What Do Millennials Care About When It Comes To Banking?
Already the largest generation in the workforce, Millennials are expected to surpass Baby Boomers as the country’s largest living adult generation sometime in 2019. Born between the years 1980 and 1996 (give or take a couple years on either side depending on which research you’re looking at), the Millennial generation has been the subject of quite a bit of consternation in the media over the last fifteen years. For many people, “Millennial” is less a defined group of people than a general term for young people, some of whom actually belong to the cohort born after 1996 (Generation Z).
But a huge portion of Millennials are already well into their thirties, which makes the common “How to Manage Millennials in the Workplace” articles rather silly considering that Millennials are increasingly the ones doing the hiring and managing for today’s businesses. This misconception has made it difficult for many industries to target Millennials as a demographic. They don’t have a good sense of what these consumers want from their customer experience because they don’t really understand who they are in the first place.
This is especially true of the banking industry.
Millennials and Banking
Banks already suffer from peculiar limitations common in the financial services industry. They tend to design their services and products in ways that make sense to them and suit their needs rather than starting with what the customer wants from them. Unfortunately, the decision makers behind these strategies usually possess knowledge and expertise about banking services that the typical customer does not. This results in products that customers find confusing or actively hostile to use.
When it comes to Millennials, who place usability and a quality user experience far above brand loyalty, delivering a poor customer experience can be devastating. While their parents might have been willing to endure inconvenience from their bank, Millennials are quick to seek alternatives. That tendency has created opportunities for alternative banking applications like PayPal and Venmo, which allow them to manage their money easily without the perceived hassle of dealing with a traditional bank.
And in some ways, Millennials are less likely to feel like they need a bank than previous generations. Mobile apps that allow them to manage money make it easy for them to pay their bills and make purchases, a process made even easier with the proliferation of mobile payment services like Apple Pay or Android Pay.
Since Millennials carry more debt than the average American (most of it due to credit card debt and student loans), they’re delaying major purchases like buying a home that traditionally require financing through a bank. It also doesn’t help banks that the memory of the 2008 financial crisis lingers, and repeated unethical behavior by some major banks continues to give them a bad reputation in the eyes of Millennials.
Banking Needs a UX Overhaul
The first thing banks need to do to better target Millennials is to recognize that no one wants to use a bank for the sake of using a bank. Customers of all ages want products and services to help them manage their money more effectively in order to meet other needs in their lives. If a bank offers them the best way of doing that, then they’re more likely to use a bank than rely on multiple services.
For Millennials, this begins with designing a quality user experience. They want financial products and services that are more streamlined and intuitive. Designing mobile banking applications isn’t as simple providing users with a way of checking the balance of their accounts. Millennials increasingly access and manage their financial assets exclusively through these applications; when they want to do something with their money, they expect to be able to do it quickly and smoothly through a single channel. They don’t want to travel to a physical bank, spend time on hold waiting for a customer service representative, or even log onto the bank’s website.
But designing more user-friendly products is only part of the challenge banks face. They must also find ways to build a trusting relationship with Millennials throughout their customer journey that will allow them to show how banking services can add value to their lives. Most Millennials are keenly aware of their financial challenges, but don’t know how their bank could help them. A PWC study found that only about 25% of banking products are available online, making it very unlikely that mobile-exclusive users will even realize they exist. By building a relationship over multiple touchpoints, banks can better understand what Millennial customers want and deliver the sort of convenient, proactive services that can build trust and loyalty.
While the banking industry faces a number of institutional challenges to rethinking its customer experience strategies, it cannot afford to rely on outdated expectations of what customers want. Millennials have different needs than their parents and expect a different relationship with their bank. For banks to compete with the upstart financial products and services being offered by newer technology companies, they will need to reframe their conception of the banking experience and show Millennials how they can become valuable, trusted partners in their lifelong financial journey.