“You can’t make money right now off millennials. They are the customer of the future.”
A community banker recently expressed that thought, echoing others who have discounted the importance in the immediate term of the millennials.
But at the recent national convention of the Independent Community Bankers of America, speakers underscored how short-sighted that attitude can be.
Two reasons to reconsider your view
First, in the long-term, Generation Y—those who are currently 19-37—stands to inherit roughly $6 trillion over the next 30 years, according to Aleis Stokes, senior vice-president, media and public relations at ICBA. Stokes spoke during a joint session at the conference with Chris Lorence, executive vice-president and chief marketing officer at ICBA. (Before they get their inheritance, Stokes also mentioned, the millennials will also have to pay off massive amounts of student debt—which totaled over $1 trillion as of the end of 2014.)
But the second, and more immediately compelling reason, is that community banks may be a better fit for Gen Y than some believe.
“Millennials are the investment that will pay off in the future,” said Lorence. Indeed, the inheritance issue aside, many places in life where banks and people touch will be delayed for millennials. They are marrying and having children later in life than any other generation of Americans and are buying their first homes later.
But they will, someday. And there is more to many of them than their personal accounts.
Why there’s a fit—and how to make it work
Lorence and Stokes’ presentation at the conference drew heavily on the 2014 ICBA American Millennials and Community Banking Study. The research, done in conjunction with the Center for Generational Kinetics, and released last October, was subtitled “Unexpected Findings from the Fastest Growing Generation in Banking.”
The speakers acknowledged that it is true that millennials worship speed in their financial dealings, but they urged listeners to probe deeper than the typical image of the individual surgically attached to their smart devices.
First, ICBA’s research found that over half—54%—of millennials surveyed prefer to work with locally owned and operated community banks. They feel, slightly more than the typical American (58% versus 55%), that banks treat them like a number.
“If a bank can make millennials feel like they are not ‘number,’ then they have an advantage over all the other banks that fall short,” ICBA’s research report states. “In fact, 64% of all millennials surveyed place importance on developing a relationship with their banks or financial institutions.”
With millennials exhibiting an appetite for “local,” it lies with the community bank to demonstrate that the millennial customer has a home with the local bank.
One way of proving this is “pressing the flesh,” as politicians used to say. The ICBA report recommends making millennial customers feel like “VIPs.” Among the suggestions: introduce a new millennial customer to three bank employees, so they have a face and a name for two bankers beyond the person who opened their account.
A member of the audience said her bank’s experience bore out this strategy. “Millennials want to feel special,” she explained. When a banker takes the trouble to greet them in a branch and shows them around, they appreciate such recognition.
“They just light up,” the banker said. “They want to connect.”
Another suggestion: Cater to the way each millennial prefers to communicate. Do they favor texting? Then notify them by text of issues or questions about their banking needs.
Not just face-to-face
A generational adjustment likely must be made before older bankers can make the most of connecting with Gen Y. While they like local and like personal, they remain very much about the internet and tools such as social media. They were born into an age when computers and mobile devices were as ubiquitous as kitchen wall telephones were for the previous generation.
Attitudes toward privacy differ, and social media reflects an urge to see oneself on a public screen somewhere, in the knowledge that others will see what one thinks. That, and the willingness to be influenced by the ratings strangers post on sites such as Yelp and Google Reviews where businesses, including banks, get scored for service and more. Millennials are very interested in sharing their experiences.
Bankers may resist the idea of putting themselves out there to be rated, but the truth is, it will happen anyway.
“Don’t be afraid of a customer review being negative,” said Lorence. “If you didn’t do anything negative, you won’t get a negative review.”
Even a negative review can be turned into a positive, Lorence added. While taking care to protect customer identification, banks can turn negative reviews into positive publicity. Customers like to see a criticized business take steps to make amends or set things right.
Lorence said a bank can publicly apologize for a bad experience and give a millennial, or any other disappointed customer, “free stays” to make good.
Think of the goodwill that hotel chains and airlines create when they make things up to guests and passengers.
Even a simple gift of a bank t-shirt can make a millennial feel better about the institution, Lorence said.
“They are the generation that will wear your t-shirt,” he said. “They will wear it until it is raggedy.”
One factor that sets millennials apart—and which argues that the payoff of cultivating them may come sooner rather than later—is that one out of three people of this generation told ICBA’s surveyors that they are considering starting their own businesses. In some cases they have already done so, and they said they might start another.
“This desire to start a business was more than double that of Baby Boomers,” the study reported, “and almost 20% greater than that of Generation X.”