Millennials, defined as those between the ages of 25 and 36, want a financial service provider who understands their individual wants and needs. They desire a bank who can demonstrate expertise and personalize offerings. But with millennials 2.5x more likely to switch banks than Baby Boomers and 1.5x more likely than Gen X, according to a Gallup Poll, banks need to connect with millennials to convince them to stay.
In short, millennials don’t think that banks have what they need. Millennials grew up through the 2008 financial crisis that comprised of the housing crash and the following recession. They lived through the Wells Fargo fiasco where millions of customers were stolen from to raise profits. As a result, millennials are skeptical of big banks; banks must rebuild trust.
Low levels of engagement among millennials are also contributing to low bank loyalty. 53% of millennials do not think that their bank offers anything unique according to the American Bankers Association. Without unique offerings, millennials are likely to switch banks for better services or rates. Banks needs to find ways to engage with millennials to increase loyalty rates.
Additionally, over 60% of Millennials owe some sort of debt. Despite the debt, millennials plan to own a home, plan a wedding, or begin a family. However, only 8% believe that they have the necessary levels of financial literacy to navigate these life events. Banks have an opportunity to guide millennials in paying off their debt, while helping them financially prepare for life-changing purchases.
How do banks overcome the issues and appeal to millennials? By personalizing services and messages to increase feelings of confidence and competence.
Relatability drives consideration, which in turn drives choice. Banks must find ways to ‘get’ or relate to millennials. One main way is through personalized marketing messages, services, or offerings. Overly standard marketing antics will drive away future or current customers. For example, sending business-only credit card offers to a customer who does not (and never plans to) own a business. By focusing on personalization, millennials will feel valued by the financial service provider – not just another ‘number’. Feelings of value increase loyalty and cement their choice to continue banking at their current institution.
Increasing feelings of competency and confidence among millennials will steer them toward your financial institution. Banks need to overcome the current skepticism; in a recent study, 4 of the leading banks were ranked to be one of millennial’s least loved brands. However, banks can overcome this negativity. An impactful way is to offer both digital and in-person services. Offering an omnibus, customer-centric approach to banking gives customers multiple touchpoints to build confidence as seen in MDRG’s positioning research for a financial client.
In summary, Millennials want:
Banks must find opportunities to capture millennials through personalization and building confidence. Market research, such as ethnographic research into customer motivations, service concept testing or copy testing, will ensure banks connect with millennials. To do this, banks must evolve and utilize technology to better serve their customers. With the growing influence of Generation Z, banks must continue looking towards the future, while focusing on the needs of the millennials.