Building a Hybrid Digital + Private Banking Model for Millennials

Millennials don't want to wait until they 'make it' to get the perks and conveniences of a private banking experience. Here are seven ways you can leverage digital tools and product design tweaks to put your institution in a better position to acquire more Millennial relationships.

If you were to borrow a Millennial’s phone, you’d find that a bunch of banking apps all with similar characteristics. They are all functional and simple to use:

  • Venmo, PayPal, and (increasingly) Zelle for payments
  • Robin Hood or Acorns for investing
  • Mint or Clarity for financial planning
  • A traditional banking app for a credit card (with perks and points)
  • A checking account, to get paid

“A digital offering with the feel of private banking could put your institution on Millennials’ radar. Millennials expect to be treated like superstars.”

Millennials make very few visits to branches or often meetings with humans aren’t their first choice. All their banking has to be performed effortlessly, efficiently, and with some social awareness to match their values. What’s appealing to them is basically private banking where the phone becomes the banker.

Millennials value high levels of service and simplicity in use. Why not wrap it all up in a digital offering that gives them what they increasingly get from almost every other industry?

A digital offering with the feel of private banking could put your institution on Millennials’ radar. Millennials expect to be treated like super stars now, even before they are wealthy.

1. Think First-Class Service, Because It’s Today’s ‘Service’

Millennials have grown used to the slick level of service provided by Uber, Amazon, Seamless, Saks, and Whole Foods Market. And they don’t want to pay that much more for any of it. They don’t expect to pay first-class prices for first-class treatment, because it increasingly is the standard in today’s competitive conditions.

The private-banking-style features need to be added in just to stay competitive. First-class digital service needs to be the standard to keep and win over Millennials to banks and credit unions.

Read More: 6 Big Millennial Marketing Mistakes Banking Brands Cannot Afford to Make

2. Streamline Products to Become Millennials’ ‘Hub’

What made the iPhone so unique at the outset was how it took what used to be provided via an iPod, a phone, and the internet and put it all in one device.

“What made the iPhone so unique was how it took what used to be provided via an iPod, a phone, and the internet and put it all in one device.”

Instead of having the five money apps I described, wouldn’t it be fantastic to provide all of those services in one place, under your brand?

This would give consumers their investments, payments, checking, and financial planning all in one place. Make it as socially satisfying as Venmo and easy to use as Robin Hood with some innovation like Acorns — and all in one app.

That’s the kind of experience Millennials hope to have.

3. Meet Superior Expectations with Superior Products

Millennials have watched how private equity and hedge funds have had superior results while their piddling bank-owned funds or ETFs turtle along with the market for the long run.

They want the same as their rich parents get (or what they hear rich older generations get). They also are aware of — and happy to pay for — new HENRY (High Earnings Not Rich Yet) credit cards like Chase’s Sapphire Reserve and Amex’s Platinum Card. This is becoming the standard level of service — and points — they expect. They want these products and the level of service that goes along with them.

Read More: Reality Check: Why Your ‘Millennial Strategy’ Might Be Completely Irrelevant

4. Meet Financial Planning Needs With Artificial Intelligence

AI continues to become mainstream. Some examples:

Bank of America has launched Erica and it has already grown past a million users. Erica can search transactions, find routing numbers, look up credit scores, and soon analyze spending to offer solutions to save you money or repay your debt faster.

“Millennials will welcome the ability to use AI to help set financial goals like you would set an alarm.”

Amazon’s Alexa can help you see how much you’ve spent on Starbucks in the last few months and can work with American Express and more financial institutions. More features are guaranteed to come. The evolution is a private banker on your wrist.

Millennials will welcome the ability to use AI to help set financial goals like you would set an alarm, or to change transfer amounts or investments like you change playlists or view your health stats on your Apple Watch.

Who needs a banker in a fancy suit when you can get better faster service from your phone and watch? Perfect for a busy, connected Millennial.

5. Bring Personalization to Everybody via Automation

When you are rich you don’t have to pay your own bills, figure out 401Ks, Roth IRAs, and who offers the best mortgage rates. Millennials are thinking: My bank has all of my information so why can’t they send a simple notification when they are going to transfer money, contribute to a retirement account, pay off my credit card when due and any other number of simple tasks?

Private bankers do this along with personalization, like offering the best rates for re-financing student loans (the “Millennial mortgage”) or any other debt.

Think of the boost to quality of life boost that your Millennial consumers would get from this step. Exactly what they are looking for due to their “work to live” versus “live to work” mentality.

6. Offer Points and Perks and Make It Easy to Earn Them

Millennials love points.

Consider the success of the Chase Sapphire Reserve card. This shows that Millennials are willing to be loyal to one card for the sign up bonus or loyalty points as long as it matches their lifestyle. Some of its features:

  • Earn 50,000 bonus points after spending $4,000 on purchases in the first three months from account opening. That’s $750 toward travel when redeemed through the Chase Ultimate Rewards program.
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to the card.
  • Triple points on travel and dining at restaurants worldwide.
  • 1:1 point transfer to leading airline and hotel loyalty programs.
  • Access to 1,000+ airport lounges worldwide.

Other providers have caught onto the same appetite for the superior experience. American Express, for example, gives certain users money towards Ubers every month.

Allowing points to work towards app-set goals or ambitions could provide that extra level of service that only old-guard private banks provide now. Such offerings will not only help acquire new Millennial consumers, but help retain them.

Read More: Four Pillars of a Successful Rewards Program for Banks and Credit Unions

7. Become Millennial Consumers’ Philanthropy Aide

Something that traditional banking institutions do horribly at is helping their clients give back to the community.

Any traditional private banker will tell you that this is a huge part of their business. Setting up trusts and foundations for the grandkids or worthy causes is how successful people want to give back and be remembered.

Many consumers don’t have such deep pockets, but they still have interest in charitable giving. Why not add this to the digital services that your institution offers? Streamlining contributions to local and international charities — and making it a corporate priority as well — will attract Millennial clients.

“HENRYs” are also the most profitable of the Millennials and banks like Chase, and Fist Republic have been smart to provide products, service, and messaging to capture them. Bring what your institution has, and what it can add, to create a game changer like the iPhone. Digital private banking will come to be the rule, not the exception.

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