extended family structure, which incorporates relatives and grandparents in the family, remains prevalent.

The long-held cultural and values- Percentage of boomers that the flight to digital payment methods use device regularly based custom of respect for, and was rapid and significant, and the deference to, elders is still strong adoption of this new technology was today, so family influence on the very heavily influenced by millennial buying patterns of millennials remains children reverse mentoring their parents. significant. The closer you move to 88% A similar influence can be seen India’s rural heartland, the more this in changing media and content is the case, whereas members of Android phone consumption habits. As Netflix and the younger generation, who have Amazon increasingly create highly moved out of parental homes and into regional, localized content to appeal bigger cities, are adapting to changing further to the Indian consumer and patterns with greater independence. challenge the likes of Hotstar, the local “It’s long been a cultural assumption 73% digital video streaming service, they that when a child starts working, Laptop are actively targeting younger early they will stay with their parents and adopters in tier-one cities, with the assume added responsibilities for aim of harnessing the wider family unit the family unit,” says Rachna Nath, influence of these more digitally savvy, partner, head of Digital Consulting more connected millennials. Services, KPMG in India*. “It’s well 62% Digital infrastructure inevitably established that parents, brought up in Desktop remains a challenge, and the full impact the traditions of the Indian family unit, of urbanization on the long-established are keen for their children to stay with family unit will take time to play out fully. them once they reach adulthood. But connectivity is on the rise in India, “But it’s also far from unheard of for even if at a slower pace than has been children to feel the same way, even 21% witnessed in the West. Companies as they’re presented with greater that identify and engage the digitally Mobile Wi-Fi hotspot opportunities, new expectations and progressive millennial, and create locally a more global outlook than in years relevant and intuitive experiences gone by. In contrast with what’s being that are primed for sharing across the experienced in the West, the reasons long tail of generations in the same for this are less financial ones and more 15% households, have the opportunity to driven by the emotional bond instilled be a part of what’s set to become an in the concept of the family unit.” iPad accelerating period of technologically The baby-boomer echo effect in India fueled change across the nation. is often referred to locally as “reverse mentorship”. Culturally, Indian consumers It’s long been a cultural assumption that aren’t wired to question their elders and aren’t expected to teach or instruct them, when a child starts working, they will but there is an expectation of sharing, stay with their parents and assume added facilitating and introducing. responsibilities for the family unit. When demonetization was introduced in November 2016 and the country Rachna Nath experienced a short-term cash shortage, partner, Head of Digital Consulting Services, KPMG in India

China’s changing consumers aren’t just reshaping the dynamics of the world’s largest market; they’re set to reshape the world as we know it.

he evolution of the Chinese consumer is on the way to becoming the defining story of the 21st century. T The sheer scale of change from a manufacturing to a consumer- based economy, along with the pace of adoption of new technology and its pervasiveness, is without precedent. KPMG’s annual connected consumer research shows how China has established itself as a major player China is truly playing a central role in in the digital era. The annual report, global growth and, while the forces now in its third year, has tracked of change echoing around the world and discussed the behaviors and preferences of China’s consumers, present increasingly complex business and pointed to a mobile evolution. For challenges, we believe that the evolving example, more than 90 percent of Chinese economy is well positioned the study’s China respondents made at least one online purchase using a to capitalize on this change, both smartphone in the past 12 months. This domestically and overseas. is a staggering figure, especially when Benny Liu and Honson To compared to other markets, especially Chairmen, KPMG China

the United States and UK, where this category expected to soar from consumers made purchases with their 4 percent in 2010 to 54 percent by The recasting of smartphones less frequently. 2030, creating hundreds of millions China’s role on the of new consumers. By 2030, those world stage and the China’s country context for the with upper-middle and high disposable changing consumer incomes are forecast to increase growth in economic from 10 percent to 35 percent of the opportunity across Understanding this fast-changing population, while those households the spectrum of the nation requires an appreciation of the with the lowest disposable incomes are population is frankly changing landscape over the past few expected to decline from 37 percent decades, which is dominated by four to 11 percent. This ascent brings with unprecedented macro themes: it significant macroeconomic impacts, in modern history. further accelerated by hyperadoption of Benny Liu and Honson To The shifting population new technologies, and is a light-speed Chairmen, KPMG China version of what happened in the United The population shift from rural to States during the 20th century. urban over the past 30 years has been productivity, especially given the rapidly colossal. Between 1990 and 2015, the Reshaping the nation’s economy rising wages needed to fuel household proportion of China’s population living spending. Amid these seismic shifts in urban areas jumped from 26 percent The government’s 13th five-year in the country’s landscape, nowhere is to 56 percent, with an estimated 200 plan continues the goal of growing the evidence of change more profound million rural migrants going to work in household consumption as a share than in China’s insatiable appetite China’s biggest cities. of GDP, over exports. It prioritizes for technology. growth in the service sector over The rise of the middle class manufacturing and seeks to rebalance The rise of the mega platforms its source of competitiveness from low- China’s rapid urbanization is a reflection cost assembly to high-value innovation, With consumers spending so of a burgeoning middle class, with incentivizing research and development much of their lives on super apps, urban working-age households in investments, and seeking to improve companies such as Tencent and Alibaba have access to almost unparalleled amounts of data that provides deep insight into consumer behavior, needs and preferences in almost all aspects of their lives. Their move from merely understanding the customers to being able to predict needs and wants before the consumers know them themselves, coupled with the ubiquity of the platform business model and access to further aspects of the customer wallet, makes these brands a force to be reckoned with not just in China, but on the global stage.

