Millennials are the most educated generation ever, the largest segment of the American workforce, and many are starting to attain important financial milestones in their personal and professional lives. There’s no question, Generation Y represents the single most important demographic for the future of the banking industry. But how bright will that future be? Will big banks fare better than community institutions in turning millennials into loyal, profitable customers?
In general, millennials aren’t yet in love with traditional banks. They’re far more likely than any other generation to give their financial business to alternative institutions like online banks. What’s more, those who do have relationships with traditional banks seem to prefer larger institutions. Given Gen Y’s preference for personalized experiences, you might think they’d be drawn to the more personal relationships community banks are known for cultivating with their customers.
Two factors seem to be giving bigger banks the edge in winning millennial business: they have better tech, and they’re investing heavily in marketing themselves to the millennial segment. They appear to be making progress, too. Earlier this year, for the first time ever, JD Power & Associates reported that customers gave higher satisfaction marks to the country’s six largest financial institutions than to smaller banks, American Banker says.
Winning over millennials
Community banks can’t afford to give up on millennials. The demographic is simply too vast, and their financial potential too great, to ignore. Yet few community banks will ever have the budget to go head-to-head with mega-banks in all the areas that matter to millennials. Instead, community banks should focus on a few key areas important to millennials and establish their edge in those specific areas.
Hone your mobile might.
Millennials are notoriously addicted to their mobile devices, and they want their mobile banking experience to be effortless and effective. More than 90 percent of millennials own a smartphone, according to research by Digital Scientists, and nearly a quarter of millennials who have switched banks did so because of mobile banking quality. They use their mobile devices to check account balances at least once a week (56 percent), transfer money between accounts (41 percent), pay bills online (35 percent), deposit checks (29 percent) and conduct P-to-P transactions (32 percent).
A robust, versatile and multi-featured mobile banking app is essential for any bank, large or small, that wants to win millennial customers.
Talk their talk.
Millennials like to interact with brands digitally. They are more inclined to search for consumer information online, and favor electronic communications such as email and messaging. Banks that want to successfully communicate with millennial customers need to do so through their preferred channels. Digital Scientists found emails with links to products and email newsletters were the preferred channels of communication for members of Gen Y. However, don’t overlook other digital communication devices such as text messaging and push alerts.
Emphasize the customer experience.
Community banks have long excelled at creating personalized, relatable and rewarding customer experiences. To succeed with millennials, smaller financial institutions will need to continue emphasizing their customer-centric culture. Millennials not only expect faster, easier service from their financial institutions, but they also want to be known by their banks. They want to feel their banks understand their unique needs and can help them fulfill their needs with relevant products, services, and information.
A great mobile banking experience and communication through preferred channels are just part of the overall customer experience millennials desire. Personalized and segmented marketing that illustrates your community bank understands your millennial customers is also a critical component of your outreach to millennials. Likewise, you should keep your millennial customers in mind when making decisions about branch design. Millennials are looking for an efficient, customer-centric and stylish environment from their bank branches.
For more insight into how community banks can market to millennial customers, download Deluxe’s free “Millennial Banking Report.”