millennials banking
By Brad Powell

Those of us who work for and with banks and credit unions have a natural curiosity about the generation known as “millennials.”

As we try to understand more about them, we read (and sometimes make) generalizations. And that carries risk.

For instance, how many times in the past few years have you read an article claiming that millennials (the youngest generation of workers right now) want more “organic feedback” at their jobs? That’s probably true, but you can find Baby Boomers, Silent Generation members, and Gen X’ers who also want and value feedback.

Most of these generational buckets contain between 20 and 80 million people. If you have conversations with any three people, they probably will have three different approaches to work — so when you extrapolate that to 50 million people, it becomes hard to generalize.

There are some safe assertions we can make about millennials and the other generations in today’s workforce, however:

● There are 3 to 5 generations in the workplace right now; globally, that’s the most there’s ever been.

● That means 3 to 5 generations with earning power, and 3 to 5 generations considering banks to hold their income.

● The single-biggest difference between the oldest workers and the youngest workers (besides income level) is comfort with technology.

● While there are some from the Silent Generation (72+ years old) who can do anything on their smartphones, in general younger generations will be more comfortable and accepting of digital and mobile.

What does all this mean for banking and the large cohort of millennials who are (or could be) bank customers? Here are four key points:

1. Millennials Don’t Automatically Assume Banks Are “Stuffy” and “Old”

Several prominent surveys have made this case over the past couple of years.

And while it’s true that millennials might prefer digital interaction with banks, they still use banks. Ninety percent of the demographic has a relationship with a bank.

It’s true that more and more millennials are using mobile payment apps such as Venmo (now owned by PayPal). Venmo’s growth statistics (154 percent year-to-year!) would back that up.

But remember: You almost always need a bank to use Venmo.

2. Email Is Overrated

Bank marketers who rely on email to reach millennials are making a mistake. Bank e-mails traditionally have an open rate of 16 percent and a click-through rate of 1.6 percent, figures which pale in comparison to other industries.

With 144.8 billion emails sent daily — 89 billion of them related to work — there is real concern in enterprise sales and marketing about its continuing effectiveness. While email marketing tends to generate high margins, the overall rate of engagement and conversion is average and eroding, especially among younger users.

3. Messaging Is Overrated, Too

Many technology observers expected a large number of Americans to start using messaging apps for commercial tasks in 2016. It hasn’t happened yet.

Millennials do seem to love messaging apps, but the bottom-line numbers aren’t huge at this point.

For instance, take the 700 million WhatsApp users and combine those with 450 million Chinese Wei Xin (WeChat) users, you’ve still only reached a little over one billion users. While that’s significant, there are 4.7 billion unique mobile users right now — and that number should rise by another billion by 2020, according to the GSMA.

By comparison, SMS (also known as “texting”) remains the gold standard. Recipients read 99 percent of text messages — 90 percent within three minutes — and act on them at a much-higher rate.

And according to Deloitte, global revenues from SMS in multiple industries (including banking) were 50 times higher than revenues from messaging apps in 2015.

4. Low Fees Aren’t as Important as You Think

While job growth is strong and unemployment is low, wages are stagnant or falling. This hits millennials especially hard, as their careers aren’t yet established. By some estimates, the savings rate for Americans under-35 is negative 1.8 percent.

If you take all these stats together, you’d assume millennials are price-sensitive when dealing with banks.

That’s true to an extent. In most surveys, the No. 1 reason millennials leave banks is high fees (although that’s the No. 1 reason Baby Boomers leave banks, too).
But in reality, millennials want advice and guidance from their banks.

As evidenced in hundreds of other industries and verticals, the value of customer relationships is the heart of business now. That’s the true bottom line on millennials and banking.

As I noted earlier, it’s difficult to generalize about millennials, and when we do, we miss some key data points. One key to reaching this group of nearly 80 million Americans might be avoiding generalizing at all.

Instead, follow the data that shows customer experience is king. That may well be the key to referral and retention for banks and credit unions, not all the punditry that tells you how stuffy millennials think you are.


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