Why Banks Should Bank on Catering to Millennials

Just as technology helped millennials disrupt an entire industry by changing the way they bought music, it’s going to change the way banks engage with and service their customers.

  1. chevron left iconWhy Banks Should Bank on Catering to Millennials
James KerleyJune 13, 2018
  • Digital Asset Management
  • Digital Marketing
  • Technology

“Those youngsters over there with all their gadgets, they don’t even know how to socialize anymore.” The older generation has been muttering something like this about the next since the dawn of time. Imagine the Stone Age hubbub when the kids got hold of those modern Bronze Age tools.

History is destined to repeat itself as technology speeds us toward a tomorrow we can’t even fathom today. For now though, it’s the smartphones and tablets which generation Xers are geriatrically shaking their fists at millennials about.

But technology moves forward and so must we. Millennials grew up with digital technology and if a business can’t cater to them, it cuts them off.

Without much else to choose between them (a nano percentage point on savings here, a joining sweetener there), banks need a way in which to differentiate themselves and technology is it. To cater to the millennials who will soon make up the majority of the workforce, investing in technology to propel digital strategies is vital.

The Power of Millennials

Just as technology helped millennials disrupt an entire industry by changing the way they bought music, it’s going to change the way banks engage with and service their customers. Already, Amazon and Google have done more to disrupt the banking industry than they likely ever intended and they did it by changing customer expectation. According to a Viacom study, 73% of them would rather handle their financial services needs via Google, Amazon, Apple, PayPal, or Square than from their own nationwide bank.

Additionally, 77% of millennials say they always have their phone with them, according to an American Bankers Association (ABA) survey, which means there are over 65 million people who reach for their phones first when it comes to shopping or services. That’s over 65 million potential customers who banks can engage — if they create the right experiences.

And one of those experiences is through social media, but perhaps not for the reason you’re thinking of. The rise of social media has given customers a powerful voice. A bad customer experience can run rampant through social media in an instant, reaching millions of other customers within minutes. With 76.8% of millennials regularly using social media, the power has shifted to the consumer. Financial institutes have to get social if they’re to bring millennials on side.

Earn Trust – It’s Great for Business

Remember that whole recession thing?

Well, that happened at a time when many millennials were either starting to enter the workforce or watching their parents’ investments dry up overnight. And it created a big trust issue: only 8% now say they trust financial institutions. It’s a crap figure but it’s still an opportunity for banks to win millennials over. And according to the study they actually want to be won over, as 60% of them “express the desire for their bank to be a partner/friend”.

The number one way to do it? Reward their loyalty, they said. Providing robust digital tools is essential in creating the financial services which millennials want, but rewarding their loyalty is key to retaining them.

We get it. Increased regulations since the recession have made it tougher on banks. But, they need to show that they’re no longer a personality-free-zone. Banks can get to know their millennial customers and show them that they can be a valuable partner in financial planning.

Invest in Mobile, Not Real Estate

Only 11% of millennials say they prefer visiting a branch to conduct transactions, compared to 46% who already use mobile banking more than any other option. And we can expect mobile usage to grow, as smartphones continue to become ubiquitous, and millennials begin accumulating more wealth.

Millennials are three times as likely to open a bank account on their phone than in person, 67% prefer mobile to desktop digital banking and 90% access channels like Facebook on mobile only.

While millennials expect to receive similar services no matter which channel they’re using, it’s clear that they prefer smartphones to any other access point. A robust omni-channel content strategy, in which customer experience and education is paramount, will provide a personalized and engaging experience without having to sink resources into hiring oodles of customer-service representatives.

Banks must not only provide products digitally, but tailor them to a mobile, on-demand experience to earn millennial customers. Investing heavily now in a mobile suite of digital products will give banks a leg up in the coming years.

Tech – You Can Bank on it

Technology will continue to evolve quickly. Millennials are the latest generation with money, but it won’t be long before ‘Generation Z’ is also looking to store its money somewhere. Simultaneously, older generations have realized that the youngsters are onto something and are adapting to the new technologies. So, you see, everyone leaves the Stone Age eventually.

To learn more about the technology which helps power financial institutes the world over, download HOT DAM 10 Trends in Finance.

James Kerley
James Kerley is a former editor at MapQuest and Yahoo!, and has been writing about the tech industry for over 10 years.

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