“The pace of change in China is innovation flowing around the world, Second, China should no longer incredibly quick — it’s relentless,” the disruptive forces which follow are just be considered the workshop of says KPMG Partner in Hong Kong unlike anywhere else.” the world, but instead a window into Anson Bailey, head of Consumer and the future. The change and disruption Retail, ASPAC. “China alone is home Takeaways being witnessed in the East isn’t to almost half a billion millennials, caused by technology; it’s merely a characteristically tech-savvy and First, for brands looking to access accelerated by it. demanding generation. We have in China’s growing middle-class The real disruptor in China and the excess of 730 million internet users, on population and their booming spending real disruptor for businesses in any par with the total population of Europe. power, the message is simple: if you’re other market is the customer. And And what’s more, 95 percent of those not on the platforms that power the if the Chinese customers are ahead users access the internet on a mobile lives of Chinese consumers, success of the curve, then they’re providing device. When you combine that sort will likely be elusive or, in the very a glimpse into a future for the rest of scale with the level of technological least, expensive. of us.

Daniel, 29, millennial Creative Director, My motivation Shanghai, China “I am so forgetful. I have set up lifehacks to help me Single remember. Like the Apple Reminders app because it syncs between my phone and laptop. I heavily rely on my Apple ecosystem.”

My connection My attention “Being without my “I glance at my phone phone is an awful constantly with feeling. I was pick- notifications. WeChat pocketed outside a Moments are how train station once and I keep up with my I was so crestfallen I friends’ adventures. I had to lay down and start and end my day fall asleep to shut the on WeChat.” world out.” of millennials in China report that 92% they use WeChat 91% of Gen X My wallet 88% of boomers “I use an on-demand app for everything—everything goes My watch through my WeChat wallet.” of millennials in “Alipay and WeChat payments are how I China report that at of millennials in China report that they would pay for everything. No need for account 36% least half of all their like to use WeChat as the single platform for numbers and complicated names. Money payments go through 48% all their communication transactions transferring in China is fast and flawless.” WeChat or Alipay.

China: My My My My My emerging motivation attention connection watch wallet » Connected and “social” consumers » Increasing time spent with digital » Fast growth in smart phones and » Delayed household formation and » Growing middle class » Instant messaging with brands on media and live streaming mobile payments upcoming shortage of time to spend » Consumer spend on food (47%), themes the rise » Mobile > PC, and media » Rise of online market places caring for the elderly personal products (17%), dining out » New influencers like bloggers, consumption through apps (Tmall, JD, Amazon) » Leisure time seems to become and recreation (11%), transportation videos, and live stream shopping » Digital multi-tasking » Growing sharing economy, on- increasingly important and communication (11%), housing A growing middle embedded in business models demand and express delivery » Increased service economy: DIFM and utilities (7%), education and class and ubiquitous > DIY, low labor costs healthcare (6%) tech platforms have given rise to a digital consumer. 1 in 4 1 in 3 29% 81% 79% people in China trust online reviews people in China glance at their phone of people in China would rather lose of people in China open their phone of Chinese total wallet share is spent on without being prompted by a notification their phone than their wallet to relieve boredom necessities rather than luxuries at least every ten minutes

60% 78% 91% >1 in 3 1. Dining 2. Travel 3. Clothing of Chinese millennials wish they were more like of people in China like technology and apps of people in China use WeChat people in China spend over 30 minutes Categories that people in China cut first if the person they describe themselves as on social to automatically filter information for them in each day commuting to work disposable income reduces media (compared to 31% global average) order to manage info overload

I trust bloggers a lot. I use WeChat every It is impossible for If I can save 10%, I will buy anything I will buy products minute, every hour me to leave my I’m willing to wait to as long as the they recommend over to chat with friends, phone at home. purchase at duty free or quality is good and big brands. family, brands and get I would feel anxiety. have a friend bring it to it saves me time. my news. Nomophobia. me from overseas.

Rong, 28, millennial Helen, 52, boomer Zi, 28, millennial Daniel, 29, millennial Theresa, 28, millennial Private education department chief, Beijing Teacher, Guangzhou Curator, Taiyuan Design Director, Shanghai Nurse, Xiamen

Source: Innovation Lab at KPMG Ignition, KPMG in the US

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Me, my life, my wallet 84

One app to rule them all?

For years China has excelled at adopting and adapting technology from the West, but when it comes to WeChat, the country is blazing the trail for “super apps” and leaving Western platforms in their wake.

f you live somewhere in the Western world, some of this routine might sound familiar: you wake to your The Chinese consumer’s thirst iPhone’s alarm and scroll through any for, and adoption of, new I overnight push notifications, check technology is unparalleled. As your text and WhatsApp messages, then WeChat users navigate cycle through your news apps to see what’s seemingly all of their daily in the headlines. You then indulge in a quick needs – and marshal their scan of Facebook, Instagram and Twitter. attention, their time and their Remembering your significant other left money – through one single early with the car, you book an Uber to catch the train. En route you check in with your digital platform and its partner and agree to arrange a restaurant for seamless, intelligent and dinner. You flick between Foursquare and intuitive experience, those OpenTable to try and find something a bit companies that fail to different, then try a Facebook post asking for understand and meet the recommendations. At the train station, you consumer on their terms risk buy your tickets using Apple Pay. being left behind Your brother makes an interesting restaurant recommendation on Facebook, Belle Morton so you grab a reservation on OpenTable. Director, Head of Customer Dinner’s not bad and the food is presented Advisory, Hong Kong

