The average bank customer is going to get younger. It’s just a matter of time, given the fact that Millennials (people born between 1982 and 2000) now comprise the largest generation in the country. I think most banks know they need to actively pursue a demographic whose sheer size gives it transformative power over the financial industry.
So far, however, the banking industry as a whole isn’t doing a real great job communicating with Millennials. Part of the reason why could be that the average bank manager is … much older than the average Millennial.
Wouldn’t you love a window into the minds of typical Millennials?
Let me introduce you to Jeziel De Jesus Vega, a senior at Mounds View High School who is interning at Deluxe through our partnership with Genesys Works, a not-for-profit organization that enables high school seniors to break through barriers and discover through meaningful work experience that they can succeed as professionals in the corporate world in major companies. Jeziel is a typical member of the Millennial generation. He is hardworking, disciplined, tech savvy and well-spoken.
Working with Jeziel is providing the Deluxe team with valuable insight into how his generation views banks, and we’ll be sharing his perceptions with you in a three-part series. For our first joint blog, we’ll talk about what Millennials think they know, and know they don’t, when it comes to banks and their branches.
Jeziel: Yesterday during a conversation, some of my co-workers began to talk about branches. I must have had a puzzled look on my face as one asked if I knew what they were talking about. They were shocked when I told them no. The word “branch” makes me think of a tree branch, or a branch of government. I never would have guessed they were talking about banks.
I didn’t learn about bank branches in school, or from my parents. After that conversation, I did some research and learned there are three types of bank branches — brick and mortar, the physical building where banks offer complete services; in-store, which is the type I was familiar with; and foreign bank branches that are branches of non-U.S. banks operating in the U.S.
It turns out, I’m not the only person my age who didn’t know these things about bank branches. I asked a few of my Genesys Works co-workers what the word “branch” made them think of and the popular answer was “tree.” They didn’t know that the bank’s different locations were called branches. It goes to show how little our generation knows about banks.
Why don’t we know? It’s not that we’re disengaged or uneducated. It’s because of who we are and who banks are.
Banks have been around a long time, and they use a lot of terms that we just don’t get. I believe my generation really doesn’t care about the reputation a bank has or what it offers. We think that if the bank can keep your money safe it’s a good bank. We really aren’t educated well enough to understand interest rates or minimum balances or even overdraft fees, and we just want to put our money in a place where it will be safe.
We also aren’t as focused on your locations. We grew up in the age of technology, and my generation has less interaction with physical banks. I haven’t been to a bank in a year and a half. We feel that it’s easier to do our banking online, and I actually see a future where we won’t need banks anymore because everything will be online.
The question for you is: What can banks do to change our thoughts and interactions with them?
Jeziel makes some vital points. Many Millennials lack basic knowledge of how banks work.
Whose responsibility is it to teach financial literacy to young adults?
We can say it should start at home, but many Generation X parents and baby boomer grandparents have financial struggles of their own. They may not be in a position to model good financial behaviors. We can also argue that it’s the responsibility of school systems, but the Council for Economic Education tells us that just 22 out of 50 states require high school students to take finance courses, and only 16 require students to be tested on economic knowledge.
Rather than saying the responsibility falls to banks to help elevate Millennials’ levels of financial literacy, let’s view it as an opportunity. By providing Millennials with financial knowledge, we can demonstrate to them the value of building a strong relationship with their financial institutions.
The bank branch is an ideal place to begin. Research shows that branches are the most successful channel for onboarding and broadening customer relationships, followed by monthly statements. What’s your marketing department doing to attract Millennials into your branches? What programs, incentives, apps or games do you offer to engage this generation?
Branch activity is a gateway to a deeper relationship with account holders. Six in 10 checking account holders say they have other financial accounts and services with their main checking provider. The most common other product is a savings account, and we know that the incidence of savings accounts increases with age. Credit cards are the next-most-widely indicated product, with four in 10 saying they have a credit card through their FI. One in six has a mortgage, loan or other credit service, while one in seven has a CD and/or safe deposit box.
Millennials are beginning to expand their financial experience, so they’re an important group that you should vigorously target for cross-selling contacts. By creating a need for young people to use your bank or credit union today, you can help ensure they’ll go to you when they’re ready for a student loan, auto loan or their first mortgage.
The next topic we’ll explore with Jeziel will be checks, and how you can help Millennial customers understand why they still need checks.