When you add technology plus a huge sector of the population, millennials are influencing the banking industry, and its future may look like your future.
When you opened your first bank account, you likely were influenced by what you knew about banking from your parents. Your parents may have even opened an account for you when you were young, and well, it was fine.
But then you got older and discovered that your life wasn't like your parents'. Maybe you are persistently and happily single and need to get your finances focused on your long-term goals. Perhaps you're now married with children and finding that the changes in your career require more financial flexibility than you needed when you were starting college. Are you still pondering buying a house in a not-so-steady housing market? If so, that's a banking adventure that's all yours, too.
Welcome to the latest stage of adulting when you have to take a step back and see what the big picture looks like for you. What's really amazing is if you are in our late twenties to around your early forties, you're getting to redefine the financial sector to suit your style. Granted, it's not all you — it's also the rapid changes in technology. But when you add those advancements with a huge sector of the population, you may find that millennials are influencing the banking industry, and its future may look a lot like your future.
What are millennials looking for in a financial institution?
The short answer is everything. If you're a millennial, you're at the age where your finances are much more than just paying bills and covering expenses. You're adding to your savings account as often as you can, you're logging in to your mobile banking and checking your balance on your loan, and you're working on increasing your retirement plan.
Those are just the tip of the iceberg. You may have your money spread out in dozens of locations, not just your bank or credit union. You may have a student loan provider, a vehicle loan, and even a handful of BNPL (AKA “Buy Now Pay Later”) payments in the works.
If you're more of the traditional banking type, you might also have a credit card that is your financial yo-yo — up this month, back down next month — and maybe even a certificate of deposit that's just out there accumulating interest. If you do use these traditional banking products, it's only because they are offering you some big benefits and rewards.
How do millennials feel about their bank?
As much as millennials are always up for an intuitive UX on their mobile banking app, millennials are not entirely hands-off when it comes to their banking experience.
As a millennial, there are three common attributes of your ideal financial services:
Digital banking. You're counting on your digital banking tools to make managing your money as easy as possible. That includes your investments, your insurance, and, of course, your digital wallet. Make my money and my overall finances intuitive and accessible online.
Personalized service. Millennial consumers have become accustomed to getting the customer experience they want, that is tailored to fit their needs. You may have chosen your financial products because of their perks that exactly fit your millennial banking habits. For those that don't fit you perfectly, you continue to look for the financial services that will cater to you.
Perfect fit. From your favorite grocery store to your preferred brand of coffee, there's none of this one-size-fits-all nonsense. The older generations may have their simple preferences when it comes to where to keep their money, but you are more likely to have way more preferences. Your health savings account may only be connected to your payroll, not your primary financial institution. Why? Because that's the way you like it.
In fact, you may not even have a go-to bank or credit union. You may deposit your money with a big bank just because doing business on Wall Street is what others your age are doing and those Wall Street banks have the tech you want. Your money may be flowing through a neobank that doesn't even have a branch.
So how do you keep track of all your dollars and cents if they are spread out across your digital landscape? Do you feel like a bank or credit union is a resource you trust? (Tip: they have smart, financial knowledge that you can glean.)
Why do millennials often seem to struggle financially?
Wait a minute — who says they do? Perhaps this is a misperception from older generations because your spending, saving, and borrowing priorities are different than theirs. Every generation has those who succeed and those who struggle with managing finances, so ignore the talking heads that lump millennials into one bucket. Millennials are simply discovering their own way to manage money and banks and credit unions are morphing to help with those plans.
Yes, there are the dreaded student loans that everyone seems to talk about, but you still keep paying on them like the financially responsible consumer that you are. If you have them, of course, you'd like them to be behind you.
In fact, as recently as 2019, millennials held over 1 trillion dollars in debt, but that includes home mortgages, too. There's a difference between having debt and struggling financially.
Millennials take a different approach to spending and saving, and that doesn't mean the debt has to be a struggle. However, debt can often divert funds that might otherwise be saved, which is why student loan debt is more challenging: it's a payment towards a past expense, unlike mortgages which are investments in future finances.
The truth is 62% of millennials have used loan services and 81% of those have paid ahead on their loan. Paying ahead on a loan doesn't sound like a struggle, it sounds like a smart idea.
When it comes to saving money and paying down debt, millennial customers are recognizing that both debt and savings are important to your credit and your future. That's definitely something you can teach the younger generation.
How millennials could reinvent the banking industry
Technology may be the obvious answer. As primarily digital natives, millennials have a higher expectation for digital banking tools. Automation and a strong digital presence can be the difference between the bank you choose and the bank you choose to give up. When it comes to designing the customer experience when banking for millennials, a mobile banking app is often more important than the type of checking account.
That's not to say that a Wall Street bank is preferable to a Main Street bank. Fact: 46% of millennials say banking locally is important for your everyday banking needs. And millennials are far more willing to say, "Adios," to a megabank that isn't meeting their needs, compared to any previous generation.
What does a millennial want in a financial institution?
While you know what you want your banking experience to include — digital bank magic, personalized customer service, and the perfect financial services fit — the perfect community bank or credit union should appeal to your emotional needs. Millennials are proud of their money and the effort they've put into earning it. You may just as likely feel stressed about your finances because it is personal to you, as it should be. As a millennial, you don't want to have products sold to you, you want to build a relationship that prioritizes you.
Look where you are right now
Are you thinking about how you plan to pay for your kids' college, or how to find the right house for your growing litter of furry kids? Your priorities will define how you choose your financial institution. You want a bank or credit union to recognize where your finances are right now — kids or no kids, single or married, self-employed or job-hopping. Money matters are a hot-button issue for almost everyone. What are yours?
Understand why you want what you want
If you want to leave your megabank, it's not just because you need a new hobby. There's a reason why you are making a change and it's an important one. Perhaps you are searching for investment advice that helps maximize your savings, or you need to start a conversation about how to manage debt. What motivates you?
See your world up close
While there are global financial issues (hello inflation, we see you), there are also local and regional financial issues that a community bank or local credit union understands. If you are in an agricultural region, or the energy sector powers your local economy, financial advice that is relevant to where you live, and a primary financial institution that supports your community makes a difference. What powers your local economy?
Tune in to your channel
Your community isn't the only place you live. The digital world is where you spend your time, your money, and your life. If you choose to communicate via text, let your financial institution know that. Many community financial institutions are working to provide these tech solutions, but also make your digital banking experience personal. Let them, and help them meet your needs the way you prefer. You're also defining the experience for younger generations. What's your digital channel?
Know and feel your worth
The total size of the millennial generation (your generation includes Americans approximately born 1980-1995) gives it a powerful voice in the marketplace, and the financial landscape is no different. As boomers begin handing off their wealth to their children, your buying power will only increase.
As a huge marketable segment, you have a lot of choices to steer the industry. As an individual, you have dollars you need to invest wisely and life goals that you want to achieve. How you think and how you feel about your money should drive your banking choices. Does your financial institution understand your thoughts and hopes for the future?
Find the financial institution for your life
At this point in your adulthood, you've likely already realized your path is completely different from your parents’. You change jobs more frequently, just like you change banks more frequently. The main culprit? Your life is changing quickly — always has been — and making choices and changes to keep up only makes sense.
But here's the big banking picture: You're not obligated to navigate all of this change alone. Your money is your tool to help you live your best life. It makes absolute sense that you should have easy access to the advanced financial literacy that a community bank or credit union has to share with you.
Plus, they aren't trying to grow their corporate profits; they are interested in helping you build that best financial life now and in the future. Their future looks a lot like your future. It's time to change the banking industry and choose a new financial home that is going to make your life all you want it to be.