It is held almost as an article of faith by too many people in banks and credit unions that the Millennial generation is an out-of-reach opportunity for most regional and mid-sized banks in America — those with $2-$50 billion in deposits. This bias is based on the notion that the fancy high-tech tastes of this demographic can only be addressed by hip fintech startups and multinational banks with the budgets to produce whiz-bang mobile apps and digital experiences.
However, a closer look at both the facts and the trends reveals the opposite to be true. The personal touch and local reputation of regional and mid-sized financial institutions is actually growing in appeal to Millennial customers as they rapidly mature personally, professionally and financially.
Connecting effectively with this generation is critical because, for the next decade or so, Millennials are the money-in-motion. This is the customer segment that is most up-for-grabs, as they experiment with different experiences before settling into the long-term relationships with the financial partners that will see them address the long-term implications of undertaking their college debt, first mortgages, growing families, career shifts and much more. (Note: J.D. Power defines Gen Y as people born between 1977 and 1994, with Millennials being a subset of Gen Y, those born between 1982-1994.)
According to research I have been conducting at J.D. Power, executives in regional and mid-sized financial institutions who become better aware of the needs and desires of this demographic are actually in a very solid position to capture the most dynamic segment of the financial consumer market. Here are a few reasons why.
Increasing Loyalty with One-Stop Shop Financial Solutions
Experts from Franklin Madison reveal how to meet the growing demand for comprehensive financial solutions including insurance protection.
Read More about Increasing Loyalty with One-Stop Shop Financial Solutions
The Financial Brand Forum – April 14-16, 2025
Learn how to tackle the biggest challenges in banking from the industry's brightest minds at the best conference in the financial world. Get your ticket now and save big!
Read More about The Financial Brand Forum – April 14-16, 2025
The Remarkable Appeal of the Branch
While the decline of financial institution branches has been widely covered, many of those headlines have been generated by large national and multinational banks.
Many smaller institutions are actually growing their branch strategy, if for no other reason than to establish and expand their presence in new markets. This has not only been noticed, but also appreciated by Millennial customers. They want more than a canned FAQ or a pre-programmed dialog with a chatbot — they want interaction.
“As Millennials grow older, they express increasing interest in visiting a physical location once they have exhausted their online research.”
This is a theme coming through again and again in our ongoing studies at J.D. Power. As Millennials grow older, they express increasing interest in visiting a physical location once they have exhausted their online research.
There are implications for addressing their needs when they come through the branch doors. Millennials typically have a solid understanding of what the marketing literature has to say about a product or service. Consequently, their questions tend to be detailed and specific. Regional and mid-sized banks that want to exploit the opportunity must make sure branch staff is appropriately prepared.
Read More: How to Design a Millennial Bank
Reputation Still Matters to Millennials
Beyond being tech-savvy, Millennials do tend to have a sophisticated understanding of what they are looking for, how they want to work, and with whom they want to do business. Mid-tier institutions have an opportunity on this front as well.
While the brand footprint of smaller institutions cannot compete with the networks of the industry juggernauts, they also do not carry the negative baggage that informed Millennial perspectives on banks during the financial crisis over a decade ago. This was a formative period of time for this generation, and has translated into a measurable appreciation for lesser-known Main Street brands over those associated with Wall Street.
Regional and mid-sized banks are also seen by many — if not most — Millennials as playing a more active and constructive role in local communities compared to larger competitors. This is not an insignificant factor for a generation that has a reputation for wanting to “do right” in addition to needing to “do well.”
Catering to an Entrepreneurial and Independent Workforce
The reputation issue also looms large in another important aspect of this segment’s financial and professional lives. Millennials are more likely to work as freelancers or start their own businesses than their older demographic counterparts. They are also more likely to work for small businesses. This is a huge opportunity for regional and mid-sized banks, who have made much stronger inroads with local businesses than their big bank competitors.
Moreover, along with the daily grind of meeting deadlines and fulfilling orders, Millennial customers who fall into the first two categories tend to have a broader set of needs — from notary publics to small business loans and retirement planning advice — that makes the branch presence and personal touch of regional and mid-sized banks extremely attractive.
Millennials Crave Meaningful Banking Relationships
So there you have it. Far from being locked out of the market, regional and mid-sized executives sit on an unprecedented opportunity to secure a healthy slice of the Millennial customer base.
But success will depend on meeting the Millennials halfway.
“While it may be a challenge to match the flash and pizazz of the digital offerings from fintechs and the largest players in the market, ‘good enough’ may be good enough.”
Specifically, banks need to be in the places Millennials visit. A robust digital engagement strategy is therefore of critical importance. The good news is that it does not have to be as expensive — or as sophisticated — as one might think.
While it may be a challenge to match the flash and pizazz of the digital offerings from fintechs and the largest players in the market, good enough may be…good enough. There are a variety of web-based platforms available for mid-tier institutions that have perfectly acceptable functionality.
We have advised our mid-sized banking executives to work from their strength when it comes to bringing Millennials into their digital fold. When customers are in the branch, look for opportunities to ensure that they are aware of the mobile apps and web-portals that are available, and take a few moments to walk them through the workflow. A little preemptive education in the branch can go a long way toward avoiding frustration later — even if the technology is a little clunky.
Above all else, however, mid-sized and regional banks should leverage their reputation for being accessible partners in the financial lives of their customers. Those that are able to engage in discussions about major life changes — which is often when Millennials change banks in the first place — tend to fare best with this demographic segment. Banks cannot be seen as trusted advisors if they do not offer…advice.
This may seem obvious. However, J.D. Power research indicates that the absence of proactive engagement represents a major opportunity for improvement. Only 22% of the more than 100,000 mid-size banking consumers we surveyed reported that they had received advice or guidance from their institution in the last 12 months.
This seems like a great place to start in the mid-tier quest to capture millennial market share.