creatively enough that you snap a and Uber, and you’re starting to picture or two, reminding yourself scratch the surface. WeChat fact ﬁle to post them with #instafood when Boasting a staggering 963 million you get the chance. In the Uber on monthly active users, WeChat began Launched in 2011, WeChat has become not only China’s top messaging app, but also something the way home, OpenTable sends life as a messaging platform, but that looks increasingly like a mobile operating you an email asking for a review. has grown rapidly to serve as a one- system. Users can do almost anything from the Maybe later. stop shop for managing all aspects app, including paying bills, buying online goods, Once home you grab the electricity of Chinese consumers’ lives It’s no consuming news and entertainment content and of bill pinned to your fridge and take wonder 61 percent of our survey course chatting. care of it in your banking app — respondents in China said WeChat is 768 million daily logged-in users as of another thing off the to-do list. their most-used app. September 2016, up 35% on the previous year Finally relaxing in front of the TV, The volume of services available you see a commercial for that film through WeChat crosses the 61% access WeChat more than ten times a day you’re desperate to catch on the big customer wallet from providing 58% use WeChat for browsing and posting screen. Not to worry, you still have financial services, such as taking on Moments that AMC app somewhere on your out loans, buying insurance and phone; you check the times. Then on investing money, to creating 54% use for sharing information to WhatsApp to ping friends to see if access to a full range of goods and 40% use for reading content via public accounts they’d like to join; they’re in. You’ll pick services, including booking medical 34% use for sending and receiving money up the cost of the tickets and they’ll appointments, organizing flower pay you back via Venmo. deliveries, browsing vacations to 33% use for mobile payments During the day you’ve been in and hiring a plumber, electrician or out of some 14 different apps. They physiotherapist — All powered by Source: eMarketer, 2016 each serve a purpose, they’re easy its integrated WeChat Pay platform; its success or the Chinese platform to use and they’re familiar. But the all informed by user reviews and itself looking for new growth outside overall experience is also a little clunky, instant social feedback; and all its domestic market. requiring multiple apps to achieve a creating enormous volumes of To some this might feel like a chapter single task. transactional, contextual and from George Orwell’s 1984. To others In China, however, everything behavioral data. it’s a personal digital concierge that you did during that day would be While this app is largely unknown makes your life easier than you could played out in one “super app” called to Western consumers, it’s time to ever have imagined and an acceptable WeChat. Imagine a combination of take notice because it’s heading in trade-off for your privacy. Facebook, WhatsApp, Instagram, that direction, either as a result of Either way, it’s a glimpse into Google, Amazon, Venmo, OpenTable Western-born apps trying to emulate the future.

Imagine a combination of Facebook, WhatsApp, Instagram, Google, Amazon, Venmo, OpenTable and Uber, and you’re starting to scratch the surface

Change is inevitable. Industry shocks, business model disruptions, pivotal economic and geopolitical moments, and the shifting sands of consumer behavior. Throughout the industrial and information revolutions, these changes accelerated, their impact deepened and storm their intensity grew. But this has just been the warm-up act — we’ve reached an inﬂection point.

e’re currently signs of abating. Look to the East, witnesses to where a burgeoning middle class the collision of and continued shift from rural to three revolutions urban environments will see China W of a disruptive home to an expected one billion and industry-defining nature: urban consumers by 2030. With the the geographic and geopolitical country’s five-year plans continuing revolution, the demographic to focus on creating much more of revolution and the technological a consumer economy rather than revolution. In isolation, each exporting, Chinese consumers offers a glimpse into potentially are becoming an increasingly different futures. But in concert, prominent force on both the their combined impact is frankly domestic and global stage. unparalleled and no company, in any In India, despite some sector or in any corner of the world, headwinds, the country is shifting is immune. Put simply, we’re in the up the income ladder, with millions midst of a perfect storm. of citizens breaking out of poverty and becoming consumers for the Geographic and geopolitical first time — estimates forecast up revolution to 500 million by 2030 — and also growth at the upper end of the Present levels of geographic and spectrum as household incomes geopolitical uncertainty show no continue to rise. Companies are

rapidly reorienting to put customers center stage in business strategies. Meanwhile, India recognizes the need for significant infrastructure improvements and investments. Hence the introduction of the Goods and Services Tax (GST) and the impact of increasing legislative change to make India more competitive. Yet as we look further at the collective of nations historically labeled “emerging economies”, it becomes evident that not all are emerging at the same speed or in the same way. In South America, both Brazil and Venezuela, once darlings of global growth predictions, are faltering as the In Europe, while the shockwaves by interest rates at historic and consequences of political and economic of the UK electorate’s Brexit decision prolonged lows. Meanwhile, equity turmoil take hold. Economies such as appear to have dissipated, anticipating markets currently trade at 16-year Nigeria have suffered a similar fate, the consequences of this challenge highs with rising employment and exacerbated by falling oil prices, while to the European experiment, and unemployment rates at 16-year investment appetite across the African the likely outcomes of early Article lows. If the goldilocks situation continent is retrenching, as evidenced 50 negotiations, remains something changes based on mortgage interest by a marked fall in the number of stock of a gamble. But this is not the only and personal debt rates rising market launches or IPOs over the last story; political populism continues faster than expected, if the deficit couple of years. to promote uncertainty, with social increases or if inflation begins to divides as present in daily national take hold, the impact on household discourse as in election campaigning. finance and consumer confidence Powering this More broadly, the highly cyclical nature could be profound, and the economy of the European economy remains a could yet stumble. next revolution is the concern as actions on fiscal policy and rise of the millennial unwinding stimulus measures from the Demographic revolution Great Recession remain opaque. There generation are other dark clouds on the horizon, Powering this next revolution is the with the state of affairs in both Syria rise of the millennial generation, Growth in Latin America and and North Korea offering more cause forecast by 2020 to be the world’s Africa, while still seen by many as an for concern and signs of longer-term largest single demographic grouping, opportunity for the here and now, is instability, notwithstanding the present as well as the largest demographic in not for the faint of heart. But in the near state of US-Russia relations. the workplace. future, as their economies being to In the United States, the economy Notwithstanding the hype rebound, these regions will once again is defined by the largest personal surrounding this generational cohort, become very important. debt per capita in history, funded or the vast and conflicting literature and

