Banks and credit unions are scrambling to understand their future market, Millennials. Much of the dialog has focused on technology-enabled services, but service may be the key to attracting Gen Y.
Research by Microsoft suggests their needs are actually different from their Boomer parents, with Gen Y placing a greater emphasis on mobility and online access.
“(Millennials) are much more likely than baby boomers to use Web banking (49 percent versus 35 percent) and to find online service capabilities to be very important when researching a new bank (54 percent versus 42 percent). Baby boomers, on the other hand, are much more likely to prefer banking transactions in person at a branch (44 percent versus 32 percent), and half (50 percent) report that they never bank via the Web using a personal computer or phone browser.” – “Millennials and Baby Boomers Banking Channel Preference Survey 2009”, Microsoft News Center, November 3, 2009.
A study by Fidelity confirms that Gen Y indeed wants online access. “Most Gen Y individuals are using mobile technology to stay updated on their cash flow situations with 64 percent reporting that they typically check their balances online before making a purchase of $300 or more.”
However, Gen Y’s needs and bank selection criteria may lie more in the area of customer service than technology.
Three remarkable videos posted on the blog, “TheFinancialBrand“, all suggest how little Millennials really understand about banks and credit unions. They have no idea how banks make money (fees?) and many bank where they do simply because that is where their parent’s bank.
Moreover, they are not happy with how banks treat them. The video above (4:06 and worth watching) shows interviews with five young adult banking customers, ages 17-25. Here are some excerpts:
“When I go in to talk to [my bank], they aren’t friendly or helpful whatsoever. They talk to me like I’m stupid, pretty much.”
“I bought a quesadilla and overdrew my account. And then I… overdrew overdrew overdrew and I owed them tons of money. When I went to talk to them, they weren’t nice to me, so I switched.” (Woman, 23)
“I’d have to say a lot of my friends do get overdraft fees, cause it’s hard to know how much you’re spending. I don’t keep track of that too well…” (Woman, 17)
“They’re not open all that often. If I get my paycheck late on Friday’s and they close early, I’ll have to wait for the weekend.” (Woman, 23)
“When I go to an ATM to take out money, it’s rough to have to pay a couple of dollars just to take out money.” (Woman, 17)
Millennials expect to be treated nicely and fairly. They want to feel good about the places they do business and are happy to reciprocate.
Gen Y’er Laura Hurlbut provided this perspective on customer service in her blog post Monday “Cafes, Spain and Customer Experience”:
“As a customer, I want to do business with individuals and organizations that respect my humanity—a preference, I assume, others share. In four years living in Spain, I often frequented bakeries and cafes where the owner took my order, asked me questions, listened to my responses, and generally interacted with me in a pleasant, and completely genuine, manner. In these small, charming establishments, I never felt like a number, a potential profit, a potential promoter, or a potential detractor: I was simply Laura, the foreign girl with the funny accent. As a result, I always wanted to get coffee, pastries, and tapas at these same places—because I like doing business with someone who genuinely respects me as an individual, and whom I genuinely respect.”
Granted, most banks are not all that interested in customers who have to check their balance before buying a quesadilla. But someday these young consumers will have real jobs, direct deposit paychecks and need additional services like auto loans and mortgages, maybe even a business loan.