Here Come the Millennials!
Special to Needham Bank
No one is yet riding up and down New England streets yelling, “The Millennials are coming! The Millennials are coming!”, but that doesn’t mean there isn’t a revolution about to take place. And according to demographic experts, no sector will escape unscathed – and the financial services sector is likely to be most disrupted.
Millennials – generally defined as those individuals born between 1981 and 2000 – are typically seen as savvy, independent, skeptical, but with a strong sense of community and social obligation. Much like the Greatest Generation, whose outlook and world-view was shaped by the Great Depression; Millennials have also lived through a period of economic shock, in the form of the Economic Crisis of 2008. Many were forced to delay entry into the workforce and, once there, found their prospects generally diminished, at least temporarily.
The on-line magazine “Scratch” published by Viacom carries what they call “The Millennial Disruption Index”. Based on a survey of 10,000 Millennials born between 1981 and 2000, its primary purpose is to determine which brands – and which sectors – Millennials love… and hate.
It might come as no surprise that they like technology and technology company brands, companies like Google, Amazon and Apple.
But whom do they dislike? The Big Banks. Four of the top ten least-liked brands are the largest US banks. According to the survey authors, “Banking has the highest risk of disruption among any sector when it comes to Millennials. Our survey found that 71% would rather go to the dentist than listen to what banks are saying; 53% don’t think their bank is any different than any other; and fully one-third are open to switching banks in the next 90 days.”
While this obviously spells a world of trouble for the Big Banks, Needham Bank President and COO Mark Whalen believes it presents nothing but opportunity to tech savvy community banks like his.
“In many respects we are exactly what this generation is seeking – we are community-based, with a high degree of social interaction at every level,” says Whalen. “But we are also technologically adept, offering a five-star on-line banking experience; the ability to deposit checks by taking a picture of one with your smart phone; and the ability to transfer money to individuals via any US bank for free.”
Surveys also show that Millennials do not like to pay fees or unnecessary charges. Again, Whalen believes this makes Needham Bank the perfect solution.
“We make a practice of not dinging our customers with fees. We reimburse them for their use of non-Needham Bank ATMs anywhere in the world, in effect making withdrawals cost-free. We don’t believe our customers should have to pay to get access to their own money.”
But why would Needham Bank specifically seek out Millennials? For Whalen it is simple:
“First, as a group they are very aligned with our values, especially in terms of community involvement and things like the Buy Local movement. Second, they are open to new approaches and solutions, something that is at the heart of what we call the Evolution of Community Banking. And third, they represent the future for the communities we serve. Millennials will be forming households, creating businesses, assuming positions of civic responsibility. We want to be with them every step of the way,” Whalen said.
The numbers are not small. Thanks to the so-called “Echo Boom” of 1991-92, when Millennial births peaked as a kind of “echo” to the earlier Baby Boom, there are currently 84 million Millennials in the U.S. That’s a lot of opportunity in anyone’s book.
One advantage Needham Bank may have in attracting its fair share of them in Eastern Massachusetts is that Millennials prefer to buy products and services recommended by friends and family – people they know- and they tend to tune out paid media, like broadcast television. These preferences track perfectly with Needham Bank’s own strategy in terms of customer acquisition.
Thus for Mark Whalen and the rest of Needham Bank, the cry “The Millennials are coming” is music to the ears. “We want them to know that we welcome them with open arms,” he concluded.
(Robert Waite is a frequent contributor to The Huffington Post and also provides consulting services to several North American financial institutions.)