65% 74% of US chief executives believe the next of US chief executives say three years would be more critical and their organization is trying to transformational for their industries actively disrupt the sector in and companies than the past 50 which they operate Source: Global CEO Outlook, KPMG, 2017

empirical studies seeking to classify about millennials as a discrete quasi- we live to how we work. Yet what them as a homogenous group, those segment and more about people we’ve witnessed in the decade since born in and shaped by two profound predisposed to be labeled “millennial the iPhone heralded a new construct economic crises, technological minded”. After all, isn’t there a little for the human condition is only set to transformation and new social and bit of a millennial in all of us? accelerate and disrupt further. employment paradigms, do indeed Baby boomers are also set to As the proliferation of connected share some underlying traits that are break with the past. Retirement for devices continues to pervade all corners already permeating wider culture. this cohort won’t be what it was for of society, from how we communicate, Media consumption is markedly their predecessors, as many choose to how we transact, to how we operate different from preceding generations either to continue working given our homes or manage our health and and trust is often found less increasing life expectancies or feel well-being, the next decade or so will forthcoming, with some 84 percent compelled to do so at the prospect see another billion or more humans of millennials reporting skepticism of underfunded retirement and rising connected to the internet by 2030, towards traditional advertising, trusting health and care costs. Moreover, the particularly driven by China and India. their friends and social media more. wallets of the boomer generation And while we can find varying patterns are under added pressure from Navigating the storm by region, millennials own less, rent their millennial children staying at more, live at home in greater numbers, home longer, returning home or Positively, those charged with believe in experience, are digital seeking greater financial help to join navigating these dynamic waters are natives and typically place greater the property ladder. Consequently, aware of what’s at stake. Over the emphasis on the purpose, values and the expected peak spending years last two years, KPMG’s annual Global authenticity of the brands they choose associated with empty nesting CEO Outlook has put the spotlight to transact with or work for. and retirement won’t pan out as on business leaders’ concerns about In isolation, this has far-reaching expected for all. their changing customer landscapes. implications, but these are only In our 2016 study, 65 percent of amplified when we consider the Technological revolution US chief executives told us that tendency of this group to transfer the next three years would be their behaviors, tastes and values No commentary on change or more critical and transformational to others, often their parents in the disruption can ignore the profound for their industries and companies baby boomer generation. Perhaps in and pervasive impact of technology than the past 50. An overwhelming the future, we should be talking less on all aspects of our lives, from how 90 percent reported being

This perfect storm isn’t on the horizon; it’s here and it’s now

concerned about the loyalty of synthesizing the findings that now abroad, both companies have hinted their customers, while 86 percent embody this report, consumers at expanding their payments apps were concerned about millennials haven’t stood still, and evidence of with international customers. and how their differing wants and change is all around us. Despite being largely unfamiliar needs will change their business. Consider Alibaba Group, whose brands in the West, such moves And in a sign of putting the 2016 Global Shopping Festival or are early signals of a competitive organization on the front foot, our Singles’ Day reported a record- collision course involving latest study published in August breaking $17.8 billion in sales on just established players such as Google 2017 revealed that 74 percent one day, three times more than Black and Apple, as well as the wider of US chief executives said their Friday and Cyber Monday combined, banking and digital payments organization is trying to actively and more than the country of Spain’s industry incumbents throughout disrupt the sector in which they entire e-commerce sales for the Europe and further afield. operate, rather than waiting to be year. What’s more, 27 percent of Companies are investing to disrupted by competitors. sales were from international brands compete in the new world; What’s most important to take or merchants, and an eye-watering consider that the volume of away from “me, my life, my wallet” 82 percent of sales were made on technology company acquisitions is the urgency with which businesses mobile devices. by nontechnology companies need to act. Not next year. Not next Take WeChat Pay and Alipay, increased 263 percent in the four quarter. Today. subsidiaries of Tencent’s WeChat and years from 2012, reaching a record The themes and the evidence Alibaba’s Ant Financial, respectively. in 2016 and outstripping, for the first we’ve explored in this report aren’t With more than one billion registered time, similar acquisitions by other abstract or distant concepts. They’re users between them, the two technology companies, most with not clouds building on the horizon that Chinese payments apps have the aim of improving or transitioning can be further studied by a working recently struck a string of deals with their business paradigm now and group or a functional team. They carry European banks, enabling millions into the future. consequences for the here and now, of retailers across the UK, France, This perfect storm isn’t on the and for those organizations intent on Italy, Germany and beyond to accept horizon; it’s here and it’s now. And for winning today as well as tomorrow, payments via their apps. Initially those bold enough to concede they the time to act is now. touted as a means of helping the just might not know as much about In the months since we began surging numbers of Chinese tourists their customers as they’d want to, the researching, analyzing and to use their domestic payment apps opportunity is palpable.

