Millennials are the largest, most diverse generation of Americans, comprising a third of our nation's population. They grew up using technology that would have been unfathomable to other generations, and have some kind of device at their fingertips at all times.
Millennials know exactly what they want from their financial services provider and everyone is chasing this audience. Understanding their perceptions and needs will help credit unions better compete for these coveted accounts.
In a recent national survey, we asked consumers of all ages about their banking habits, and found some valuable information about millennials.
Both Traditional and Unconventional
It's no surprise that millennials have different expectations than other generations. You may have heard that millennials are more likely to be "unbanked" than other generations, and our research shows that is true: 14% of millennial survey respondents are indeed without a traditional financial service provider (vs. only 10% of other generations). Non-traditional banking solutions are nearly as popular with millennials as are credit unions — about 16% of millennials are CU members, as compared to 20% of the rest of the population.
But millennial CU members are quite traditional in the services they use, as 88% of millennial members have checking accounts, 91% have savings accounts — similar to other generations — and 77% of millennial members have debit or prepaid cards.
Surprisingly, CU members are considerably more likely than those who bank elsewhere to have a saving account — only 56% of the rest of the banking population does.
All Mobile All The Time?
It goes without saying that millennials do absolutely everything on their mobile phone right? Not exactly. We found an interesting insight with regards to mobile banking. While they list mobile banking among the services they use considerably more than other generations (51% of all millennials versus 36% of other generations), their actual habits indicate other preferences. Online is actually the primary method of interaction for all segments — 36% of millennials and 44% of other generations noted that they do most of their banking online, rather than in branches or via mobile.
But it is true that brick-and-mortar locations are changing in front of our eyes. Our research reinforces the fact that most consumers rarely even see and touch your brand in person anymore, leaving the majority of influence in the hands of digital channels — with one exception. A majority of consumers continue to physically touch your brand multiple times per day through the physical credit, debit and prepaid cards associated with their accounts.
Our data also shows that credit unions have slightly higher product penetration than banks — at 3.9 products per member (including millennials) — and marginally more card products per member as well.
A Need for Personalization
Credit, debit, and prepaid cards offer exceptionally valuable real estate to the millennial audience, and should be used to maximize your brand through personalization. Millennials love to personalize their credit, debit, and prepaid cards, and when given the chance, 45% have personalized the design or image on their card. A full 63% of millennials want the option of personalizing their cards, but 59% report their FI doesn't offer the option or they are not aware of it. That's opportunity just waiting to be tapped.
When You Get Them, You Keep Them
Credit unions have been able to attract all generations at a similar rate, but our research shows that credit unions do a better job of keeping members satisfied — regardless of generation -than any other banking alternative. While about 64% of the population (including millennials) is "very satisfied" with their bank or other provider, a whopping 84% of credit union members (and 82% of those who are millennials) report these same sentiments.
And millennials are surprisingly less jaded about their provider's trustworthiness. More than half — 52% — of millennials completely trust their provider to keep their account and personal information secure, while only 40% of other consumers do. This is even more encouraging for credit unions, where a full 71% of millennials and 47% of others trust their credit union with account and personal information.
Will They Walk Away?
Surprisingly across all provider categories, millennials were no more likely to walk away from an institution than their counterparts in other generations. And for those who do walk away, the reasons might surprise you. Convenience and the demand for mobile banking options — not price sensitivity and fees — are the top two drivers. In fact, no millennials in our study reported changing providers because of costs like fees and penalties, whereas about 28% of the general population did so.
Whether attracting new millennial members or retaining existing ones, credit unions compete against both banks and nontraditional providers such as digital payments solutions and prepaid cards. When switching providers, 22% of millennials have switched or plan to switch to prepaid cards, 26% have or plan to choose a credit union, and 37% choose banks to meet their needs.
The financial services industry has always been competitive, and today companies are under more pressure than ever to gain and retain connected consumers. Millennials are looking for more personalized and engaging ways to bank and present their financial profile.
Credit unions already have a solid foot in the door and maintain some of the strongest customer loyalty in the industry. But to acquire and retain more of this important generation of savers and spenders, credit unions must be more proactive, and personal with their marketing. Millennials want and need to hear from you. They value personalization and convenience and will respond to targeted marketing that is relevant to their lifestyle and their needs. So get personal, engage locally, and be nimble when it comes to marketing and card production.
Render Dahiya is CEO of Arroweye Solutions, a payment technology provider.
