What Do Millennials Really Want From A Financial Institution? Well, Just Ask Them
By Mike Duncan
Financial institutions wanting to court Millennials would be well-served to ask them what they actually want from an institution -- and how they want to be approached.
This is a basic tenant for interacting with the younger generation, no matter the financial product or service. But it might be especially important to remember when figuring out how Millennials want to interact within an institution’s digital channels.
Take mobile banking apps. Unfortunately, user interfaces and user experience seem to be an after-thought in many cases when it comes to consumer-facing products provided by banks and credit unions. Few institutions take the time to gauge people’s opinion about certain features before launching them, but instead take stabs in the dark about what might be popular -- only to experience weak adoption afterward.
But at Bankjoy, we bring in focus groups and ask them to interact with our user interface, and then we make adjustments. For example, to counter low adoption of apps that first show a menu after logging in, we asked people what they wanted to see first. Overwhelmingly, they valued viewing their account balances before anything, even a menu. This is especially true for the Millennials we asked -- that’s an example of taking user interface serious and not being an afterthought.
Now take personal financial management tools on mobile apps. Most banks and credit unions that provide such tools believe customers prefer making financial decisions themselves, after viewing all of the data from their various accounts aggregated into one app. Institutions try to facilitate their customers’ financial decisioning by creating separate categories of expenditures, such as groceries and travel, so customers can better gauge just where they are spending money. Many institutions are stuffing as much data as they can into their PFM apps, seeing that as an advantage.
But for Millennials, that’s simply not enough. Millennials are now saying loud and clear that they would rather institutions help them actually manage their finances and also tell them what to do with their money.
According to the results an Accenture survey of nearly 4,000 retail banking customers published in the report, “The Digital Disruption in Banking: Demons, Demands, and Dividends,” 67% of respondents who were 18 to 24 years old said they were interested in their institution providing tools and services to help them create and monitor a budget. What’s more, 58% of respondents said that they wanted their institution to proactively recommend products or services to them that they might find useful.
Millennials also want to know what they need to do to achieve their goals – for example, right after college graduation, should they focus strictly on paying off their student debt or should they also start investing while servicing the debt at the same time? Which investments make the most sense?
We’re creating new features within our apps so institutions can better meet the needs of Millennials.
First, we have a way for customers to identify their savings goals to make it much easier for them to accomplish them, whether it’s saving for a car, or a home, or a trip to Paris. We let customers plug whatever savings goals they may have within the app, and we try to make it as personal for them as we can, letting them name their goals and even apply pictures to that goal that they have uploaded from their own files or from social media. A growing body of research has shown that the more a person can concretely visualize their goals, the more they can visualize -- and then take -- all of the steps necessary to achieve those goals. We allow users to decide how much to save and how often. The bank or credit union knows how much each user is saving each week or month.
Then we’ve developed the capability within the app for institutions to make personalized offers to these customers, such as a loan, or personalized financial advice to help them achieve that goal faster.
If a bank or credit union wants to offer loans to customers who have saved a certain amount of money, we provide them with the admin tool to automatically create ad campaigns, based on criteria the institution inputs. For example, an institution can ask for all customers who have created a goal to save for a car, and then ask for only those who have saved, say, $2,500, which could enable them to use that as a down payment for a loan to buy a car. Banks’ marketing departments can design and upload images for ads.
We have three channels, mobile banking, online banking, and statements, in which ad campaigns can be distributed. Banks can link ads to pages on their website or to features in the apps. For example, we can create an ad that sends the user to the goal creation feature in the app to create a goal to save for a particular item.
Banks and credit unions can also give customers personalized advice on how to best achieve their savings goals. Through our admin tool, they can find who they want to target, and then send advice through the apps or printed on electronic statements. For example, institutions can target customers who have created a goal to save for a house, and then send tips, such as letting customers know the institution’s maximum debt-to-income ratio to give them an idea on how much credit card debt they should pay down before actually applying for a mortgage.
For Millennials in particular, they may have money in their account, but they may not have any idea on how to achieve their goal without help. Institutions can give them targeted messages about their ability to help these customers achieve their goals. We don’t dictate the type of advice – we let banks do their job. But we provide banks with the capability of full transparency on what customers are saving for.
Our white-labeled app can be downloaded for free from iTunes or the Google Play Store for iOS devices and Android devices, respectively. The bank customer can learn about the app from the bank's website where a link is usually provided to the app stores. Our apps give insights, help customers save money automatically, and help financial institutions understand their customers better.
This behind-the-scenes capability bodes especially well, because 52% of Millennials are using third-party apps from FinTech firms, instead of apps provided directly from banks, according to FICO’s report, “Millennial Banking Insights and Opportunities.” While we provide a third-party app, it’s white labeled, so banks and credit unions don’t have to give up those relationships.
Millennials are the fastest-growing generation today – and by 2030, there will be 78 million of them, compared to 56 million Baby Boomers, according to the FICO report. Millennials are beginning to earn more money, and accumulating more of the American Dream as they start to grow their families. It will become increasingly important for banks and credit unions to strengthen their relationships with Millennials, and finding ways now to do business with them – in the ways and manner they prefer – will become critical if institutions want to compete in the future.