Our

The context behind our unique, multilayered approach to generating methodology fresh insights

raditional research the “why” behind behavior. For methods work best when both of these areas, we leveraged the future looks like the extensive research that we have past, but in a time defined performed across multiple industry T by seismic change and sectors, including consumer and greater volatility, new ways of thinking retail, banking, insurance, wealth are needed to reach new insights. management, healthcare, and To do justice to our most telecoms and media. comprehensive customer-focused We combine this developing picture research effort to date, KPMG’s and the ethnographic findings to inform Innovation Labs developed a multilayer questions for our primary survey, to research framework, underpinned by test the prevalence of behaviors. Our the rigor of design thinking for business approach starts with deep qualitative model innovation. Critically, we don’t research to uncover insights that don’t rely on any one of these activities alone come out through traditional market to paint a picture of the future — it’s research, moving from signals, to in their combination that the sum hunches, to hypotheses that are tested, becomes greater than its parts. validated and quantified. We begin by understanding Why does this approach get to better macro trends, identifying social, answers? Baked into each layer of data technological, economic and political is an opportunity to check our cognitive signals of change. We then layer biases and keep exploring the unknown- on a combination of scientific known and unknown-unknown data and fact-based historical and territories. Put simply? It helps us go economic data, before adding original hunting for insights in the right areas, ethnographic research to understand asking the right questions.

Our methodology

Me, my life, my wallet

Trends data Research-led change to Outside-in trends research across industries

Scientiﬁc data Scenario-driven

Quantiﬁable historic data Case studies change to Analysis US, UK, India, and China historical data

Behavioral and ethnographic data Ethnographic interviews

Qualitative and quantitative survey Sector speciﬁc change to 10,000 US, US, India and China consumers surveyed Research strategyResearch Content strategy Triangulation and sense making Design thinking for business model innovation

Motivation Attention Watch Wallet Connection Characteristics that Ways we direct our How we balance the How we adjust our How we connect to drive behavior and attention and focus constraints of time share of wallet devices, information expectations and how that changes across life events and each other across life events

Duncan Avis Dan Coonan Jennifer Linardos Principal, Advisory, Customer Solutions, US Executive Director, Global Consumer & Retail Global Customer Insights Program Director [email protected] [email protected] [email protected]

Anson Bailey Natalie Cousens Belle Morton Partner, Consumer & Retail Leader, ASPAC Global Marketing and Communication Lead for Director, Head of Customer Advisory, Hong Kong Customer COE and Customer Insights Program Hong Kong [email protected] [email protected] [email protected]

Katherine Black Todd Cullen Rachna Nath Principal, Advisory, Corporate Strategy, Managing Director, Customer Solutions, US Partner, Head of Digital Consulting Services, India Consumer & Retail, US [email protected] [email protected] [email protected] Deno Fischer Vera Nieuwland Mark Britnell Principal, Advisory, Customer Solutions, US Director, KPMG Innovation Lab Global Chairman, Healthcare, KPMG [email protected] [email protected] International [email protected] Nicholas Griffin Philip Ng Partner and Head of Global Strategy Group Partner, China Judd Caplain [email protected] [email protected] Principal, Head of Global Banking & Capital Markets Laura Hay Jessie Qian [email protected] Global Insurance Sector Leader Partner, Head of Consumer Markets, China [email protected] [email protected] Adrian Clamp Partner, Customer Advisory Leader, Elisa Holland Aditya Rath UK Director, KPMG Innovation Lab Partner, Digital Customer, India [email protected] [email protected] [email protected]

Urvashi Roe Mitch Siegel Tim Zanni Global Executive, Customer Center of Principal, Financial Services Strategy Global and US Technology Excellence and Transformation Leader Sector Leader [email protected] [email protected] [email protected]

Kes Sampanthar Paul Wissmann Christoph Zinke Executive Director, KPMG Innovation Lab National Sector Leader, Partner, Head of Strategy, China [email protected] Media & Telecommunications, US [email protected] [email protected] Yael Selfin Chief Economist, UK Scott Wolfson [email protected] Director, KPMG Innovation Lab [email protected]

Lynne Doughtie Hanson To Bill Michael Chairman and CEO, KPMG US Chairman, KPMG China and Asia Pacific Chairman, KPMG in the UK

Benny Liu Arun Kumar Chairman, KPMG China Chairman and CEO, KPMG in India

Article Page Reference Source My attention 19 Media creation rates What Happens Online in 60 Seconds, Smart Insights, 2017

Email sent and open rates Email Statistics Report 2015-2019, Radicati Group, 2015

Data growth and information creation rates Big Data: 20 Mind-Boggling Facts Everyone Must Read, Forbes, 2015

My connection 20 Mobile phone adoption Birthday World Wide Web, The Economist, 2014

Disconnection anxiety 20 iPhone and smartphone penetration in the US Technology Adoption, Singularity, 2014 and Internet and American Life Research Study, Pew Research, 2013

21 Nomophobia defined as fear of being without your phone UK Post Office, 2008

Survey results on anxiety when leaving their device at home KPMG Survey with Intuit Research of 10,000 Respondents for Customer Insights Program, KPMG, 2017

Quote from Anchint, 27, Calcutta, India KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for Customer Insights Program, KPMG, 2016-2017

Survey results on losing wallet vs phone KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials glancing at device screens KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

The Five Mys profiles 24 Millennials in India anxiety without device KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials in India budget reduced by 10% KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials in India device interruptions KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials and WeChat as preferred platform KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials, payments and WeChat/Alipay payments use KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials and WeChat use KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Gen X, Baby Boomers and WeChat use KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

25 Millennials in India budget reduced by 10% KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials in India budget reduced by 10% KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

