Many millennials, like myself, don’t consider their bank the center of their financial world. In fact, the sun of my financial universe is a third-party adviser: Mr. Dave Ramsey. I’ve read his books, I follow him on social media and I even listen to his syndicated radio show. Simply put, he’s my go-to guy for all things money — not my bank.
This is where banks, particularly community banks, are missing a key opportunity.
Dave and his team share common-sense financial advice over multiple channels. The simplicity of his message has helped millions of people eliminate debt, take control of their finances and create a path that allows us to build wealth. Included in the Ramsey product lineup is something community banks should particularly pay attention to: the EveryDollar app, which happens to be ingrained into my morning routine. Frankly, I don’t even log onto my bank’s app every day — or even every week.
Like other fintech apps, the EveryDollar app pulls data from my checking and savings accounts to track my spending. I use it daily to sort my purchases into categories and ensure I’m staying on track with my monthly budget.
Since millennials are tech-inclined, it’s easy to imagine that many of those users are young adults. Certainly, it is the case with other apps designed to fill the void for simple financial help. Apps like Digit and Acorns aid consumers in taking steps toward saving and investing, and they do so in a straightforward, you-can-do-it manner. Even Acorns’ slogan is “Anyone can grow wealth.” Marketing “easy” and “simple” goes a long way — especially with younger adults who, for the most part, lack experience with investing and using other bank products designed to help them save and grow them money.
Furthermore, these apps are especially powerful tools given 40% of Americans have zero dollars in savings, and only 25% have savings with more than $10,000. Constant propaganda is pushing America to spend, spend, spend, resulting in an average household credit card balance of almost $16,000. This propensity to buy now, pay later makes saving and investing seem like an insurmountable, low-importance task. So when a service comes along that makes the impossible seem not only possible, but easy, consumers latch on.
Given the statistics, I am certainly in the minority with my decision to spend less than I make, save as much as I can and avoid debt at all costs. However, the majority of my millennial peers welcome help reaching financial freedom — or at least spending their hard-earned money more wisely. According to v12data, 59% of millennials say they desire advice on financial topics, including: savings (32%), creating a budget (30%) and credit cards (26%). Community banks can and should give financial advice to us just as fintech apps have been doing. That's how they can ensure they become a regular part of my day — and that of my peers — just like Dave Ramsey is now.
Sure, community banks make money off consumer loan interest, overdrafts and fees. But the future of community bank profitability is the financially secure millennial.
If community banks give millennials the advice they are asking for — information on how to save, invest, buy homes, open businesses and plan for a financially abundant future — then they will reap the benefits of selling services that produce significant interest income. But it’s got to come in a simple, straightforward manner, not with convoluted bankerspeak.