By Kerry Tracy, CEO of Working Media Group
- To attract millennial consumers, banks need to offer a better customer service experience with more convenient locations, digital/mobile services, money management tools, and rewards, as well as fewer fees.
- 93% of millennials prefer one that offers no-fee banking options, and 30% of millennials would switch banks if they were offered a year of free banking
- 92% of millennials notes that they would choose a bank with digital services over a bank that doesn’t offer digital options.
For millennials, recommendations from friends and family are the driving force when choosing a bank initially, but what causes these consumers to switch banks? Understanding millennial behavior and goals is key for financial institutions who want to attract this younger generation, as well as retaining the current millennial consumers already using their banking solutions. Millennials are now the biggest generation in the United States, so ignoring them equates to ignoring over 83 million consumers, or 44% of the workforce.
Millennials are mobile and digitally/socially savvy. They want a bank that can communicate with them in a mobile setting and is willing to share insights and knowledge in the settings they typically get it – via digital and social.
This is a generation that does not feel brand loyalty to their banks. In fact, 12% of millennials report that they would switch banks for as little as a free cup of coffee each month.
So how can banks inspire millennials to stay instead of switching to another bank? Or how can we attract them away from others? Here are the top reasons millennials switch.
FEES = MASS EXODUS
Think of all the free (or low fee) services millennials have been raised to love – Pandora vs. Sirius/XM, YouTube or Netflix vs. cable. Free shipping…. Face it, millennials are frugal and for good reason.
Millennials care about banking fees, given the unstable job market and high student loans this generation faces. When choosing a bank, 93% of millennials prefer one that offers no-fee banking options, and 30% of millennials would switch banks if they were offered a year of free banking.
Fees are a thorn in the side for both “young” and “old” millennials; 36% of millennials aged 18 to 24 and 45% of millennials aged 25 to 34 will switch banks due to fees, including ATM fees and low balance fees.
NO TOLERANCE FOR POOR CUSTOMER SERVICE
Millennials are less likely to put up with even minor frustrations, and will leave their bank if the experience is less than pleasant. What constitutes as a frustrating experience varies from person to person, but many of the frustrations cited by this generation can be boiled down to poor customer service.
55% of millennials find difficulties in resolving problems with their bank as frustrating enough to leave. 37% are frustrated by the long queues, 23% are frustrated by inconsistent experiences, and 22% are frustrated by unpleasant interactions with employees. By investing in better customer service training, banks can combat these frustrations to keep more millennials from switching banks.
TECHNOLOGY WOES LEAD TO BANK SWITCHING
Unsurprisingly, millennials are also frustrated by poor technological experiences when banking, such as a banking technology failure and the inability to carry out onlinetransactions. They are equally frustrated if their bank does not offer robust digital features. In fact, a whopping 92% of millennials notes that they would choose a bank with digital services over a bank that doesn’t offer digital options.
Mobile is even more important. Millennials are on the go, and they value mobile banking options more than older generations, who are increasingly using computers to access bank websites. A full 65% of millennials report that access to mobile app options and mobile check depositwould get them to switch banks. Millennials are three times more likely to use a mobile app to connect to their bank and two and half times more likely to have used banking mobile app to pay a bill than their Baby Boomer counterpart.
Having a mobile app is so important that number a quarter of millennials say that this is the main barrier to engaging with their bank.
The younger the millennial, the more likely they are to use mobile apps to connect with their banks, which indicates that future generations will likely see this feature as important in their banking as well. Mature millennials (over 25 years old) like features such as mobile wallet and mobile money, while younger millennials (25 years old and under) value peer to-peer payment options.
Mobile apps make accessing your money more convenient, but what about when you actually need physical money? Millennials are less likely to visit a branch than older generations, so ATM access is important.
In both cases, if the location isn’t convenient, millennials will find a bank with locations that are. According to a BAI Research survey, 34% of millennials note that convenient locations of branches and ATMs are the most important factor when they are considering choosing a new bank.
Expert Chris Skinner, who is the chair of the Financial Services Club and the author of DIGITAL BANK notes that huge bank branches may not make as much sense as they did in the past. “Instead, banks need a Genius Bar-style distribution network modeled on the Apple structure of being where most of the consumers are at, namely, shopping malls and airports. The rest can be remote capture, self-service and pop-up stores,” he writes.
MILLENNIALS WANT TO MANAGE THEIR MONEY
Although the stereotype of the millennial is someone who doesn’t have money or isn’t good at money management, 67% of consumers in this generation want digital budgeting tools from their bank. Over half of millennials say that their bank doesn’t offer anything unique, so offering these tools, especially via a mobile app, is one way for banks to stand apart from their competitors. Not only do these tools prevent millennials from switching banks, but they also give current millennial customers a reason to stay.
REWARDS CAN BE ENTICING
Although millennials typically do not feel a strong sense of loyalty to their bank, one major factor that can change this perspective is offering rewards. 83% are likely to switch to a bank that offers rewards, such as ATM fee refunds and high interests after checking. They also love rewards in conjunction with their savings accounts.
Looking beyond traditional rewards makes sense for banks seeking to retain and attract millennial customers. For example, this generation highly values the ability to customize their banking experience. 16% of millennials feel frustrated and consider switching banks due to limited banking options and the lack of customizable options. By allowing millennials to tailor their rewards to their own needs, banks can tap into this generational desire.
The millennial generation’s relationship with banks cannot be better summed up than this quote from American Banker: “Millennials don’t necessarily dislike banks — they just want them to be better.”
Going forward, banks need to offer a better customer service experience with more convenient locations, digital/mobile services, money management tools, and rewards, as well as fewer fees. Otherwise, millennials will go elsewhere. Companies like Avidia Bank, which is building a community around their brand, and BB&T, which is rolling out a customizable banking platform, are seeking to disrupt the traditional bank experience.
Working Media Group can help you attract and retain millennials through better positioning, messaging and tactics. Engage with your millennials in the places where they are themselves engaged – the digital and social world.
Working Media Group is a strategic, data-driven agency that helps clients to successfully navigate the complex and dynamic media landscape and drive business results. Don’t get disrupted!