Two recent independent surveys seek to pin down exactly what the millennial generation really wants from their banks. Remarkably, the two surveys reach very similar conclusions.
How to make them happy?
What do millennials want?
• Experience factors, says Medallia Institute, a customer experience management company.
What does that mean? It begins with getting the basics right, including security of personal information, transaction efficiency, and effective problem solving. Millennials, in particular, respond positively to innovation—nearly 65% reporting that their day-to-day behavior is driven by a desire to find new and better way of doing things.
"Experience factors—personal interactions with the brand, online reviews, and recommendations from friends and family—have replaced branch proximity as the most important driver of customer acquisition," says Robert Schiff, vice-president and general manager of financial services at Medallia. "Market leaders must become experience leaders if they want to stay on top. Welcome to New Finance."
• Millennials embrace technology and are quick to try new offerings—at the expense of loyalty, says Experian, based on its own research this summer.
“Millennials are coming of financial age at a very unique time,” says Guy Abramo, president, Experian Consumer Services. “They’ve experienced a recession and the explosive advancement of personal technology. As a result, they’ve developed different views toward managing money, using credit, and how they expect financial services to be delivered.”
Why you should give a hoot
And why should bankers care about millennials?
"As the largest generation in the U.S., millennials represent massive current and future purchasing power," says Beth Benjamin, senior director of the Medallia Institute. "Capturing and maintaining their attention is paramount to earning their brand loyalty."
The takeaway: Give them what they want, which means innovative, mainly digital, ultra reliable, and certainly secure channels with which they can figure out how to manage their money. Along the way, offer individualized financial counseling and advice.
“The survey also showed that millennials will abandon loyalty for better products and services, which is something the entire financial services sector should consider; the pressure is on to keep innovating,” says Experian’s Guy Abramo.
Looking more closely at millennials
The two surveys each have an abundance of other insights into the millennial generation and its relationship to banking.
• Online banking is the most frequented channel: 81% of millennials and 72% of baby boomers have interacted with their bank online in the past 30 days. (That means logged into an online account and/or used a mobile banking application.) Millennials are 2.6 times more likely to have used a mobile app.
• The preponderance of online banking does create significant challenge for financial institutions: 55% of millennials rank technology failures or the inability to carry out a transaction online in their top three most frustrating banking experiences.
• The human factor has a stronger impact on how baby boomers rate customer experience than on how millennials do. Boomers are 2.4 times more likely than millennials to cite an interaction with a bank employee as driving a positive experience, and 1.7 times more likely to list bank employees as a top source of frustration.
• Millennials miss the mark when estimating their generation’s average credit score (654 [est.] vs. 625 [actual]), average debt $26,610 [est.] vs. $52,210 [actual], and average debt, excluding mortgage ($12,580 [est.] vs. $26,485 [actual]).
• Despite being associated most closely with student loan debt, credit card debt takes first position as the most common millennial debt (38%), followed closely by student loans (36%). Others, in descending order, are: auto loans (28%), home loans (20%), personal loans (17%), and “other” (14%).
• The majority of millennials (57%) use financial mobile apps to manage their finances.
• Millennials have, on average, three financial apps on their phones.
• Most (57%) millennials are willing to use alternative companies/services that innovate to better meet their needs.
• A significant number of millennials (39%) are familiar with “non-bank” lenders (e.g., Prosper, Lending Tree, Upstart) and 13% have already used such a service.
• Nearly half (47%) will likely use alternative lenders in the future, citing easier application process, not dependent solely on credit score, more accessible, faster review process, and digital savvy.
• Many millennials (46%) look for new financial companies/services that better meet their needs.
• More than three out of four millennials will switch financial accounts if they find a better alternative.
• Most frequently mentioned reasons to switch include: better interest rates (47%), better reward programs (43%), better identity protection (32%), and better customer service (35%), among others
• Most millennials feel confident of their credit knowledge (71%). However, 32% don’t know their credit scores and 67% have questions as to how their scores are created.
• Among those who check their reports less than every three months, reasons for not checking reports and scores include: not necessary (35%/37%); afraid it will hurt their scores (24%/22%); unsure how to check their credit reports/scores (19%/18%).
• Millennials are very aware of how credit scores impact them; nearly three in four had a lending or leasing experience helped or hurt by their credit scores.
• Despite most having a handle on their finances (73%), more than half feel that they are “going it alone” (59%) and that “the odds are stacked against them” (57%).
• Top financial future concerns are supporting a family (30%), retirement savings (28%), and financial independence (25%).
• Nearly three out of every four survey participants had their loan, credit or rental applications impacted—positively or negatively—by their credit scores.
• Despite the concerns, 83% of respondents said being debt-free is an attainable goal; 71% feel confident about their financial futures