26 Baby Boomers in UK preferences around phone vs wallet KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Baby Boomers in UK necessities vs luxuries KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Baby Boomers in UK online behavior KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

27 Baby Boomers in UK online behavior KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Baby Boomers in UK weath management and savings KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

The customer wallet 28 Survey findings around self improvement KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials’ sources of income KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Quote from ethnography KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for Customer Insights Program, KPMG, 2016-2017

Generational surfing 32 Millennials’ life event drift KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Millennials’ life event drift KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

35 Millennials’ life event drift KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

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Millennials’ new life events - paying off student loan debt Press Briefing on Household Debt, with Focus on Student Debt, Federal Reserve Bank of New York, 2017

Millennials’ life event drift Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans, American Student Assistance, 2015

Millennials’ life event drift Population Composition, Indian Census, 2011

Millennials’ life event drift Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans, American Student Assistance, 2013

Rise in unmarried women in China Women and Men in China - Facts and Figures, UNICEF, 2012

US student loan debt Consumer Credit (G.19), Board of Governors of the Federal Reserve System, 2017

Baby Boomers’ life event drift More older Americans are working, and working more, than they used to, Pew Research Center, 2016

36 Wealth management gaps More older Americans are working, and working more, than they used to, Pew Research Center, 2016

Baby Boomers’ life event drift Proposed new timetable for State Pension age increases, Department for Work and Pensions, 2017

Baby Boomers’ life event drift The Current State of Retirement: A Compendium of Findings About American Retirees, Transamerica Center for Retirement Studies, 2016

Baby Boomers’ life event drift The Aegon Retirement Readiness Survey, Aegon, 2015

Western baby boomer 37 Causes of Millennials living with Boomer parents For First Time in Modern Era, Living With Parents Edges Out Other Living Arrangements for 18- to 34-Year- echo effect Olds, Pew Research Center, 2016

Tech adoption lag in the boomer generation KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Industry view 42 Quoting Indra Nooyi, Chairman and CEO of PEPSICO “PepsiCo CEO Opens Up About Trump, Amazon, and that Kendall Jenner Ad”, Fortune, 2017

Data becomes king 44 Quote from ethnography KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for Customer Insights Program, KPMG, 2016-2017

Quote from ethnography KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for Customer Insights Program, KPMG, 2016-2017

Privacy concerns KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

45 Online purchasing trust KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Curated by me, for me 47 Media viewing trends The Nielsen Total Audience Report, Nielsen, 2016

Quote from ethnography KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for Customer Insights Program, KPMG, 2016-2017

Media viewing trends Z-File:Executive Insights, Zogby Analytics, 2014

Survey findings KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Active devices globally More than Six Billion Smartphones by 2020, IHS Markit Says, IHS Markit, 2017

Media viewing trends Parks Associates Announces Top 10 Subscription OTT Video Services in the U.S. Market, Parks Associates, 2017

Cost of subscriptions The NPD Group: Average Monthly Pay-TV Subscription Bills May Top $200 by 2020, NPD, 2012

48 Binge watching description Binge Viewing: TV’s Lost Weekends, The Wall Street Journal, 2012

Sporting event rights purchase Twitter Gets NFL Thursday Night Games for a Bargain Price, Bloomberg Technology, 2016

Sporting event rights purchase NFL and Amazon Reach One-Year Streaming Deal for About $50 Million, The Wall Street Journal, 2017

The empowered patient 49 Quote from ethnography KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for Customer Insights Program, KPMG, 2016-2017

50 Talent gap in healthcare Global health workforce shortage to reach 12.9 million in coming decades, WHO, 2013

Shift in definition of health Health + Wellness 2017, The Hartman Group, Inc., 2017

Patient centricity in Healthcare Dr Ed Fitzgerald, Global Healthcare Executive to KPMG’S Health Practice Global Chairman

Technology and security in healthcare Mark Britnell, Senior Partner and Global Chairman, Healthcare, KPMG International

51 Health tech in China Digital Health - Investors begin to sour on Chinese Health apps, Financial Times, 2017

Health tech in China Digital Health - Investors begin to sour on Chinese Health apps, Financial Times, 2017

In search of a simplified 53 Big bank apps KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for financial life Customer Insights Program, KPMG, 2016-2017

Reorienting around the person, 56 Ladder Life Ladder Introduces Life Insurance Built to be Instant, Simple and Smart, PR Newswire, 2017 not the risk 57 Trov AXA teams up with Silicon Valley start-up Trov to deliver market first in ‘on-demand’ insurance, AXA, 2016

Arity Allstate Launches Tech Startup Arity to Power Transportation Analytics and Innovation, The Allstate Corporation, 2016

Zhong An Exclusive - hong An plans to sell 5-10 percent stake ahead of IPO - sources, Reuters, 2017

Article Page Reference Source United States: a brave 59 Population in the US United States Census Bureau, 2016 new world GDP in the US The World Bank, 2017

Internet penetration in the US United States Internet Users, internet live stats, 2016

Smartphone usage in the US Statista, 2017

US economy Why the U.S. economy could keep growing until 2020, CNN Money, 2016

Job growth in urban vs. rural Rural Employment and Unemployment, United States Department of Agriculture, 2017

60 Millennial early adoption KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Amazon Prime users Sixty-Four Percent Of U.S. Households Have Amazon Prime, Forbes, 2017

Facebook users Statista, 2017

Google driving search traffic Search Engine Market Share United States Of America, Statcounter, 2017

iPhone users US iPhone Users, 2014-2016 (millions, % change and % of total smartphone users), eMarketer, 2016

