Take notice, baby boomers: You've been "out-boomed."
Numbering at approximately 72.1 million, based on the latest figures available from the Pew Research Center, millennials are America's single-largest generation. Born between 1980 to 2000, millennials are not only the biggest in terms of sheer population, but they also represent the largest portion of the labor force and have the most purchasing power to boot, given their current age range (in their 20s and 30s).
However, somewhat paradoxically, this sizable chunk of the country's citizenry is proving to be the most elusive for financial institutions to capture as customers.
It's not necessarily that millennials don't have relationships with traditional FIs; they do — by the tens of millions, in fact. But a number of polls over the years suggest that in many cases, they're largely indifferent about the ones with which they have opened checking or savings accounts.
"Millennials are largely indifffent about their primary banks."
The convenience and wide availability of mobile banking — which spares them a drive to their local branch location and the need to wait in line — may be a contributing factor. Indeed, according to a consumer behavior survey conducted by Marqeta, nearly 48% of 18- to 34-year-olds are so invested in online banking that they say they would consider moving their accounts to a digital-only bank. This compares with only 33% for 51- to 65-year-olds, aka baby boomers.
Furthermore, according to Gallup, millennials are the least engaged generation and are more apt to have specific complaints about their primary bank than their older counterparts, at 13% versus 10%, respectively.
If this is an issue your bank struggles with, or you foresee it becoming an issue, there are a few strategies that may help draw in and retain this highly valuable demographic group.
Hire more millennials
If there is one thing millennials do a lot of, it's interacting with their fellow 20- and 30-somethings. Some banks have therefore set their recruitment sights on that generation, finding that those they hire often bring their friends with them — whether as customers or potential employees.
Adam Eckels, co-founder of AJ Consultants, told American Banker that he likely wouldn't have gotten into the industry were it not for a high school friend who was in it already. FIs that devote their time, energy and resources on wooing millennial talent can help young adults feel like they're truly valued as both employees and customers.
Help them where it hurts
Even though millennials have more spending power than those younger (Generation Z) and older (baby boomers) than them, many are struggling financially. A 2019 study done by Pulse and cited by American Banker contributor Thea Garon found that only 1 in 4 millennials consider themselves to be in good shape, moneywise. This is partially a function of the Great Recession, the height of which came at a time when many millennials were newly graduated from college, leaving them with limited options for ongoing employment, never mind in their chosen profession. This in turn, put them behind the financial eight ball.
"Millennials want advice about how they can be better stewards of their finances."
This may be one reason that they seem more than willing to accept advice about how they can be better stewards of their finances. However, millennials don't believe their primary financial institution is fulfilling this desire. In the same survey, more than 55% of millennials said their financial institution's ability to improve their financial well-being was "very" or "extremely" important to them. Yet only 14% were satisfied with how their FI was assisting them in this regard.
This is a critical lesson learned. Garon says banks must acknowledge the income instability millions of millennials face and consider offering services or products that can help them better manage their money.
Optimize and customize digital tools
Unlike Generation Z, which for the most part grew up in a digitized world, millennials lived in an analog universe in their formative years. This may explain why they have such an appreciation and uptake rate of mobile tools and devices. Both national and global surveys reveal millennials are more likely to use mobile banking than any other demographic. As the aforementioned poll from Marqeta found, almost half would weigh the possibility of going mobile-only.
Yet at the same time, that also means the other 50% would not under any circumstances go digital-only.
FIs may want to consider ways that they can leverage both mobile banking tools as well as the in-branch experience so millennials can feel more engaged and get more use out of their in-person and electronic relationships. Customizing offerings that specifically meet these account holders' needs may help get their foot in the door.
"Banks can capitalize on this digital-first mindset to create affordable, accessible and customizable products that help millennials spend wisely, build savings, manage debt and plan for the future," Garon advised. "In return, banks can become a routine and trusted part of millennials' digital lifestyles."
From integrated equipment to ongoing consultation, BranchServ stands ready to help you maximize your growth potential with millennials and your customers in general. Contact us today to schedule a free, no-obligation demonstration.