May 04 2018
Digital Workspace

4 Ways Banks Can Use Tech to Win Millennials’ Business

Young people demand authenticity and digital convenience.

For banks and credit unions trying to compete with larger rivals and online-only financial tech companies, the customer segment getting most of their attention is the millennial generation. And rightly so.

Millennials, defined roughly as those born between 1982 and 2004, are the largest generation in the history of the world — 83.1 million strong in the United States alone, according to the U.S. Census. Their market power is massive and growing.

Most importantly, millennials represent the future of many industries, including financial services. Learn how to attract and retain this group of customers and you’ll find your institution thriving against deeper-pocketed competitors.

And millennials are different from other generations in a number of key ways. Let’s start with what we know.

Millennials are the most digital-savvy generation in history. The younger half of the millennial generation are digital natives — they’ve lived virtually their entire lives in an internet-connected world and may barely remember the days before smartphones. And even older millennials — who came of age in the 1990s when the web was young and were teens when the first iPhone came out — have grown fully accustomed to a mobile-first lifestyle.

Millennials are less engaged with their banks than other generations. A recent Gallup survey found that less than 30 percent of millennials are “fully engaged” with their financial institutions, the lowest of any generation. Gallup says this trend holds true across virtually every industry it studied: Millennials are just less deeply tied to the businesses they patronize.

It’s no wonder, then, that millennials were 2.5 times more likely than baby boomers and 1.5 times more likely than Gen Xers to have recently switched banks, according to Gallup. Its survey found that 8.4 percent of millennials had done exactly that.

While they live online, millennials crave authenticity. A recent survey by Stackla of 2,000 adults in the U.S., U.K. and Australia found that 90 percent of millennials regard “brand authenticity” as important to them, more than any other generation.

Yet despite this desire for authenticity, millennials visit bank branches less often than any other generation and use mobile apps and online banking more, Gallup says. That presents a particular challenge, because those in-person interactions represent banks’ best opportunities to deepen engagement with their customers.

With all this in mind, how can you design your bank’s technology solutions to meet this generation’s demands? Focusing on these four principles can help.

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1. Make it Easy and Intuitive to Do Everything Digitally

As part of an initiative to attract more young account holders, a community bank in Harrisburg, Penn., created a millennial advisory board last year. A board member filmed himself attempting to open an account on the bank’s website, and what ensued, as reported by Independent Banker, was a perfect summary of how to frustrate millennials:

It took him almost three-and-a-half minutes to figure out where on the website he could open an account — and he said he would have quit looking for it after 20 seconds if he weren’t doing it for the project. But it was more than an inconvenience. He interpreted it as a message from the bank: “We don’t want you to bank this way.”

When they got to the end of the process, they were dumbfounded when they learned they’d have to print out the form and either mail it or bring it to the office. Some didn’t own printers or stamps. One didn’t even own a computer, doing everything from his phone. The bank’s website said to download the bank’s mobile app for the best experience, so he did — only to discover that he couldn’t open a new account through it.

Your website isn’t a billboard advertising services or advising customers on how to do things in a branch; it’s a platform through which service is delivered. It should be easy to open an account online without printing anything out or mailing anything in. The interface for viewing account information should be clear and intuitive. Small banks and credit unions must strive to offer online bill-pay service, just like big banks, and must make that service easy for users to manage.

2. Optimize Everything About Your Website for Mobile

Millennials buy movie tickets and make dinner reservations, shop, work, get driving directions, engage on social media and more — all through their phones. They won’t tolerate a bank that doesn’t make it easy to check their account balances, pay their bills and make deposits with their phones, too. And they shouldn’t have to.

That’s why every aspect of your website must be mobile-optimized and every service you provide must be mobile-enabled.

3. Use Data to Make the Most of Your In-Person Interactions

If millennials crave authenticity more than other generations yet have fewer in-person banking experiences, then banks and credit unions must make the most of those rare face-to-face interactions.

Advanced data analytics can help institutions gain a deeper understanding of the financial habits, goals and needs of customers so that when a young person does arrive in a branch, employees will have an opportunity to at least start a conversation about that individual’s needs (and perhaps schedule a deeper follow-up conversation with an advisor or loan officer).

4. Design Your Online and App Experiences to Be Helpful

Growing up, millennials were probably the most supervised generation in history. They were the children for whom parent-arranged “play dates” were invented to replace the “just go outside and play” approach taken by earlier parents, and for whom organized sports all but completely replaced neighborhood pickup games.

That’s why they’re also the generation that invented the term “adulting,” a difficult grown-up activity that’s hard to understand.

For financial institutions, this presents an opportunity to build into your website and mobile apps financial education and wealth-building guidance. Consider offering mobile alerts when their account is low, credit monitoring service, and even game-based content that helps account holders save for retirement or a house down payment.

Gallup notes that having to pay fees is the single-biggest reason millennials change banks. Mobile alerts and financial education tools can help them avoid paying the kinds of overdraft and other fees that alienate them.

Fewer than one in four millennials strongly agree that their bank helps them meet their financial goals, Gallup reports. So be the bank or credit union that does.

This article is part of BizTech's EquITy blog series. Please join the discussion on Twitter by using the #FinanceTech hashtag.



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