A generation ago, bankers could count on young people –piggy banks in hand — riding their parents’ coattails to the neighborhood branch. As the years passed a kid who opened a savings account at 10 opened a checking account or a student loan at the same bank before heading off to college at 18. In a few years, that meant a mortgage, a college fund for their children, or an IRA.
In the age of Apple Pay, Google Wallet, and online banking, the old assumptions are shattered. But how do we attract a generation that communicates phone-to-phone and text to text, not face to face? Believe it or not, this is a slice of the market that in some cases has never opened the doors of a bricks-and-mortar branch bank or learned how to write a check.
And at a micro level, how do community banks reach a generation overwhelmed with debt that inhibits wealth? A recent article in the Wall Street Journal states that the average Class of 2014 graduate with student-loan debt has to pay back some $33,000. This is the most indebted class ever.
A whopping 63 percent of millennials (ages 18 to 29) don’t have a credit card, according to a survey commissioned by Bankrate and compiled by Princeton Survey Research Associates International.
How can bank marketers find creative ways to attract those 18-to-29 year old customers? With a combination of creativity, using this generation’s technology and some of the old-fashioned, yet time-tested customer service and marketing techniques their parents knew well.
First, know this: The younger generation has embraced mobile banking more warmly than mobile phones. According to Bankrate.com, people ages 18-29 make up 44 percent of mobile bankers, but make up only 22 percent of mobile phone users.
How can community banks grow their share of the online market, while at the same time draw the younger generation to the branch?
Broadly speaking, it’s about building trust, especially in the wake of the financial crisis in the last five years. According to The Economist and a survey by Accenture, less than a third of 18-to-24-year olds believe their bank operates in a fair and transparent manner. The same Economist article pointed out that one in 10 millennials have hung up in frustration when dealing with call centers.
On a more personal note, my 25- year- old son decided to buy a house. I recommended that he go to the local branch of Bank of America to apply for a mortgage. After waiting for 30 minutes to meet with a customer service representative, he was escorted into an empty office, except for a desk and a phone. The representative dialed an 800 number, gave the phone to my son and walked out. My son did the same with no plans to return.
But these downsides offer an opportunity for small community banks to attract customers that not only spend an average of 20 hours a week on a computer or smart phone, but are out and active. Here are some ideas that can be accomplished at a low cost. Accenture offers some interesting ideas. And we have a few of our own.
* Get out of the office. Go to where millennials are and find out the trends that are popular among them. Crafting these relationships can and should begin even before the potential customers reach 18.
* Offer millennials the human touch. To reduce frustration with online and phone banking, every branch should have at least one young, tech-savvy staffer who can network with young customers, speaking the language they understand. This individual also would be responsible for the branch’s social media presence, as part of the bank’s strategic online marketing. A personal presence at the bank gives young customers a face they can befriend, not an automated prompt that can frustrate. Conservative bankers might dismiss social media. Don’t. While return on investment may not be great at the outset, as millennials grow in their careers –and paychecks grow as well — solid returns will come.
*Winning new, young customers must be a priority. As the Accenture article points out that once a customer signs on with a bank, there’s only a 10 to 15 percent chance they will switch later. However, the older the potential customer, the tougher it is to win them over.
*With that in mind, consider sending small gifts or perks to young potential customers through their parents. A silver dollar at birth, a card with a coupon to a popular pizza parlor or ice cream shop on birthdays, rewards for good report cards.
*Sending a newspaper clipping celebrating a young person’s success with a congratulatory note also makes a big impression.
*Banks and bankers need to be visible at major community events where young potential customers gather: high school sporting or arts events, community festivals
*Give young people a voice.. There are bright, technologically tough people who can make a difference for your bank. Launch a contest asking students to design an online presence geared specifically to them. It creates a buzz in a circle filled with future entrepreneurs.
*Customize branches to meet customer needs. The needs of customers near a high school or college campus is different than that in older, more established neighborhoods.
*Link up with retail stores to offer customer discounts and other offers to online banking customers.
*Set up different avenues online for specific goals –an online “piggybank” for savings for example.
*Bring the bank to students. Teaching financial literacy –how to build credit, student loans, savings — can begin with something as simple as a late-afternoon pizza party as part of an economics class. Here, the bank can introduce its e-presence, and showcase the services it offers.
*Be the first banker in town to endorse and introduce Apple Pay. A recent article in the Credit Union Times describes how Navy Federal Credit Union announced they were supporting Apple Computer’s new Apple Pay mobile retail payment system. They even posted a video on YouTube to demonstrate the ease in which Apple Pay can be set up and used. This makes this credit union look hip to our younger generation.
As noted earlier, 18-29 year-olds enter the picture with debt. But today’s debtors are tomorrow’s asset creators.
And on a bright note, a story earlier this year in the Houston (Texas) Business Journal cited a survey of 600 Texans, ages 18-24, which revealed that those millennials visit their branch banks at least once a month, more often that their older counterparts.