Pub. 8 2018 Issue 1

5 ISSUE 1. 2018 banking apps, too, but at 47 percent the percentage is much less. One sometimes-overlooked fact about millennials: when their parents die, they will inherit $30 trillion, which is about 35 percent of the net worth of today’s households. Managing wealth might not matter to them much now, while they are struggling so much with low wages and debt, but it will mean a great deal to them later, especially since they are so good at saving. Later on, they are likely to become wealthy. A Harris Poll that was commissioned by BancVue surveyed more than 1,000 U.S. adults. The poll offered the following insights into the habits of millennials: • Approximately 50 percent have checking accounts with a national bank. Approximately 29 percent use a credit union or community bank instead. • Some 38 percent would actually prefer a community financial institution but could not find one that offered financial manage- ment tools, free checking, and reward checking. • Millennials are open to the idea of transferring. In 2015, 41 per- cent said they were somewhat likely to switch to one that year. For those 35 to 54, the percentage was 16 percent. For those 55 and older, the percentage was 14 percent. In 2017, approximately eight out of 10, or 83 percent would con- sider switching if offered features such as being given refunds on ATM fees, being paid a high rate of interest on a checking ac - count, or getting cash back on purchases. Almost two-thirds (65 percent) could be swayed by being able to deposit checks using a smartphone or having a banking app on their phone that would give them additional flexibility. There is another reason why millennials switch banks. The average for other ages is 19 percent. The average for millennials is 11 percent. Switching does not mean millennials are disloyal. What is the real problem? If customer support is poor, they are not likely to tell you; they prefer being quiet to initiating a com- plaint. Instead, they are more likely to switch banks. What can you do to get millennials to tell you what they don’t like? You can be the one to initiate by asking them for feedback. Banks that act when they receive individual customer feedback are two times as likely to be growth banks as the banks that don’t. Millennials use mobile banking apps to see what the balance is in their checking and savings accounts (85 percent), to transfer money between savings and checking (58 percent) and to pay bills (52 percent). This is the information that should be most easily accessed on your mobile banking app. Some 67 percent want their bank to provide digital budgeting tools. (Only 50 percent of other customers want that.) What helps millennials save so much money? For starters, they don’t like to buy things. They would rather buy an experience than merchan- dise from a store. They talk openly about money, save aggressively as much as possible, and avoid paying full price as much as possible. Three out of five millennials want to feel like their financial insti- tution is a partner, not an organization that only sees them as a way to make a profit. Only 32 percent of millennials feel understood by their banking institution, which is still probably geared more toward the baby boom generation than toward them. What do millennials want from their financial institutions? Their two main goals are paying off their student loans and saving money. They want products that will help them build a mutually beneficial relationship between them and their financial institution. They also appreciate as much real-time data as possible. What can community banks do to attract more millennials? • Increase marketing efforts. The banks with the largest brand recognition are the national ones. Some 82 percent recognize the megabanks, and 63 percent are willing to do business with them. For local credit unions, the percentage is 56 percent; for local community banks or for regional banks, the percentage is 51 percent. Eighteen percent of millennials don’t know what their local community bank or credit union offers. For those who are ages 35 to 54, the percentage is a much lower eight per- cent. For those 55 and older, the percent was seven percent. The best ways to market to millennials are through social media and word of mouth or referrals. A minimum of 75 percent of millennials use social media networking sites. Approximately 91 percent say they trust recommendations they get from their friends for products and services. What should your strategy be? Educate them about the advantages of switching, and do your best to make sure that everyone in your geographical area gets the message. • Improve what you offer customers. Start with what they care about the most: 94 percent want one online platform they can use to monitor bank accounts, credit cards, loans, and any other financial matters from their computer or their smartphone; 91 percent want cash back options and rewards; 90 percent want mobile options, compared with 72 percent for those between the ages of 35 and 54, and 58 percent for those who are 55 and older. • Focus on convenience and customer service. Ninety percent of millennials like their financial institution to be nearby: 96 percent think personal customer service is somewhat import - ant to them; 88 percent want to be able to do their banking in person; 86 percent say banking near their homes matters, while only 74 percent of those who are 55 and older would agree; and 42 percent would rather get financial advice in person. What else can a financial institution do to attract millennials? • Approximately 41 percent of millennials like to bank at the busi- ness where their parents or other family members bank. • Since millennials spend so much time on smartphones, optimizing mobile apps is important. If you don’t have an app for your bank, 23 percent of millennials will see that as a serious problem. • Focus on programs that address the most important needs first, and keep the barriers to entry low. Help millennials manage their financial priorities by working to develop good solutions that address their multiple priorities. They don’t like fees, so