Banking the Millennial Generation
August 18, 2015
By: James A. Swanson
Millennial-focused articles are commonplace in many periodicals these days. One reason this generation is getting so much attention is that in 2015, according to the U.S. Census Bureau, Millennials* overtook the Baby Boomers as the largest living generational group in the country.
Another reason is that change makes the news, and Millennials embrace technology and technological innovation at a more rapid rate than prior generations.
Considering that Millennials have struggled as a group out of the gate—many having entered the workplace during the recent economic recession while also saddled with increasingly high student loan debt—the economic impact of the generation is still in its relative infancy.
Clearly, though, as more Millennials advance in their careers, and as wealth from prior generations is passed down, the associated economic impacts are sure to play out over the coming years in pronounced ways.
So what does this mean for community banks? For starters, it means if your bank hasn’t thought much about how to gain traction with Millennials, you need to start now. But before delving into that issue, let’s take a quick look at what Millennials think of the banking industry.
According to a three-year study conducted by Scratch/Viacom Media Networks, banking ranked at the top of the list of industries deemed most at risk for disruption based on the habits and perceptions of Millennials. A few statistics from the study are eye-catching:
-First, 53% of Millennials don’t think their bank offers anything different than other banks (all banks are the same, this is good and bad).
-Second, approximately one in three is open to switching banks in the next 90 days.
-Finally, one in three believes that down the road they won’t need a bank at all.
From our travels, we sense more community bankers are recognizing the importance of the Millennial issue. Yet many still struggle with how react to this demographic.
More than one banker has expressed some variation of a train of thought that goes something like this: “We don’t get a lot of complaints that our product and service offerings are inadequate.” This is usually followed by, “But that might be because our customer base is aging and we don’t have a lot of younger customers.”
Capturing Millennial market share is not a simple off-the-shelf process, so community banks need to develop a longer-term strategy focused on this objective. We would offer some suggestions to help your organization start down that path.
FIRST, cultivate a situational awareness of the Millennial issue throughout your organization, and make sure you understand the generational breakdown within your customer base—including the percentage of your new accounts being opened by Millennials.
SECOND, engage your younger employees and customers (those born after 1981) to gather candid feedback on their perceptions of how well your institution is meeting the needs of Millennials.
*Authorities often differ over who’s included in the Millennial generation; however, it’s commonly thought to comprise people born between 1982 and 2002 ... give or take a couple years.
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