In the previous post, Preparing for the Coming Wave of Millennial Entrepreneurs, we reported many of this country’s future small business owners are members of the 35-and-under crowd. As these millennials become more financially stable and work to make their entrepreneurial dreams a reality, they’re going to need access to capital. But that doesn’t necessarily mean they’re going to reach out to traditional lenders like banks or credit unions.
Banks are going to have to work hard to gain this business. That’s because 53 percent of millennials don’t think their financial institution offers anything different from other banks, reports the Millennial Disruption Index. Even more alarming are the facts that this same group reports that all four of the top banks are among the 10 “least loved” brands, and a third of millennials believe they won’t need a bank at all in five years.
What do banks and other traditional lenders need to focus on in order to improve their reputation among millennials?
Traditional products, only better
The good news for banks is that a recent CCG Catalyst survey of millennials discovered that 90 percent already use a bank in some fashion. Many write checks on occasion (yes, really!), regularly hit up an ATM, have an auto or school loan, and stash money in a savings account. But millennials won’t settle for just average when it comes to these offerings. They look for products with premium features, such as high savings account interest rates, no fees (high fees are a top cause of dissatisfaction among millennials, according to a 2015 Accenture survey), transparency, and a credible guarantee that their personal information remains secure and private. Additionally, while millennials have the reputation of staying glued to a screen at all times, they do desire customized assistance when it comes to setting financial goals and navigating tricky transactions. Traditional banks certainly have the advantage over online lenders when it comes to offering this personal touch, yet they often don’t tout or emphasize it enough.
With 94 percent of millennials grabbing their smartphones to make transactions instead of hitting up the local bank branch, it’s imperative that traditional banks offer a stellar online banking experience. That means offering mobile banking, budgeting tools, real-time mobile payments, digital wallets, and wealth management through an app or user-friendly mobile site. And to stand out, they really need to act like a millennial: send text messages in the right contexts, be accessible all the time, welcome customization and innovate. The same applies for traditional banks that look to remain competitive in the small business loan marketplace. According to Barlow Research, the current number of small business owners under 45 years old is small (12 percent), but it’s expected to grow consistently as current proprietors reach their golden years and hand over ownership to the younger generation. To attract these borrowers, banks need to up their digital game by offering a transparent, easy online loan application process.
Speedy, accommodating service
A common banking complaint from younger business owners? How long it takes traditional lenders to respond to requests or questions and to “get things right the first time,” according to Barlow Research. When it comes to banking, younger generations want flexibility. Brick-and-mortar banks can provide this by giving customers the ability to conduct in-person financial transactions when they want, how they want. An easy way to do this is to be open longer hours during the week and at least one day on the weekend. Reliable features such as mobile check deposit and 24/7 chat-based customer service are also extremely attractive.
To learn more about what millennials demand from their banks, check out the ebook, “How to Create a Faster, Smarter Lending Process.”