Due in large part to technology, we have seen a shift in the way many different industries conduct business and reach their customer base over the last several years. One such industry that has felt the impact of advancements in technology is the banking sector. In fact, the prevalence of smartphones and digital platforms has made the act of physically going into a bank or credit union unnecessary for many transactions.
This is especially true of millennials, those born after the year 1980 and into the early 2000s. Millennials are an important generation for many reasons—but for today’s purposes we are going to focus on the impact of this generation’s financial habits and what financial institutions need to do in order to attract millennials. Like it or not, millennials are our future and it is absolutely imperative that banks and credit unions understand their needs in order to stay relevant and bring in business.
The intention of this blog is to take a more in-depth look at who millennials are, what their financial practices are, and how their attachment to technology and devices is impacting financial institutions.
Who Are Millennials?
In order to really understand how important this generation is to banking practices, let’s first go over who, exactly, millennials are. Often referred to as Generation Y or Echo Boomers, millennials are arguably the most important generation to the banking industry. Here are a few facts about millennials:
- Millennials today are currently between the age of 19 and 37
- There are approximately 80 million millennials in the U.S. today
- This generation is the most ethnically diverse in the history of our country
- They are buying their first home at an older age than any generation before them
- Millennials boast the greatest number of college graduates in U.S. history
Millennials are important to the banking industry because they are bringing an entirely new and fresh perspective to a tradition that has been a part of our society for as long as we can remember. Perhaps the best example of this is mobile banking. It is no secret that millennials, in particular, rely heavily on their mobile devices, so it should come as no surprise that they prefer to do most everything, including banking, with their smartphone.
Financial Habits of Millennials
Technology has had a huge impact on how millennials approach their finances, which has caused quite a disruption for many financial institutions. The banking industry has stuck to relatively the same practices for years, until now. In order to attract millennials, banks and credit unions alike must change their tune in order to appeal to this tech-savvy generation. Here is a look at a few of millennials’ most important financial habits:
The role of social media
It is no secret that millennials love to share on the many different social media platforms, but did you know that they also turn to Facebook, Twitter, LinkedIn, and the likes for financial advice? A recent study indicates that 91 percent of millennials use social media in order to obtain advice on various financial matters. This is huge, as previous generations were more likely to go into a bank or credit union and ask for financial advice. In addition, millennials also claim to use social media to decide which bank or credit union will provide them with the services they are looking for, a fact which should be a game changer for financial institutions.
Tradition no longer matters
One of the hardest things for many financial institutions to wrap their heads around is the fact that millennials don’t seem to put much stock in tradition when it comes to their banking habits. In order to attract millennials, the first step is for banks and credit unions to realize this, and adjust accordingly. This easygoing generation is not one to color within the lines, instead placing more importance on businesses - including financial institutions - that meet all their needs and appeal to their lifestyle.
They want to be in control
Another important habit of millennials is their desire to be in control, which we can thank technology for. By way of the internet, consumers can now search for anything they want, providing them with more control and knowledge about pretty much anything. So, in order for financial institutions to attract millennials, they must recognize and embrace this.
Many millennials have become distrustful of financial institutions, but not all hope is lost. In order to gain back their trust and, in turn, their business, we must take the time to understand who this generation is, what their financial habits are, and what they are looking for in a bank or credit union.
To learn more about how financial institutions can attract millennials as well as how technology has impacted the world of banking, please check out our ebook, What Lenders Can Do to Attract Millennials. If you have anything to add to this subject, please feel free to use the comment section below.