While much has been written about Milllennials and their perception of banks, many financial institutions still haven’t cracked the code on what Millennials expect from their banking providers. Millennials now outnumber Baby Boomers, totaling 84 million in the U.S. alone, and they’ve proven to be fickle when it comes to banking. According to Accenture, last year Millennials switched from their primary banking provider at a pace nearly double the average of other consumer groups. How can banks and credit unions build meaningful relationships with Millennials?
1. Synch with The Millennial Lifestyle
Milllennials live untethered to a branch seeking independence and discovering new ways to ‘bank.’ Millennials want banks that are ever-present, yet invisible. They look for access to their funds anytime and anywhere in a way that integrates money-management into their life seamlessly.
Provide innovative ‘at my fingertips’ digital banking with ‘tech giant’ quality. Millennials believe tech companies are better positioned to provide the mobile banking experience that they desire than banks themselves. Over 70% would be more excited about a new offering in financial services from tech giants like Google or Apple than from their own traditional banking provider. With the fast pace of technological advancements, expectations for banking are high. No longer will simply viewing transactions on your mobile device be enough. The security and convenience of biometrics will offer access without fumbling with multiple passwords. Similarly, peer-to-peer payments via texts, tapping or phone numbers will push banks to think about mobile transactions in new ways.
Bridge the divide of a fragmented financial life. Millennials witnessed the housing collapse and a major recession during defining life stages. Many are saddled with student loan debt want help paying it down in smart ways while avoiding more debt. Just 46% use credit cards compared to 60% among older demographic segments. Millennials need help bridging the divide from a fragmented financial life to one that is streamlined, accessible and holistic. As they enter their mid-30’s, managing their finances will become even more important and smarter consumption is taking center stage. Banks and credit unions that can find ways to support them — with the ultimate goal of independence from debt — will win.
2. Embrace The Millennial Mindset
Millennials love experiences delivered from brands that are both authentic and transparent. Millennials look for ‘context-right’ interactions that fit their needs. Financial brands should aim to demonstrate a genuine and compelling experience that is both reflects the changing times and values. Milllennials want services that are “with me” not “for me,” pushing companies to reimagine how to provide quality service and how to speak to Millennials.
Speak to their lifestage with honesty and humor. An early ad campaign from Ally Bank raised the question, “Do you love your bank?” with clear implications that Millennials do not have any type of meaningful relationship with their banking provider — purely transactional. Today, Ally succinctly declares “no branches = great rates.” Its 2016 Superbowl commercial presents a story of thriftiness and quirkiness with the tagline “grandkids = great tech support.” While Millennials are grandkids, many of them are now also parents. Chase offers relatable humor with their “Fairy Dadmother” campaign. Millennials are not just urban-dwelling, early-career hipsters; they are building families, too.
Deliver happiness throughout the customer journey. Online shoe retailer Zappos is famous for its customer experience, creating interactions based on core values that are “human” and patient at their core. Zappos is willing to go to major lengths to please people; one time a Zappos customer service agent even helped someone order a pizza. Empower employees to do what’s right for the brand instead of just sticking to the script. Deliver a consistent and positive brand story throughout the entire customer journey and you’ll create loyal, happy customers — the kind you can’t buy through traditional loyalty programs.
Transform branches into a “third place. Millennials came of age embracing Starbucks as a “third place.” Imagine brick and mortar branches as spaces for a community to come together in the fashion of a clubhouse, café or school. MassMutual had this concept in mind to develop the Society of Grownups, “a sort of masters program for adulthood — a place to learn how to deal with adult responsibility without losing your soul or sense of adventure along the way.” (See photos below.) Considering that 71% of Millennials would rather go to the dentist than listen to their banker, they knew that MassMutual needed to invent a new brand experience including physical and virtual environments that in no way resemble a traditional bank. Casual coffees, dinner parties and financial planning workshops co-exist. While online, calculators to examine home affordability, debt vs. invest and loan repayment compliment digital certificate programs and courses currently in beta.
3. Align With Millennial Values
Think about this… Millennials have held an average of 7.2 jobs between the ages of 18 and 28. This generation is passionate and loves adventure, but that is not to say they are frivolous. hey strive to achieve and accomplish personalized goals, and financial institutions could support the process.
Millennials like doing things that feed their passion, partnering with banks and credit unions that measure success using nontraditional metrics and goals. Millennials value different “currencies” in their lives — from health to fun, learning to financial growth, tight family connections to expansive social networks. How can a financial institution support the growth and balance of each of these “accounts”?
Embrace the variability of work today. Many Millennials watched their parents invest decades into a 9-to-5 secure career, slowly climbing the ladder to accrue a couple extra days of vacation or a slight pay raise every few years. Millennials envision a different future for themselves. The growing Gig Economy provides flexibility, empowering people to create their own schedule, which simultaneously presents some financial complexities (e.g., particularly during tax season). The growth of this career option is expected to continue. The share of U.S. workers in alternative work arrangements jumped from 10% in 2005 to 16% last year. These workers inherently experience more income volatility, thereby requiring more active financial management. Also, the online platform economy (e.g., Über and AirBnB) is starting to be a significant source of income with more than 5% of Millennials earning money through these avenues last year. In fact, those ages 18-24 are nine times more likely to earn income on platforms like Über TaskRabbit than other generations.
Create impact via entrepreneurial ventures and social investing. Millennials have been bitten by the entrepreneurial bug. Some Millennials choose to use sites like GoFundMe and Kickstarter to fund a small project, while others dive into full-fledged startup mode by seeking out investors to launch a business. By the end of this year, the crowd funding industry is on track to account for more funding than venture capital. Could banks be better partners in offering access? Similarly, could banks help Millennials weigh investment opportunities by social impact in addition to the traditional metric of financial return? Millennials are more likely to accept a lower return or a higher risk related to an investment if it’s in a company that has a positive impact on society and the environment. For example, the largest funded campaign on Indiegogo ($5M), An Hour of Code, funds an introductory hour of coding to students worldwide.
Acknowledge the diversity of preference for big-ticket purchases like homes and cars. Will Millennials become homebuyers? Economists, realtors and marketers have been watching to see if the speculation that Millennials’ preference to rent apartments in hip, walkable urban neighborhoods extends into their next life stage of adulthood. Some 35% of homebuyers in 2015 were Millennials, up from 32% in 2014, with a median age of 30. As Millennials begin making these major investments, they’ll look to banks for guidance. Are they buying cars? It turns out that Millennials car-buying habits are not that dissimilar from other generations. Perhaps adoption of regular car-sharing routines may not hit this generation as hard as some predicted.
But get ready, Gen Z is right around the corner with a fresh set of expectations.