What Millennials Want in a Bank
By David Mitchell, President of NYMBUS
If you work in the banking industry, you’ve probably sat in on at least one meeting about marketing to millennials. Millennials, loosely defined as people born between 1982-2004, are a highly coveted demographic for banks and credit unions to acquire, as they will soon have the most spending power of any generation alive. These digital natives grew up watching the 2008 financial crisis and are saddled with student debt, so aptly, they are more skeptical of the financial services industry than previous generations. That may be why they are more averse to banks and not opposed to banking with non-traditional players like Amazon or Google instead.
If you’re looking to capture the attention of this generation, you’ll need to understand what they truly want in their banking experience.
Millennials and Banking Statistics
When you look at the statistics of millennials and banking, you can see why this generation is creating pressure for financial institutions to innovate their digital brands or risk missing out on their business.
- One third of millennials are open to switching banks in the next 90 days
- 21% say that a better digital experience would spur them to switch banks
- 73% of millennials are open to banking with trusted brands like Apple, Amazon, Google, etc.
- 59% use mobile banking daily
- Millennials have an average of 3 financial apps on their phones
- One fifth of all millennials have never written a physical check to pay a bill
- 33% say that technology failure is their main frustration when dealing with banks
- 54% of millennials would tell everyone they know in response to an extremely negative experience with a bank, and 26% would write a public review on an independent website
This data from The Financial Brand shows us how millennials prefer to bank digitally, and the institutions that aren’t willing to modernize will be overlooked or left behind. Ease of use becomes a big driver for this generation as they aren’t willing to spend time with clunky and outdated technology and expect to have a similar experience to what they are used to around the internet with other websites like Amazon and Google.
Millennials Banking Habits
Millennials are the most digitally connected generation in history. They want to use their money to feel they are making a difference. However, they are tremendously skeptical of banks. Or as Forbes wrote, “The four biggest bank brands are among the ‘least loved’ by millennials.”
However, this generation is becoming adept at mobile banking. A Bank of America survey found that millennials love mobile banking apps so much that 21% are checking their app multiple times a day and nearly half are logging in daily. Here’s how the rest of their mobile banking app usage stacks up:
- 85% use a banking app to check balances and statements
- 58% transfer money with a mobile app
- 52% pay bills with their banking app
- 40% make purchases at checkout digitally
It’s clear that millennials value mobile banking and expect to have the ability to check balances, transfer funds and pay bills via their bank or credit union’s app. In addition, they like shopping digitally, and would rather pay with a mobile wallet or an app like Venmo than take out cash at the ATM.
Spending Habits of Millennials
The shopping habits of millennials further shows us how much buying power this segment has, and how cautious they are at spending it with the wrong companies. However, once they find a brand they love, they become very loyal.
- In the US, millennials wield about $1.3 trillion in annual buying power (Boston Consulting Group)
- Specifically, their spending power is estimated to reach $3.39 trillion by 2018 (Oracle)
- 41% of millennials have already made purchases with smartphones (Edelman Digital)
- American millennials are 7 times more likely to give their personal information to a trusted brand than to any other brand (SDL)
- 60% are often or always loyal to brands that they currently purchase (Forbes x Elite Daily)
- 64% of millennials feel that companies should offer more ways to share their opinions online in the future, and if they do, they’ll continue to participate (Bazaarvoice)
As this group enters the life stages that include their major financial commitments, like buying a home, planning for a wedding, and starting their retirement funds, the statistics above are even more enlightening. If your institution can offer a similar digital experience to what they are already comfortable with online, alike to Google, Amazon, Facebook or Apple (GAFA), then you’ll have a better chance at becoming a bank that millennials will buy into.
Digital Innovation Has to Happen Now for FIs to Compete
The race is on to capture today’s digital millennial bankers. If your bank or credit union is looking into ways to quickly reach this demographic, a newer alternative is to launch a separate, digital-only brand for your institution. In the same amount of time it takes a millennial to switch banks, you can now get a digital-only bank up and running with an experience that’s on par with the likes of GAFA. Plus, it can be offered nationally versus only available within your current geographic footprint. Or your institution can partner with an existing brand or established affinity partner, like a sports team, school, or organization, to create a co-branded digital bank and brand that’s separate from your existing institution.
Either strategy you choose, SmartLaunch™ from NYMBUS was created with this digital simplicity and client attraction funnel in mind. Contact us to learn how we can help you stand up a new digital brand in as few as 90 days with no core conversion or additional staff required.