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The 2015 “Wall Street Reputation Study” from Makovsky, found that more than two-thirds of Millennials (69 percent) reported that they did not trust financial institutions, which was higher than the percentages found among Gen Xers (59 percent) and baby boomers (54 percent).
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A 2015 Gallup poll found that 31 percent of Millennials are “actively disengaged” with their primary bank, which was significantly higher than other generations, which reported a 20.7 percent disengagement rate on average. Millennials were also the least likely to be “fully engaged” with their bank, with 23 percent of Millennials reporting full engagement versus an average 33.7 percent engagement rate among other generations.
The Millennial perception of banking is so bleak that in a survey of 10,000 Millennials from Viacom Media Networks, 71 percent said that they “would rather go to the dentist than listen to what banks are saying.” And among the 10 “least loved brands by Millennials” the survey reported that four were banking companies. The Viacom researchers also found that one in three Millennials are open to switching banks in the next 90 days. They concluded, “Banking is at the highest risk of disruption [by Millennials].”
Data from the FDIC shows that Millennials represent the most “unbanked” and “underbanked” generation. Of those aged 25 to 34 years old, 12.5 percent are unbanked and 24.7 percent are underbanked. The older age cohorts report just 8.3 percent being unbanked and 23.9 percent being underbanked. And on top of that, Millennial suspicion extends beyond the banking industry and into investing as Capital One Investing's 2016 Financial Freedom survey found that 60 percent of Millennials distrust financial markets.
Given these dismal figures, it’s easy to become cynical about Millennials’ interest in the banking and investing sectors. It might even seem like a lost cause to attempt to market financial services or communicate corporate messages to Millennials. But for all the skepticism Millennials demonstrate in these surveys, they also show a lot of potential for profitability.
According to Gallup, “When Millennials are fully engaged as customers, they’re more profitable and loyal than are other customers.” The Gallup report goes on to say that fully engaged Millennials are also more likely than other customers to recommend the products they use to other people. And they are less likely to choose products solely based off price.
While the Viacom survey found that 73 percent of Millennials “would be more excited about a new offering in financial services from Google, Amazon, Apple, Paypal or Square than from their own nationwide bank,” Gallup found that Millennials were just “as likely as other generations to have core deposit products [e.g. checking account, debit or credit card, online bill pay, direct deposit, savings account] with their primary bank.”
And even more encouraging for banking marketers, Gallup found that Millennials have a greater percentage of their wealth tied to their primary bank than any other generation. Millennials had a 69 percent “share of wallet with their primary bank” while other generations had a 59.3 percent wallet share with their main bank on average.
So, Millennials tend to be more suspicious of traditional banking and investing than other generations but present great opportunities for companies in these sectors. The focus now becomes: how do companies in these industries engage Millennials to earn their trust?
 Meredith Deen |
It’s obvious that Millennials prefer digital engagement, but the intensity of this preference is eye-popping. Gallup found that 73 percent of Millennials prefer to have a digital relationship with their bank rather than a personal relationship, meanwhile only 58 percent of Gen Xers, 43 percent of baby boomers, and 28 percent of traditionalists said they preferred a digital relationship. And Millennials act on this preference, with 84 percent reporting that their relationship with their bank is primarily digital.
While banks have significantly broadened their digital services in recent years, there’s still room for improvement, as a FICO report found that 43 percent of Millennials “don’t think that their bank communicates to them through their preferred communication channels.”
Meredith Deen, President of Financial Management Solutions, Inc., has several suggestions for how banks can appeal to Millennials. She said these institutions should provide text alerts for specific events (e.g. low balance), online account opening and bill pay, online loan quotes with linked assistance, mobile appointment setting with email and text reminders, and “robust mobile apps” that allow remote deposit, account-to-account transfers, and bill pay.
Deen said banks should make their services “very personal” for Millennials, and one way to do so is to “develop a healthy social media relationship.” Posting financial news to LinkedIn or tweeting about interest rate changes is helpful. Sending customers hordes irrelevant emails or posting on their Facebook walls is not.
 Thomas Ryan |
Given that Millennials are estimated to represent $1.3 trillion in buying power in the U.S. and now that financial planning and investing is coming into focus for the generation, it’s easy to overstate the importance of marketing financial services to Millennials.
Also, because banking and investing are often mentioned in tandem, it’s tempting to lump together how these services are marketed. But to do so would lead to misperceptions.
In general, most companies are less focused on retail investors and more focused on institutional investors, said Thomas Ryan, CEO of ICR. Because companies are not bifurcating retail investors by generation Ryan said he has “never heard of a company specifically targeting Millennials from an IR perspective.”
Another IR professional told O’Dwyer’s that her firm doesn’t communicate with Millennials any differently, because her company doesn’t want to accidentally overstep any regulations.
Although it’s easy to overstate the importance of marketing financial services to Millennials, it’s also not a coincidence that digital ad spends for financial services continue to surge as more Millennials reaching an investing age.
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Ross Benes is a journalist and researcher who has written for The Wall Street Journal, Adweek, AdExchanger, Quartz, Business Insider, and Esquire. His first book will be published by Sourcebooks next April. You can follow him on Twitter @RossBenes.
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