If you ask Baby Boomers, millennials have destroyed pretty much everything—napkins, Applebee’s, starter homes, even cereal. And while banking will likely always exist in some fashion, they may be in the process of killing conventional financial institutions, with branches and physical locations potentially on their way out.
Unlike their parents, Millennial don’t have faith in traditional financial services, due in part to the financial crisis of 2008, a deluge of scandals , and their general unhappiness with the banking status quo . They visit brick-and-mortar lenders less often—if they visit them at all.
At the same time, the rise of the digital economy is offering ,millennials other options. Without a doubt, America’s 73 million millennials are changing the entire mindset around how money should be managed, saved, and spent. But if millennials aren’t happy with what’s always been, what’s their new definition of normal?
Business Model Over Branches
According to a Kasasa study, 82% of millennials have no issue with switching banks , and one-third of them are open to switching banks within 90 days. Their lack of loyalty to a specific financial brand—which differs from their parents’ and grandparents’ generations—points to the possibility that millennials mostly see major banks as interchangeable and are looking for specific ways banks can help them.
Many are okay with a branchless, fully digital financial partner like SoFi, and would consider putting their money into non-financial service companies they already use regularly, such as Square or PayPal.
They’re much more likely to turn to the web in search of a lender focused on improving the lives of their customers, not their executives, which means financial institutions need to step up their game—both in digital prowess and real-life trust.
A Great App
More than one in three millennials say they’ve abandoned a mobile-banking process because it took too long. And just like their attitude toward the companies they trust with their money, millennials judge a good app by its capabilities first—speed, security, mobile deposit, customizable alerts, and quick access to human or AI customer service top their digital priority list.
They’re also likely to judge an app by its cover and are more likely to be drawn to one that not only works well, but looks great. Millennials also give big points to financial apps that intuit their needs based on account types, balances, and activity, and offer up personalized products and education. To find the perfect app for them, millennials will often turn to online ratings and reviews or recommendations from their peers.
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Beyond an attractive design and a simple UX, extras like budgeting tools and wealth management are the keys to Millennial hearts and can be deal breakers, especially for those who face the huge financial challenge of mounting student loan debt, underemployment , or both.
In fact, a lender of the future may look more like a complete financial ecosystem that not only facilitates transactions, but also acts as a “digital concierge ” that makes relevant recommendations and even offers advice. For customers, it means bespoke solutions in real-time that help make their lives easier.
Engagement and Customer Service
Millennials seem to have more problems with their banks, and are less satisfied with the solutions they’re provided.
Even though they engage with their banks mainly digitally, they’re still looking for that person-to-person interaction, and want to know that the bank is listening to their problems and working to fix their issues—whether it’s a glitch with the app or something larger. Anticipating millennials’ concerns with finances and financial services will go a long way in maintaining their trust—and business.
Low Fees and High Interest
If there’s one thing different generations have in common, it’s the collective dismay over financial institutions charging high fees for everything, from opening accounts to overdrafting and making transfers. And beyond that, there’s the dissatisfaction that comes with accounts that offer tiny interest rates after the mountains of fees. This is an essential issue, especially because, according to Gallup , millennials were most likely to leave their current lender over an issue with fees.
Even forgiving a few fees would make a difference in retaining their customers. But thanks in large part to the rise of digital opportunities like no fee online banking, customers are able to keep more of their hard-earned money in their pockets than ever before.
Transparency and Truth
Finally, millennials just want their bank to be straight with them. To tell them about fees up front, to make information easy to find, and to be honest about their practices. They’re marketing savvy and read the fine print.
And, as previously mentioned, brand loyalty won’t supersede their dissatisfaction. Millennials are wary to gimmicks and obfuscation, and once their trust is lost, that’s it—there’s no going back.
Let’s be real here—the financial industry isn’t going anywhere. But in order to keep up with this generation’s needs—and the next’s—lenders need to truly hear what millennials are asking for, and then rise to the occasion.
SoFi Checking and Savings: All of the Above
We hear you, millennials. And we want what you want. So we developed SoFi Checking and Savings®, an online banking experience that has no account fees. With SoFi Checking and Savings, withdrawing cash is fee-free at 55,000+ ATMs worldwide (fee structure is subject to change at any time).
Plus, you’ll gain access to the SoFi community—members like you, career coaches, credentialed financial planners, and special events.
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SoFi members with direct deposit can earn up to 2.50% annual percentage yield (APY) on all account balances in their Checking and Savings accounts (including Vaults). There is no minimum direct deposit amount required to qualify for 2.50% APY. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. Rate of 2.50% APY is current as of 09/30/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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