Start-up costs Startups and accelerating corporate innovation, CB Insights, 2015

Housing prices increase American house prices: realty check, The Economist, 2016

Industry shifts in urban areas KPMG analysis, Pitchbook and CB Insights, 2017

61 Quotes from ethnography KPMG Innovation Labs with Foresight Factory Ethnographic Research Interviews of 100+ Participants for Customer Insights Program, KPMG, 2016-2017

62 Decrease in trust in traditional advertising Global Trust in Advertising, Nielsen, 2015

Experiences increasingly prioritized over material possessions, Why Americans are Spending More on Experiences vs Buying Stuff, Fortune, 2016 especially for millennials

Rise in social influencers This Is The Future Of Influencer Marketing, Forbes, 2017

63 Highest media and digital media consumption compared to China, US Time Spent with Media, eMarketer, 2017 India and the UK

Non-digital TV still biggest media consumption channel but mobile US Time Spent with Media, eMarketer, 2017 increasingly displacing desktop/laptop

News consumption through social media increase, precipitating rise The Filter Bubble Revisited, Slate, 2017 and impact of filter bubbles

Smartphone adoption near universal Evolution of Technology, Pew Research, 2017

Explosion of platform companies and adoption The Center for Global Enterprise, The Cage, 2017

IoT and AI taking off AI Takes Off, MIT Technology Review, 2017

Blurring lines between work and personal life The Line Between People’s Work and Nonwork Lives Continues to Blur, American Psychiatric Association, 2015

Delay in traditional household formation Census Results, US Census Bureau, 2017

Increase in on-demand services, spending and expectations The OnDemand Economy is Growing and Not Just for the Young and Wealthy, Harvard Business Review, 2016

High student debt Press Briefing on Household Borrowing, Student Debt Trends and Homeownership, Federal Reserve Bank of New York, 2017

Stagnant real wage growth US Job Growth Slows in August, Reuters, 2017

Generational wealth transfer The Great Wealth Transfer has Started, CNBC, 2016

Article Page Reference Source United Kingdom: 64 UK market ranking for Google Alphabet - owner of Google - takes top spot from Apple, BBC, 2016 the connected consumer UK market ranking for eBay eBay pays £1.1m UK tax on revenues it told US investors were £1.1bn, The Guardian, 2016

UK market ranking for Amazon Amazon continues heady UK expansion with new distribution centre, Reuters, 2017

E-commerce percentage of GDPs by country Global Ecommerce Report 2017, Ecommerce Foundation, 2017

Online to offline purchases Survey of 2000 UK shoppers, Cybertill OnePoll, 2016

65 UK city house pricing UK Cities House Pricing Index, Hometrack, 2017

Online retailing in Europe, the US and Canada Online Retailing: Britain, Europe, US and Canada 2017, Centre for Retail Research, 2017

Quoting Tim Knight, Managing Director, KPMG Nunwood KPMG Customer Experience Cloud, KPMG Analysis, 2017

68 Decrease in trust in traditional advertising Consumer Trust in Traditional Advertising Declines in UK, Nielsen, 2015

High on-demand expectation, but value driven Survey of 984 online respondents age 16+, Foresight Factory, 2016

Lower trust in media than the US, China or India Survey of 984 online respondents age 16+, Foresight Factory, 2016

Lower time spent with digital media compared to the US, India, China WeChat Users in China, eMarketer, 2017

Fastest adopter of digital in Europe, expected to tip non-digital media WeChat Users in China, eMarketer, 2017 consumption in 2018

News consumption through social media increase, precipitating rise How Social Media Filter Bubbles and Algorithms Influence the Election, The Guardian, 2017 and impact of filter bubbles

69 WhatsApp and Facebook usage dominant for social KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

High use of contactless card payment and increase in mobile payments Cash No Longer King as Contactless Payments Soar in UK, The Guardian, 2017

e-commerce and click-and-collect growth continuing Report: Click and Collect UK, Verdict, 2016

Delay in traditional household formation Families and Households: 2015, Office for National Statistics, 2015

Shorter work week hours compared to the US, India, China, but Work Life Balance, OECD Work-Life Balance, 2016 increasing concern with work-life balance

High and increasing commute times for the UK workforce Daily Commute of Two Hours is Reality for 3.7m UK Workers, The Guardian, 2016

Wealth primarily owned by Baby Boomers Will the Baby Boomers Bankrupt Britain?, The Independent, 2011

High student debt Debt and Repayment Statistics for England, Student Loans Company, 2017

House prices in England, and particularly London, increasing UK Cities Housing Price Index, Hometrack, 2017

India: leapfrogging towards a 71 Population in India The World Bank, 2017 digital economy GDP in India The World Bank, 2017

Internet penetration in India Statista, 2017

Smartphone usage in India Statista, 2017

Population in India World Population Prospects, United Nations, 2015

Population in India World Population Prospects, United Nations, 2017

Mobile payments in India KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

Demonetization announcement Full Text of Indian Prime Minister Narendra Modi’s Speech on Replacing Largest Rupee Notes, The Wall Street Journal, 2016

72 Mobile payments in India *99# Product Overview, National Payments Corporation of India, 2016

Quote from ethnography KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

74 Discount and cashback driven, looking for the best deal Consumer Behaviour and Branding, The Indian Context, S. Ramesh Kumar, Indian Institute of Management Bangalore and Pearson Education, 2009

Young population with high percentage of millennials Mary Meeker, KP Internet Trends, 2017

Rising trend towards individualism The New Indian: The Many Facets of a Changing Consumer, BCG, 2017

