It seems that a day can’t go by without seeing a news report about the Millennial generation and their impact — the Presidential election, TV ratings, the economy, or their utilization of financial services. To be sure, the Millennial generation is a force to be reckoned with. At 75 million strong, Millennials have officially surpassed Baby Boomers as the largest generation.
Their needs and priorities for financial services differ significantly from other, older generations. However, you have to ask: Are their needs driven by a true generational difference, or simply by the current life stage that they are in? Can we not learn past lessons — particularly around financial services needs — from the folks who were 18-34 thirty years ago?
Most financial needs/behaviors are driven by the stage of life that a consumer is currently in. The financial needs of a Millennial that is 29 years old are not significantly different than those of a Baby Boomer when they were 29 years old. Both are/were concerned with accumulation — first home, borrowing for big ticket items, starting to save for the future, and convenience in every day transacting to assist with hectic schedules of work, new families, and busy social lives. The real differences between the Millennial age 29 and a Boomer age 29 is the communication (both tone, frequency, and media), and the technologies used to meet the consumer’s financial needs.
To be sure, Millennials are the most technologically advanced generation yet (with Gen Z hot on their heels), and they demand a certain type of engagement that is markedly different than what young Boomers expected. It’s a faster, more detached world than Boomers experienced. But financial services companies have to understand the underlying needs and motivations of customers to adequately provide solutions for money management and prosperity — something both generations are looking for.
Millennials indicate that they want personalized service, accurate and prompt problem solving, a trustworthy financial partner, and convenience, among other criteria. These are also desired by Baby Boomers. Perhaps the most significant difference among the generations is how they prefer to engage with financial services companies.
There is much consternation about having the best mobile app or gamification concept to grab Millennials and compel them to pick one bank over another. But is the medium or delivery method of the message really what drives action? Or is it the content, and how well that content resonates?
Key Question: Just how different are Millennials from Baby Boomers (then and now), and how do those differences impact the type of messages created to motivate them?
( Read More: Are Millennials Really That Different? )
( Read More: Millennial Consumers Are Unique, But Not That Different )
Half of Millennials don’t believe they will receive Social Security when they retire. Back in the 90s, there were plenty of Boomers were pretty sure they weren’t going to see Social Security still intact today. Much is made out of the crises that Millennials have had to experience, especially the economic downturn after 9/11 and the 2008 “Great Recession,” and the effect that these events have had on their financial psyche. However, Millennials’ “woe index” likely pales in comparison to Boomers, who came of age with 21% prime interest rates, survived six recessions, three major market crashes, at least four wars including one very Cold one, lines at the gas station that was only open one day a week, Watergate, 444 days of American hostages in Iran, etc.
As Millennials age, their collective experience will evolve along with their financial needs — financing school for children, expanding housing, ensuring that they have enough saved for retirement, etc., and will be affected by economic and social changes over the years. It is important to understand these cumulative experiences when designing communication. Much like Boomers… who eventually outgrew their psychedelic tie-dyed 60s moonflowers for BMWs, Restoration Hardware and 401ks.
Like their boomer counterparts at the same age, Millennials aspire to home ownership. According to the National Association of Realtors, less than 25% of 30 year olds own their own home. However, another survey from TD Bank indicates that 84% of renters ages 18 to 34 intend to purchase a house in the future. While many have flocked to the cities, they will likely return to the suburbs once they marry and start having children (again, much like Boomers). Creating content that educates Millennials on what is needed and providing resources to facilitate home ownership is critical to connecting with this group and motivating them to borrow through your financial institution. While convenience of application and approval process is important, creating financial confidence and comfortableness will create greater loyalty.
Some stark differences between the generations remain when it comes to technology and engagement. While Boomers — particularly the affluent — utilize technology heavily, it is used in tandem with other, more personal channels of communication (e.g., phone and branches). Millennials are very comfortable managing their money through mobile or online access and with alternative lending and payment vehicles and many tend to exclusively use these channels for engagement. They rely heavily on the advice of others when choosing a bank and will do extensive research online before making their choice. They are looking for educational material online that is instructional, and that will explain the options and solutions they need.
Key Insights & Takeaways
To capture the attention and relationship of Millennials, retail financial institutions must have a robust advice, guidance, and education program that is easily conveyed via mobile and online channels. However, this should not be at the exclusion of a visible branch presence with knowledgeable staff to assist with problems when they arise.
Additionally, there is significant learning in the past behaviors of those that have come before that can be learned from. Like their boomer counterparts at the same age, Millennials will be looking for mortgages and other loans to satisfy an expanding lifestyle, they are beginning to save for retirement, and they need convenience in day-to-day transactions like making deposits and payments. Understanding their basic financial needs, providing effective advice, guidance, and education, and adapting solutions into mobile and online channels is the key to connecting with Millennials to create lasting financial service relationships.