Why Banks Should Worry About Millenials
Much has been written about the millennial generation (people born between 1981-2000). They’ve been accused of wanting comfort at all times, focused on living for today and having a narcotics grade addiction to their phones. I am technically a millennial, so I feel like I have a right to chime in on this one and somewhat agree with the assessment.
However, we do live in an instant gratification society which was built by another generation. We can watch an entire new season of TV in one sitting. We can text a pizza emoji to Dominos and expect a real one to show up in 45 minutes. We can effortlessly transfer money to friends for free through Venmo. We can’t be blamed for expecting high service and low costs from businesses. Which might explain why we generally hate banks.
Anyone who ever worked at Wells Fargo or followed them in recent years knows they have a broken service model. They opened accounts without permission, charged huge unnecessary fees and rarely put customers first. Wells may be the worst offender, but their problems are present throughout the industry. Banks generally put their own interests first.
A fascinating study on Millennials in 2013 by Viacom showed how deep the bank-hatred goes:
71% would rather go to the dentist than listen to what banks are saying
1 in 3 are open to switching banks within 90 days
73% would be more excited by a banking option from Apple, Amazon, Google or Square
…the list goes on. You can see the full study here.
But why should banks care about this generation’s demands? The Average millennial saves only 5% of their pay, and 70% of them have less than $1,000 saved. Most don’t own a home, don’t plan to soon, and have a net worth under $10,000. There’s not a lot of current deposit or lending opportunity for a financial institution.
BUT: This Millennial generation will see an inheritance of over $30 Trillion (yes, Trillion) dollars in coming years. To put that in perspective, each one would inherit an average of $400,000.
Banks should see that as an opportunity to acquire tons of half-million dollar clients early. They could start treating customers better, along with lowering unnecessary fees and improving customer technology… Ally bank online has had huge success with their business model.
Millennials basically want a smaller barrier between them and their money. Anyone who can provide that will be in a great position for a piece of this impending $30 trillion market.