Retail Banking: 3 Myths about Millennial Customers

Despite spending the past few years investing heavily in services that they hoped would appeal to millennial customers, banks and credit unions are still struggling to entice this younger segment to spend money on financial services. There is still clearly a gap between what providers think about millennials’ financial aims and behavior, and the reality.

In particular, when it comes to a segment of millennial customers sometimes known as “builders” —  millennials who are either highly educated or already have significant assets of their own – there are three major myths that bankers hold on to, and that prevent them from appealing to millennial customers and differentiating themselves from competitors.

• Myth #1: Millennial customers just want an easy, “seamless” experience: Because millennials are seen as being loyal to brands that offer compelling and easy digital customer experiences, many banking providers assume that designing their own low-effort digital transactional experiences will be enough to win over these customers.

  But despite this reputation, builders respond to easier experiences in the same way that other segments do — they are less likely to reduce their relationships at institutions that make it easy to accomplish financial tasks, but they are no more likely to purchase more services or deepen their relationships with those institutions.

• Myth #2: Millennials want to avoid bank staff at all cost: Financial services providers often assume that while older customers turn to staff when they have questions or problems with their finances, millennials prefer to get things done without staff help. In reality, builders assert similar preferences for staff involvement as other segments, according to CEB survey data. In fact, when it comes to finding customer support for problems or issues, three out of four builders state that they prefer at least some interaction with staff.

  Builders do not even stand out in terms of their digital preferences — in 2015, roughly 40% of both builders and other segments preferred to use digital channels for most banking activities.

• Myth #3: Millennials are less loyal to their banking providers: Many of the managers in CEB’s networks of financial services providers feel that millennials are simply not loyal, except to a few brands that appeal specifically to them. They worry that banks and credit unions can never be as “cool” as these brands, and therefore will not be able to win millennials’ loyalty.

  But they needn’t worry. Builders are just as likely as other segments to purchase additional financial products from their primary banking provider, according to CEB data.

Those at banks and credit unions need to dispel these beliefs about digital-only, disloyal millennial customers. Younger customers are in fact highly engaged in their finances and motivated to improve their financial situation, but they are just early in their financial lives and do not know how.

The best approach is to forge relationships with these high-opportunity customers by helping them develop the right habits and behaviors to build a strong financial footing for their lives ahead.