Millennials, who are between 18 and 34, are a major market segment for banks and other financial institutions to attract and retain. There are now more than 83 million millennials in the U.S., representing one-quarter of the country’s population and a larger share than baby boomers. Most millennials have spent their entire lives with technology with very different desires and demands when it comes to financial services than previous generations.
The key to attracting and keeping millennial clients? Offering better services, products, and experience than the competitors, according to researchers.
Millennials Have a Bias To Digital Services
Research firm CCG Catalyst conducted a large survey of millennial consumers to learn more about how they use banking services and what they want from a financial institution. With a reputation for living on their phones, it’s not surprising that the study found millennials have a preference for using digital services. 44% said they send money digitally, 68% use online banking, and 39% use remote deposit capture for checks.
Still, the survey found that millennials still use traditional services: 46% also use checks. Many also regularly use ATMs and put money away in a savings account. While millennials use traditional services, they don’t want them to be average: they want them to be better. Millennials are looking for premium features like no fees, high interest rates, and transparency.
The bottom line of this survey is that while millennials want more automation from their financial institutions and greater control, they’re still looking for a human connection when it’s necessary.
What Makes Millennials Switch Financial Institutions?
A recent research study conducted by Harris Poll asked Americans about their perceptions about banks and what would make them conduct business with one institution over another. The study found that 83% of millennials would switch to a different financial institution if it offered better rewards, such as cash back on purchases or a high interest rate on a checking account. 65% of millennials would consider switching to a smaller credit union or bank if it offered mobile services. Almost half of millennials also said it’s important to choose a locally owned institution over a national chain.
Not surprisingly, 93% of millennials said no-fee banking is important when choosing a financial institution. While a convenient location was almost as important, millennials are more likely to sacrifice location if the institution offers online tools.
What Are Millennial Entrepreneurs Looking for?
Despite more student loan debt than other generations, stagnant wage growth, and a higher cost of living, millennials are optimistic about finances and a growing number are starting their own business. 49% of millennials want to become an entrepreneur in the next 3 years and over half would quit their job to do so in the next 6 months with the right resources.
The problem is these “right resources” are difficult to find. Over 40% of millennials feel that major financial institutions are unlikely to give them a small business loan due to their age. This forces many to rely on personal credit rather than taking on business loans.
Financial institutions are in a good position to help millennials close this gap toward owning a business. One survey found that three-quarters of millennials will pay more for financial services and products to ensure the success of their business. To get there, financial institutions need a long-term approach to guide millennials toward financial stability and greater availability of mobile tools and technology. Millennials don’t just need greater availability of small business banking services; they also demand more convenient and faster lending experiences.