The Millennial generation comprises 80MM people, the largest in U.S. history. Born between the years of 1980 and 2000, millennials range in age from 15 to 35 years and are just beginning to gain their foothold in the economy.
Do we really want to bank millennials? If I borrowed a crystal ball from one of the soothsayers out at Jackson Square in New Orleans’ French Quarter, I imagine this would be the question on most everyone’s mind that joined me at our annual Bank Board Growth & Innovation conference. With many community banks making their money through C&I lending, the immediate concern (at least at the board’s level) is how do I grow right now? While many conversations trended towards the opportunities to engage this demographic by leveraging emerging technologies with a bank’s sales and marketing efforts, I was not surprised to hear a concern about the investment costs of bringing new technologies into a bank. The rationale, as I understood it, is by the time a bank gets a return from its investment, it may be too late. I’m not saying this is my way of thinking, but I do think it reflects apprehensions by key officers and directors when the conversations comes to these future business owners, inheritors of wealth and digitally demanding individuals. As shared in a presentation by Ingo Money, in the next five years, the Millennial generation will have the largest income in U.S. history, and any company that can monetize Millennial spending or data may seek to bank them. Still, regional and community bankers wrestle with the type of client they might be — both now and in the future.
To kick things off, we invited Dave DeFazio from StrategyCorps to “look beyond the basics” in terms of mobile banking. As he shared, over 75% of people in the U.S. own a smartphone in the year — and most everyone has some sort of addiction to their device. With all of the big banks offering the “big five” today (mobile banking, mobile bill pay, mobile deposits, ATM/Branch locators and P2P payments), bankers should think beyond basic banking transactions to develop a mobile presence that is a “can’t live without” app. Some of his tips: provide easy authentication, pre-login balances, voice recognition, budgeting tools and coupon and shopping tools.
Anecdotally, the issues I took note of were, in no particular order:
- The four biggest banks in the U.S. are among the 10 least loved brands by Millennials.
- Millennials want banking services designed for their needs that are instant, simple, fair and transparent… which is why new providers are beginning to emerge.
- For those not familiar with Moven, GoBank and Simple… take a look at what each has to offer.
- The cultural divide between banks and FinTech companies is getting smaller for bigger banks, but remains high for regional and community banks. Nonetheless, these banks are in a better position to collaborate and seriously consider new tools and products as the decision making cycle is considerably shorter then at large institutions.
Picked Up Pieces
While today was “just” a half day, some of the more salient points I made note of:
- Per Jennifer Burke, a partner at Crowe, “proactively identifying, mitigating, and in some cases, capitalizing on these risks provides a distinct advantage to banks.”
- In terms of building value, the ability for a bank to grow is as important as a bank’s profitability.
- It was refreshing to be at a banking conference where talk about regulation was at a minimum; in fact, it seemed that the regulatory environment presents more of a distraction than it poses a threat to bank’s looking to grow.
- The corollary to this point: competition from non-banks is higher then ever before.