Article Page Reference Source

74 Lowest time spent with media compared to the US, the UK, China WeChat Users in China, eMarketer, 2017

TV still dominant but digital increasing, especially mobile WeChat Users in China, eMarketer, 2017

Mobile entertainment and live streaming on the rise Mary Meeker, KP Internet Trends, 2017

75 Lower cost of mobile data fueling dramatic increase in mobile data usage Mary Meeker, KP Internet Trends, 2017

Rise of online market places (Flipkart, Snapdeal), and WhatsApp and Mary Meeker, KP Internet Trends, 2017 Facebook as dominant social platforms

Connect with brands via social media 2017 Connected Life Study, Kantar TNS, 2017

High level of women not participating in the workforce Mary Meeker, KP Internet Trends, 2017

Relatively low number of vacation days, leisure time seems to become 2011 Vacation Deprivation Study, The Times of India, 2011 increasingly important

Average time spent in school is less Mary Meeker, KP Internet Trends, 2017

Demonetization driving move to digital wallet and payments are Mary Meeker, KP Internet Trends, 2017 leapfrogging, but cash is still vital

Growing middle class 6 Surprising Facts About India’s Exploding Middle Class, World Economic Forum, 2016

Eastern baby-boomer echo effect 77 Life event drifts The World Bank, 2017

Life event drifts Supplemented nuclear families make 16% of Indian households, The Economic Times, 2017

China: window into the future 80 Nuclear families rising Supplemented nuclear families make 16% of Indian households, The Economic Times, 2017

China’s migration to urban Urbanization and Urban Villagers: Institutional Factors and Social Identity in Urban China, 2015

China’s growing middle class The Emerging Middle Class in Developing Countries, Brookings Institution, Brookings Institution, 2011

China’s growing upper class, shrinking lower class The Chinese consumer in 2030, EIU, 2016

China’s growth and impact to global economy Benny Liu and Honson To, Chairmen of KPMG in China

Connected customers and smartphone payments China’s Connected Consumers 2016, KPMG Huazhen LLP, 2016

81 China’s 5-year plan goals The 13th Five-Year Plan For Economic And Social Development Of The People’s Republic Of China, Central Committee of the Communist Party of China, 2016

82 Connected and ‘social’ consumers China’s Connected Consumer, KPMG analysis, 2016

Instant messaging with brands on the rise Survey of 1000-5000 online respondents age 16-64, Foresight Factory, 2015

New influencers like bloggers, videos and live stream shopping WeChat Users in China, eMarketer, 2017 embedded in business models

3rd compared to the US, the UK and India in time spent with media WeChat Users in China, eMarketer, 2017

Digital exceeds nondigital consumption, driven by mobile. TV in fast decline WeChat Users in China, eMarketer, 2017

WeChat has a highly engaged user base for news. Live streaming is WeChat Users in China, eMarketer, 2017 on the rise

83 Fast growth in mobile adoption WeChat Users in China, eMarketer, 2017

High-tech giant online platform adoption, inc. e-commerce The Center for Global Enterprise, The Cage, 2017

Still growing sharing economy, on-demand and express delivery services Embracing the Sharing Economy for Growth in China, TechCrunch, 2016

Delayed household formation and upcoming shortage of time to spend The Future of Families 2030, OECD International Futures Programme, 2011 caring for the elderly

Increase in time spent traveling Chinese Tourists Spent 12% More in Travelling Abroad in 2016, United Nations World Tourism Organization, 2017

Increasing service economy: DIFM > DIY China Says Its Service Sector Has Grown 8.2% So Far This Year, Fortune, 2017

Growing middle class The Emerging Middle Class in Developing Countries, Brookings Institution, 2011

Financial dependency of the elderly on their children China’s Aging Population Becoming More of a Problem, Forbes, 2017

Article Page Reference Source One app to rule them all? 85 WeChat usage Number of monthly active WeChat users from 2nd quarter 2010 to 2nd quarter 2017 (in millions), Statista, 2017

WeChat usage KPMG Survey with Intuit Research of 10,000 respondents for Customer Insights Program, KPMG, 2017

WeChat usage Number of monthly active WeChat users from 2nd quarter 2010 to 2nd quarter 2017 (in millions), Statista, 2017

WeChat usage WeChat Users in China, eMarketer, 2017

A perfect storm 87 China urban population 2030 China’s Urban Billion, Zed Books Ltd, 2012

India population out of poverty 2030 70% of India’s population could be middle-class by 2030: Report, Business Today, 2015

88 Millennial population and workplace statistics Millennials overtake Baby Boomers as America’s largest generation, Pew Research, 2016

Connected consumer forecasts for China The Chinese consumer in 2030, EIU, 2016

Equity markets at 16 year high Bloomberg Markets, 2017

Millennial trust levels in traditional advertising Engaging Millennials: Trust and Attention Survey, The McCarthy Group, 2014

89 Insights from KPMG Global CEO Outlook Global CEO Outlook, KPMG, 2017

Alibaba Group Singles’ Day Sales Alibaba’s Singles Day is Amazon’s Prime Day — on steroids, CNBC and eMarketer, 2017

Alibaba Group Singles’ Day Sales Singles’ Day Scorecard, Forbes, 2016

WeChat and Alipay user metrics Is WeChat Pay Taking Over Alipay?, Forbes, 2017

Technology acquisitions by nontechnology companies over time Startup acquisitions data, Pitchbook, 2017

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Produced by: KPMG’s Creative Services. Publication Date: February 2019. (4798) Me, my life, my wallet Contacts

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Produced by: KPMG’s Creative Services. Publication Date: February 2019. (4798)