Millennials are more likely to change banks than members of other generations, and it’s often in favor of smaller, community banks and credit unions, according to a recent survey by Accenture.
Of 18 percent of millennials who switched their primary bank in the past 12 months (versus 10 percent of customers 35 to 54 and 3 percent of those over 55), 5 percent went to local/community banks, and 3 percent went to credit unions, according to the 2015 Accenture North America Consumer Digital Banking Survey.
Among the reasons cited for jumping ship: higher fees and poor loyalty programs.
“We don’t have a similar study to be able to say that that exact trend is happening (in Wisconsin), but I will say that our members are investing heavily in technology to keep up with the demands of consumers, most notably millennials,” said Rose Oswald Poels, president and chief executive officer of the Wisconsin Bankers Association.
As one of the largest generations in the U.S., the millennial generation can’t be ignored by banks, she said.
One of the amenities they demand is mobile banking, which is being utilized more frequently by consumers. Mobile banking usage increased from 20 to 35 percent from 2011 to 2014, according to the Federal Reserve, and Wisconsin banks have been in line with that national trend, Oswald Poels said.
Social media is an important avenue to communicate with younger audiences.
“Wisconsin’s banks are definitely growing in terms of the number that have social media sites and maintain them on a regular basis, so they’ve definitely invested quite a bit of energy into social media….to make sure that they are marketing it to attract millennials and the mediums that millennials are operating in,” Oswald Poels said.
Summit Credit Union has seen an influx of millennial members, partly as a result of marketing and attraction efforts like these.
“We’ve seen over the last couple of years, well over a third of our new members are coming from that millennial generation,” said Chris Schell, senior vice president of marketing at Madison-based Summit Credit Union. “It’s been trending about that (level) for the last year or so, and that’s been very deliberate on our part – they’re certainly part of our core target market.”
Summit has six Milwaukee area locations, and is in the process of adding two more. It has a total of 31 branches and 150,000 members.
The credit union’s value proposition, Schell said, lies in its online services, lower fees than most banks, convenience and rewards programs. Each Summit member saved an average of $116 in 2014 versus doing business with a for-profit banking institution, according to the Credit Union National Association.
“A lot of it is in the way (millennials) want (banking) delivered,” he said. “Certainly more of a focus on digital, more of a focus on information delivered in very snackable, quick pieces of information.”
Big banks are also trying to attract millennial customers. BMO Harris Bank, a large Canadian bank with a U.S. headquarters in Chicago, doesn’t disclose its market share by demographic, but its total Milwaukee market share is very strong and continuing to grow, said Emily Penate, media relations manager.
“Millennials are looking for simple, convenient, fast and secure ways to bank, and we’re addressing that with our commitment to innovation – giving our customers, including millennials, new banking tools and options, such as Touch ID and Mobile Cash, which is the largest cardless ATM network in the United States,” she said. “In addition, we connect with our customers including millennials, through various grassroots, community-focused content on social media.”
The millennial small business clients Paul Sackmann works with at Milwaukee-based Park Bank are most interested in convenience and technology, he said.
“When it comes to community banks, I think we’ve all, including Park Bank, tried to keep up with the big banks in terms of technology, so it’s not a hindrance,” said Sackmann, who is assistant vice president of commercial banking. “I think most banks have those higher technology levels that millennials demand, because a lot of them are doing their banking away from their desk.”
Sackmann works with several business owners in their early 30s who run startups and small businesses such as IT firms and coffee shops. He meets with them at least once a quarter, but sometimes as frequently as twice a month.
Because he works directly with customers, Sackmann said he has flexibility to, for example, waive fees while a business goes through a transition.
“We tend to spend more time on the front end to get to know them and help them grow their business,” he said. “I’ve noticed a lot of the small businesses, including the startups, they view me as a partner in their business to some degree.”
Brown Deer-based Bank Mutual has also capitalized on the technological convenience and occasional personalized attention millennials seek, said Joseph Fikejs, chief operations officer.
“Banks realize that millennials are different from any other generation,” he said. “As a result, we need to alter distribution channels and provide additional avenues to banking services. The Millennial is ‘mobile centric,’ and yet a large majority of them wish they knew more about finances.”