How can banks keep millennials banking?
It comes as no surprise that millennials, the world’s first digital natives, are using mobile banking more than any other cohort. Sixty-seven percent of millennials use mobile banking, according to the Federal Reserve. Despite this, banks are still losing their relevance to us.
A majority of millennials don’t feel they owe any allegiance to their banks. In fact, over half don’t think their bank offers anything that differs from other banks. On top of that, one-third of millennials believe that they won’t need a bank in the next five years, according to Viacom. Traditional banks need to redefine their approach to stay relevant and keep millennials banking.
Banking, tech and millennials
While technology has transformed the way people interact with their money and with traditional banks, banks haven’t been able to innovate quickly enough. Even with ATMs, online and mobile banking, and mobile wallets, financial technology solutions have provided us crowdsourcing, investment apps and virtual currencies. Banking and financial market executives know that they’re falling behind. They see the growth of mobile solutions and cloud computing more than executives in other industries according to a report from IBM.
What can persuade millennials to stay?
If millennials don’t see a difference from one bank to another, besides what T-shirt or mug they would get when they open accounts, there’s a problem in the value banks are offering their customers. So, how can banks set themselves apart from the pack and prove that they have something truly different to offer?
Enhance your offerings
The perk that most entices me about my bank is their mobile app. It includes the functionalities I need, like mobile check deposit, funds transfers, bill pay, account status and spending reports. But it also lacks some functions that financial technology solutions made up for. Companies like TransferWise and WorldRemit allow people to send money internationally and convert transfers to different currencies for a low fee. Acorns and Nutmeg (no relation) offer unique investment strategies. These startups offer value that, at the moment, banks do not. By embracing the less traditional, banks could offer their customers something that would otherwise require them to download another app and link their bank account.
Give us advice
If banks offered advice on retirement plans, budgeting and saving, it would further entice us to stay. We love learning, especially when it helps us become more self-sufficient and knowledgeable about our futures. We’d prefer advice presented to us not only through a medium we find interesting but in a personalized way. Taking into account income, spending behaviors, cost of living, financial goals and plans for the future, we’d like to see personalized advice on what we should be doing with our money.
Offer digital convenience AND human assistance
To keep millennials banking, smartphone tap to pay has revolutionized the checkout process. Banks supporting this innovation show they can keep up with those agile financial technology startups. Customers just need a near field communication (NFC)-capable smartphone or other mobile device to pay at a supporting checkout terminal. Millennials are shown to be quicker to adapt to new technologies, with Accenture reporting that 23 percent of millennials make mobile payments at merchants at least weekly while the average is at 18 percent.
While we love a good routine process simplified, digitized and secured, we also like talking to human beings when it comes to more significant financial steps. When joining accounts, opening new ones or seeking a loan, we still would feel most comfortable completing these milestones with a knowledgeable banker in front of us. In fact, 55 percent of millennials still go to bank branches on a monthly basis according to FIS. Customer service, both in-person and over the phone, is still a necessity. One bad experience can tarnish brand image, while a great one could make us think twice about leaving.
With so many financial options and innovations, we have plenty of possibilities to choose from. Choosing a new bank, or deciding to stay at an old one, is not a decision that we make lightly. It requires direct comparison, and, like any product, if a bank wants to stand out from the rest and keep millennials banking, it has to start offering something better.