Financial marketers have catered to baby boomers, Gen X’ers and the Greatest Generation with success, but no segment has given the banking industry more heartburn than millennials.
Not that they have much money now, but in seven years millennials’ income will exceed that of baby boomers and Gen X’ers combined, according to Javelin Research. But wait seven years and it will be too late to bring them into the fold. Smart marketers are laying the groundwork by developing new products and services now.
A sharp contrast in banking attitudes exists between millennials and previous generations, so it’s not enough to revise marketing plans. We need to throw them out and start over.
Here are nine factors marketers need to consider when creating a millennial marketing plan.
1. Everything mobile
Millennials are the first generation to spend a majority of their media time on computer devices – smartphone, tablet or laptop. Ninety percent use online or mobile for everyday banking. (2014 Bank Financial Education Survey) Prior generations spent the most time watching the television. Tip: Forget desktop computers; smartphones are your primary banking vehicle. Make sure your website is responsive and online transactions are intuitive.
2. No checks
A checking account is an oxymoron; call it an all-digital account and position it around your debit card. Millennials don’t use checks. They use person-to-person money, bill pay and interbank transfers. Tip: Tie into a big surcharge-free ATM network because millennials move frequently and demand convenience.
3. No minimum, no fees
They hate monthly fees, surprise fees and overdraft charges. Over 80% say fees are the most important factor when considering a new bank (ThinkFinance 2013). Tip: Make sure fees are transparent and kept to a minimum.
4. Little loyalty
More than half of millennials think your bank is no different than the competitor down the street. One third are open to switching accounts in the next 90 days and 73% are excited by the prospect of Google, Amazon, Apple and PayPal opening their own bank. (Viacom 2013). Tip: Emphasize sticky marketing, mobile services and very good customer service.
College debts make it difficult for many millennials to save money. For nearly three-quarters, having enough money for retirement is their biggest financial fear. Fifty-nine per cent worry that they’ll never pay off their college loans. (ThinkFinance 2013) Tip: Develop an automatic savings option with a small minimum to kick-start their savings habit.
6. Looking for advice
Millennials want financial advice. A third say they need help and guidance creating a budget; a fourth want advice on choosing and managing their credit card. (2014 Bank Financial Education Survey). Tip: When designing a new account, incorporate personal financial management tools (PFMs). Almost half of shoppers under 30 want these. (Novantas 2014)
Although 92% of millennials have banking relationships, 45% are also using non-banking products such as pre-paid debit cards, money transfer service, check cashing, pawn shops and payday loans. They like the convenience. (Think Finance 2013). Tip: Create a robust, customized cross-marketing program to remind them of your products.
8. Influenced by Amazon
Millennials grew up with Apple and Amazon and are comfortable ordering virtually everything from toiletries to shoes online. They’ll judge banks by the same service, free shipping and mobile convenience standards that online giants have perfected. Tip: Squeeze the inefficiencies out of transaction times, policies and procedures. Review social media comments to spot and resolve issues before they become big.
9. Snail Mail Most Popular
Perhaps surprisingly, direct mail is the millennials’ preferred channel for financial communications. Ninety-two percent report that when choosing vendors they prefer comparing mail pieces. Seventy-five percent consider their mail to be valuable. (Epsilon, Channel Preference 2013) Tip: In other words, if you want to grab their attention, do it the old-fashioned way.
Current banking practices may be unrecognizable ten years from now. New entrants, mobile payments, and cloud services will disrupt the financial services industry. Banks must learn to respond quickly and nimbly to innovation. It won’t be easy. Consulting firm Accenture thinks full-service banks could lose 35% of their marketshare by 2020 and millennials will be leading the revolution. Meet their needs and you’ll be well positioned to survive.