In the age of Amazon, financial institutions are trying to keep current customers happy and engaged and trying to retain the millennial demographic and keep them from leaving their bank.
Because they do, in fact, leave. The Millennial Disruption Index shows that one in three millennials is open to switching banks in the next 90 days. Scarier still, millennials ages 25 to 34 are two to three times more likely to close all accounts with their primary financial institution than people in other age groups.
They’re also growing restless. Research shows that millennials are twice as likely to switch banks this year than the one prior.
To understand how to keep a millennial, you need to understand why they leave in the first place:
- Forty-five percent of millennials cited high fees as the primary reason for switching banks, and late payment fees ranked second
- Twenty-seven percent will leave after a negative customer service experience
- Twenty-four percent switch because they do not have access to enough ATMs
This last stat is especially surprising; as attuned to technology as millennials are, they’re still on the hunt for fast access to cash. While many institutions spent the last five years beefing up mobile capabilities (which as you’ll see below are equally as important), many forgot that branch and ATM proximity is still a determining factor to this “tech forward” generation.
Is Mobile the Answer?
Yes. But it isn’t enough to simply have a mobile banking platform. Millennials also want technology that assists in managing their financial lives. Although 60 percent of millennials primarily use mobile banking for routine transactions, such as checking account balances and internal transfers, research also finds millennials want extra “bells and whistles” from their mobile banking apps.
- Fifty-four percent want email alerts when their credit scores change
- Fifty-two percent want credit scores in their monthly statements
- Forty-seven percent want a credit score simulator
- Forty percent want a mobile app that turns credit cards on and off
Are Rewards the Answer?
We’ve written before about how much millennials love being rewarded for their loyalty and patronage. Eight in 10 millennials will switch for a better rewards program, but in order to gain their loyalty and trust, you need to step up the rewards program beyond the general “reward point” variety.
It’s no longer enough for institutions to offer cashback cards or a bonus for opening a new account. Take a cue from popular credit card companies who are now offering bonus rewards that will soon become the norm — items like cell phone protection, streaming service reimbursement, and roadside assistance. All of these “perks” now come standard and it is changing the industry.
Rewards + Mobile = Millennials?
Thirty percent of millennials want to feel rewarded for their loyalty to a financial institution, and they’re demanding a tall order: best-in-class mobile technology and everything-but-the-kitchen sink rewards. And they want it all with a free or low-fee checking account.
But they possess these expectations because brands are already catering to them. Why? Because of the increased wealth and economic power we’re seeing as millennials age into adulthood. Millennials now boast over $200 billion in buying power and will have the most spending power of any generation by the end of this year.
It may seem like a lot of work to engage just one segment of your entire customer base, but institutions who correctly engage millennials will reap significant rewards of their own.
Loyalty is a two-way street. No one knows this better than millennials. They are more likely than any other generation to remain loyal to a brand that is loyal to them (22 percent). And with billions of dollars in spending, loan application and credit card fees on the line, can your institution afford to miss out?