What they (don’t) want in a bank
Millennials crave responsibility, convenience and authenticity. But don’t take our word for it. If you’re looking for ways to attract them as customers, it’s best to go straight to the source.
Millennials have an eye for the inauthentic. Put a new logo on the same old product, and they’ll notice. Pretend that you care, and they’ll see right through you. Assume you know what they want, and they’ll quickly disabuse you of that notion.
It’s a hard quality to measure, but authenticity is essential for community banks seeking to attract millennials as customers. And although a community bank’s initial reaction may be confidence—certain that its commitment to both its customers and its communities oozes legitimacy—it’s not that simple. For millennials, authenticity is more than a strong backstory. It’s also present in the subtle ways community banks communicate with these digital natives, either showing that they truly understand their customers or inadvertently turning them off.
There are a lot of things not to like about traditional banks if you’re a millennial, according to Tonya Rapley, a 32-year-old millennial financial educator and the founder of MyFabFinance.com. Too many banks see this demographic as a profit center and aren’t vested in their personal outcomes. Marketing teams read studies about what millennials allegedly want instead of taking the time to do any firsthand research or develop a fresh approach. They are not as flexible as they should be with
millennials’ contracts or freelance jobs. They don’t relate to them as peers.
And then there’s the tone they often use when trying to help.
“A lot of their advice and information feels parent-led rather than peer-led,” Rapley says. “‘You shouldn’t do this.’ ‘You shouldn’t do that.’ ‘You should know better.’”
“They are not just going to pick the bank that is closest to them with branches. They are going to pick the institution they can get excited about.”
She understands just how demoralizing that can feel. When she was in her 20s, she was in a physically and financially abusive relationship, one that left her in debt with a gutted credit score. She repaired her financial life, and now she coaches other millennials on how they can stop living paycheck to paycheck and start saving and planning. Clients are comfortable admitting their mistakes to her, she says, because she understands how things can go wrong. She doesn’t judge; she just gives encouragement and empowering advice.
Searching for structure
This message of responsible adulthood resonates much more with millennials than it would have with baby boomers at that age, says demographer Neil Howe, who coined the term “millennial” along with William Strauss in 1991. He cites the success of insurance company MassMutual’s Society of Grownups campaign, an initiative offering online financial classes, tools and information. Its subtitle: Helping You Find Your Inner Adult.
“Boomers wanted to find their inner child and act out and find their impulsive side that institutions were suppressing,” Howe says. “Millennials want to figure out the rules. Their parents never told them how to become grown up.”
One way banks can do that is through mortgage lending, Howe says. Rather than making it look like the bank is giving away money like lenders did during the last bubble, they should position mortgages as a tool that can help customers be grownups who build long-term wealth.
One millennial’s dream app
There’s an app for everything in a millennial’s life, but sometimes all those apps get exhausting.
Just ask Tonya Rapley, the 32-year-old millennial money advisor and founder of MyFabFinance.com. She and her peers use a bunch of different apps to track elements of their financial life—often linking their bank accounts and credit cards—but the list can be unwieldy. Rapley would love to see a financial institution put them all together into one app. Elements would include:
- Savings. Instead of just stashing cash in an account, some institutions offer savings buckets where customers can allot that cash into buckets for a trip to Europe or saving to quit their jobs. But it can be hard to remember to save, so they also use apps like Digit, which analyzes bank account spending on a daily basis and moves money to savings if the customer can afford it that day.
- Account monitoring. USAA has an account where customers can set spending goals by category and get regular feedback on where they can improve. But to figure out the breakdown, millennials might download another app to tell them how much money should be allotted to rent, entertainment and other expenses based on their salary.
- nvesting. Acorns is an app that lets customers invest small sums using their smartphones by connecting bank accounts, credit cards and debit cards. Stash Invest is another app that facilitates investing and provides investment recommendations. No trip to the bank is required.
“The first bank able to fold all those services into a checking and savings account will be the preferred bank,” Rapley predicts. “It shows they understand
Another frustration millennials report, according to Rapley, is when banks change the logo and branding on an existing product but don’t change the guts. While fintech firms are strategic in their approach, traditional banks are not necessarily innovating, she says.
“Fintech companies are very intentional with design and knowing who they are appealing to,” she says. “The language is user-friendly and relatable. It’s developed by millennials who understand the population.”
Some banks, such as $480 million-asset Centric Bank in Harrisburg, Pa., are working to change that. Last year, the bank instituted a 16-person millennial advisory board in partnership with the Harrisburg Young Professionals (HYP), a local organization with 2,500 members.
The idea came to CEO Patti Husic after she spoke at HYP’s inaugural CEO breakfast series. Hoping to tap into the enthusiasm of the people she met there, she reached out to HYP’s executive director, Derek Whitesel, 28. The bank would glean insights from millennial members, while, in exchange for a two-year commitment, those members could build their resumes, network with the bank’s board and use their voices to help create change. Millennial bankers are also on Centric’s board.
One of the biggest takeaways so far came when a board member with a video production company filmed Centric’s online account-opening process to share with the board. It took him almost three-and-a-half minutes to figure out where on the website he could open an account—and he said he would have quit looking for it after 20 seconds if he weren’t doing it for the project.
But it was more than an inconvenience. He interpreted it as a message from the bank: “We don’t want you to bank this way.”
One person on the millennial advisory board asked if the [bank’s] software, which came from one of the big core-processing vendors, was from the 1980s.
It got worse from there. One person on the millennial advisory board asked if the software, which came from one of the big core-processing vendors, was from the 1980s. People laughed when given the option to put $5 million in the account. They were puzzled why they had to enter the routing and account numbers from their checks—which not everyone had—instead of their debit card number.
