The Marketing Implications of Millennials’ Changing Views of Banks

Not long ago, TechCrunch ran an article titled Millennials Are Destroying Banks, And It’s The Banks’ Fault, which contained the following assertion:

Millennials aren’t buying crap anymore, destroying businesses that sell crap. Few industries will face a greater struggle targeting these new consumers than banks, who seem wholly unprepared with what to do with us. Indeed, if ever there was a dark evil in the world that millennials as a whole would probably like to see completely destroyed like San Francisco in San Andreas, it is the banking industry.

What nonsense.

It’s funny how “data scientist” is the hot new profession when seemingly so many people seem completely unaware that things like “data” actually exist. Well, hold on — since I have no data to back up that assertion, let’s just say that the guy who wrote the TechCrunch article is seemingly unaware of the concept of data.

Because the data simply doesn’t support the author’s assertion.

Bank Satisfaction by Generation

To start, there’s this from JD Power:

Satisfaction scores for banks among Gen Z customers (797) is higher than among Gen Y and Gen X customers (781 and 778, respectively.) Additionally, overall satisfaction among Gen Z customers of big banks (807) is higher than among Gen Z customers of regional banks (796) and midsize banks (769).

To be fair, I don’t put much stock in what Gen Z thinks. JD Power defines Gen Z as people born after 1995, and when the findings were published, these folks weren’t even adults yet. But the fact that Gen Y’s level of satisfaction was higher than Gen X’s — even barely — helps refute the idea that Millennials hate banks more than other generations do.

There’s another data source, however, that I think tells the broader story.

The Positive Effect of Key Institutions

According to the Pew Research Center, 45% of Millennials in the US said that banks had a positive effect on the way things are going. Granted, that’s not even half. But what’s important to note here is that a larger percentage of Millennials believe that banks are having a positive effect than Gen Xers, Boomers, or Seniors (sorry, but the people that I know from that generation are anything but “silent”).

What’s also important to note is the change in perceptions. Among the six categories for which there is a point of comparison to 2010, perceptions about no other institution has changed as much as it has for banks. Further refuting the TechCrunch article, looking back at 2010, it would appear that the older generations hated banks a lot more than Gen Yers did, at least if you use “positive effect” (or lack thereof) as a proxy for “hate.”

Percent saying banks are having
a positive effect on the way things
are going in the country
2010 2015
Millennials 35% 45%
Gen X 22% 39%
Boomers 14% 37%
Seniors 17% 40%

Even back in 2010, more than twice as many Millennials as Boomers and Seniors thought banks were having a positive effect on the way things were going in the country.

What It Means

Pew’s findings say a lot about how our society is changing.

We Americans like to have our villains. It can be a healthy thing from a competitive aspect, but it’s more often than not an unhealthy thing. This identification of “villains” goes back hundreds of years: witches in Salem, MA, American communists in the 1950s, Russian communists in the 1960s and 1970s, British Petroleum after the oil spill in 2010.

The financial crisis of 2008-2009 helped to create a new villain in the US: Banks. For the most part, large banks, but you really have to question where people draw the line. No question that the 4 mega-banks were on the villain list, though.

Credit unions certainly benefited from this. Remember Bank Transfer Day? To this day, some credit unions (and community banks, for that matter) bash the big banks in their advertising effort.

What the Pew data tells me, however, is that the “banks as villains” view is dissipating. The percentage who see banks as having a positive effect may not be a majority, but the shift from five years ago is tremendous. The shift — or perhaps, the continuing shift — in perceptions should impact financial services marketing:

1. If you’re still bashing big banks in your advertising, stop it. If you think you’re tapping in to some hatred with big, impersonal corporations, look at the Pew numbers for Corporations — they’re on the rise, as well.

2. There’s an opportunity for credit unions and community banks to capitalize on Millennials’ highly positive views of small businesses. I would bet that many consumers don’t think of any financial institution — mega-bank or not — as a small business, but the reality is that many smaller, community-based institutions really are small businesses.

3. Bank partnerships with fintech startups should be emphasized in marketing efforts. Not only can this help foster an image of being technology-advanced, but it may piggy-back on the positive perceptions younger consumers have regarding both small businesses and technology firms.

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