Millennials are the key to growing credit union membership, but many financial institutions may be missing the mark as they search for ways to connect effectively with the sought-after generation, according to a recent study.
In its recent semiannual Banking Outlook report, which surveyed 2,000 consumers of various ages and 556 financial services leaders, Chicago-based research and analytics firm BAI found that most new customers of financial services organizations are millennials. However, financial institutions may be falling short on marketing to millennials and offering tools and services they really want.
In particular, BAI reported that the vast majority (about 75%) of millennials find a new primary financial institution via online research or digital advertising. However, even though millennials are one of the biggest sources of new business, financial services organizations allocate only about a third of their ad budgets to digital channels, the study found.
“It is important for financial services organizations to thoroughly know their customers' financial needs as they develop strategies. Without direct feedback, they may be missing the mark, and consequently, missing key opportunities for growth,” BAI Managing Director Karl Dahlgren said.
Not surprisingly, millennials also have a low tolerance for outdated banking apps — over half said they would switch banks to get access to a better banking app, according to the study. However, 70% of financial services organizations in the BAI survey said they think their banking apps already meet their customers' needs.
Another issue is the growth in person-to-person (P2P) transfers — a new competitive landscape in which non-FI organizations pose a significant threat.
“Person-to-person (P2P) platforms are becoming more relevant across all surveyed generations of consumers, but non-banks are the leading P2P platform providers. In the last 12 months, 93% of millennials, 81% of Generation X, 62% of baby boomers and 49% of the silent generation used a P2P platform more than once.”
Financial institutions are still reckoning with the role of their branches — and exactly how much millennials really value them, according to the BAI survey.
“Across generations surveyed (millennial, Generation X, baby boomers and silent), the number one reason why consumers choose their [primary financial institution] is convenient branch locations. However, almost 50% of bankers reported that in-branch transactions have decreased over the past year. Additionally, millennials surveyed that incentives (18%), such as cash or gifts, is almost as important as convenient branch locations (25%),” it reported.
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