When they got to the end of the process, they were dumbfounded when they learned they’d have to print out the form and either mail it or bring it to the office. Some didn’t own printers or stamps. One didn’t even own a computer, doing everything from his phone. The bank’s website said to download the bank’s mobile app for the best experience, so he did—only to discover that he couldn’t open a new account through it.
“To me, that was eye opening,” says Husic. “I don’t want feedback filtered. I want to hear it. I may cringe when I hear it, but if we don’t know the hard truth, we’re not going to be able to change this.”
In the end, it took 18 minutes to print the paperwork to open the account, not including the time to find the link. When they tried a credit union site, the process took 10 minutes, with no printer or stamps necessary.
“For younger people, technology [allows us] to use time more effectively,” says Whitesel. “From the consumer end, I think oftentimes the majority of the population is not really looking to take time to go into the bank. We want to be able to have an easy experience going online and doing most of the same things as going into the bank.”
That was just one exercise, with more to come. Perhaps Centric will discover findings to further support Howe in his belief that mobile banking is just a prerequisite for doing business with millennials—not an end. The digital experience needs to go deeper, he says, with millennials particularly responding to gamification that lets them measure achievement and reach new levels, whether that’s FICO scores, saving scores or some other measurement.
Free Go Local toolkit
ICBA is no stranger to authenticity. Through the Go Local initiative, ICBA helps community banks support the local shops, restaurants and other businesses that make their communities unique. The Go Local toolkit includes marketing tips, fliers, graphics and stickers to help your community bank promote Small Business Week (April 30–May 6) and even ideas for launching your own Go Local campaign. If your bank has a community involvement story you would like to share, email email@example.com and join the conversation on Twitter with the hashtag #GoLocal.
Download the Go Local toolkit at icba.org/go-local/spread-the-word/marketing-toolkit
But it has to be real, and that’s where community banks may have an edge.
“It starts with having something that’s not just big marketing, but something that is really authentic to what the company stands for and what it does,” says Andrei Cherny, CEO of Aspiration, a fintech firm offering socially conscious investing and checking products using a “pay what’s fair” model. Aspiration is not a chartered bank, so it provides checking accounts through Radius Bank, a Boston-based community bank with $850 million in assets.
With trust in financial institutions at an all-time low, Aspiration is meant to be an alternative that puts customers’ interests first and proves it by putting faith in those customers. They are free to pay Aspiration what they like for its services, and almost all its customers do pay something, Cherny says. It also donates 10 percent of revenue to “charitable activities expanding economic opportunity” while making it easy for customers to give and track charitable giving.
“Because of that, they have a sense of empowerment and ability to make choices for themselves; they are not just going to pick the bank that is closest to them with branches,” Cherny says. “They are going to pick the institution they can get excited about.”
When asked why Aspiration chose economic opportunity for its charitable giving, and if it had used surveys or focus groups to determine what charity would best resonate with customers or tap into the zeitgeist of Bernie Sanders, Cherny paused. It was the kind of pause that let the jaded reporter know she hadn’t quite grasped what authenticity meant. “It’s really less about how to figure out what pleases the consumer and more about our mission,” he explained politely. “We’re about spreading economic opportunities to people.”
And that’s the difference between authenticity and pandering. Authenticity isn’t about focus groups or polls; it’s being who you really are and finding a resonant way to tell that story.
But some stories shouldn’t be told. While authenticity is essential, it can also turn off customers if the message is wrong. Rapley cites social media posts as a common pitfall. Even seemingly benign pictures of staff or events can send a negative message if there are no people of color in them. After all, the millennial generation is the most ethnically diverse in American history; about half are members of a racial or ethnic minority. Millennials look for a reflection of themselves and move on when they can’t find it.
“For millennials across the board in all different industries, you see an unwillingness to accept things the way they are [just] because that’s how they’ve always been,” says Cherny.
And if community banks want to attract these discerning customers, they need to do the same.
Case study: NewDominion Bank
In young and hip Charlotte, N.C., $320 million-asset NewDominion Bank is using its perch as the only community bank in town to launch a campaign
targeting what CEO Blaine Jackson calls “established millennials”: those educated professionals who have
left home and established themselves in Charlotte’s high-rise apartments.
It’s setting itself apart with:
- A playful tagline. Taking a page from the bustling craft brewery scene and millennials’ desire for authenticity, it chose the tagline “Banking Handcrafted.”
- Community activity. One untested lesson Jackson picked up while lunching with millennials: They don’t necessarily like to talk about finances, but they love to listen. Jackson hopes promoting the bank’s community efforts, including free seminars through its financial literacy foundation, involvement in local charities and employee volunteerism, will make an impact.
- A dazzling app. NewDominion’s digital offerings include Apple Pay; a person-to-person payment system to rival Venmo; and the ability to turn debit cards on and off from its mobile app. It’s a convenient alternative to calling the bank if customers misplace their cards—especially if they are likely to find them. Another mobile product they offer is a financial management and budgeting tool.
- Concierge-level service. NewDominion’s bankers regularly travel to customers and avoid inconveniencing them with annoying tasks like signing paperwork. Either a banker takes it to them or they can sign electronically. “Literally the only reason someone needs to come to us is to deposit cash,” Jackson says.
- Being where the customers are. The bank wants to be where millennials live, work and play. That means partnering with local partners for free pizza and beer events in apartment complexes and incentivizing them on the deposit side with gift cards for local businesses.
- Going off-site. Jackson is thinking of partnering with a local coffee shop to create a space where business ideas are exchanged.
Kelly Pike is a freelance writer in Virginia.