Yahoo Finance What Millennials Want From a Bank
As the youngest and largest generation, millennials are making their mark on society. From trading taxis for Uber rides to delaying marriage and home ownership, young adults are turning many conventions on their head.
Even their banking habits can be unconventional, although industry experts say all generations share certain values when it comes to wanting a financial institution that is stable and secure. "Core expectations are the same, but the way millennials interact with banks is very different," says Matthias Goehler, senior vice president and head of industries at the e-commerce solutions company SAP Hybris.
[See: 10 Retirement Planning Moves to Make in Your 20s.]
Here's a look at some of what's important to millennials when it comes to banking, and how those things differ from older generations.
Technology is a must. As digital natives, millennials are unsurprisingly looking for ways to integrate technology into their banking experience. "Their preferences are very orientated toward quick interactions, either online or on a mobile app," says Lars Holmquist, senior vice president for the Americas at Collinson Group, a global firm that develops loyalty and lifestyle benefits programs. Those interactions could range from checking a balance to making a deposit digitally. "To me, convenience and access are the main drivers," Holmquist says, when explaining millennial interest in mobile banking.
Cash is still king. Despite their inclination toward technology, millennials aren't planning to give up their cash anytime soon. Qualtrics, in conjunction with Accel, surveyed 8,000 adults to learn how the different generations approach their money and payment options. "What we found is that 80 percent of millennials say they still use cash, and 64 percent carry cash most of the time," says Mike Maughan, head of global insights at Qualtrics and a millennial himself.
Mobile payments not as hot as online payments. Mobile payments may seem like a logical choice for millennials, but they have been slow to catch on. While millennials are 16 times more likely than baby boomers to use Apple Pay or Android Pay, their use still lags far behind that of cash. Millennials are five times more like to use cash than mobile payments, according to the Qualtrics study. "What that's indicating to us is that there's a long ways to go before mobile payments catch up," Maughan says.
However, what is hot among millennials is the use of online services such as Venmo and PayPal, which allow users to send payments that bypass the bank completely. Maughan notes 62 percent of millennials use Paypal, and young adults are six times more likely than older generations to use Venmo.
[See: 12 Financial Terms Every Retirement Saver Should Know.]
Privacy may be exchanged for a personalized experience. When it comes to privacy, Goehler says millennials may be more inclined to share personal information, assuming it benefits them. "In terms of day to day life, millennials are less concerned than older generations," he says. "[They say] I'm OK sharing something if I get something of value in return."
That something of value may be a more personalized banking experience. For instance, millennials may be OK with their data being used if it results in offers tailored to their interests or an app that intuitively knows what to display first. "Call it almost the Amazon effect of offer management," Holmquist says. Instead of having to search for relevant information, millennials may gravitate toward systems that use their personal data to display relevant information immediately.
Branches are not obsolete. As banking apps become more functional, "One might have anticipated that millennials aren't visiting the bank," Maughan says. However, they are visiting the bank and in roughly equal numbers to baby boomers. The Qualtrics survey found 30 percent of millennials report they visited a bank in the past week. Meanwhile, 33 percent of baby boomers said the same.
[Read: The 10 Best Banks of 2016.]
Future wants center around quick and easy banking. Goehler anticipates millennials will continue to press for banking changes that will make transactions more flexible and mobile. For instance, he notes some banking activities, such as mortgage applications, may require a personal meeting to verify a person's identity. "Millennials want to do this instantly," he says. "[They're wondering], why can't I do that on a video conference?"
Banking laws and regulations will undoubtedly play a role in how much financial institutions can do remotely, but millennials would probably be happy to do as much as possible from their phone. "In the end, it's the ease of doing business [that's important]," Goehler says, summing up just what millennials want from a bank.
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