There’s been a lot of debate about millennials and their likes and dislikes. I myself cite regular surveys that millennials would rather go to the dentist than visit their bank and that surveys of millennials find no bank brands are desired. In some ways, this gives a false impression, as we have to think that when we refer to this demographic we are now referring to age groups of between 20 and 35. They may not like banks, but it is interesting to see what they really think about them, rather than what people think they think about them.
For example, I often bring up the fact that when Deutsche Bank designed their cool new high net worth branch in Berlin, they created the iPod Room for millennials and the Senator Room for their mums and dads. The iPod Room was all white plastic and looked, to me, like the inside of a toilet. The Senator Room, on the other hand, was all red leather, oak panels and screamed “tradition.”
So, the bank branch opened and all the mums and dads went to the iPod Room; they wanted to still feel young, cool and hip. Meanwhile, grungy teenage dudes went to hang out in the Senator Room, as money is serious, man; you don’t joke about moolah.
This is where many pundits are making falsehoods and suppositions, as the idea that kids who are now young workers don’t want branches or advice is not always true. Think back to when you got your first job, opened your first bank account, bought your first house, considered your first long-term savings investment, thought about the idea of saving for a pension, which at that point seemed like an eon away … did you make all those decisions on your own? You might today, but would the 25-year old younger version of yourself have had the gumption to do all these things on an app? Sure, you might investigate for first ideas, and then ask a few friends or family members. But I’m pretty darned sure that the average Millennial Joe is going to get told, “Best go and see a financial guy.” And, when they ask who that guy is, they’ll be told, “Start with a bank, I guess, as that’s what I did.”
So, now I’m making supposition and assumptions, so what’s the truth? Well BAI Research recently produced some fascinating results from a survey of over 2,000 US consumers, a quarter (545) of whom were Millennials, with those split into Young Millennials (57) and Mainstream Millennials (488). And yes, it’s true: the recommendation from friends and family is a key factor as to how they choose their bank, along with whether there’s a branch nearby (see chart, “Main Reason Primary FI Was Chosen”). In fact, a key surprise of this survey, for some, may be that Millennials and Non-Millennials are similarly aligned in their citing a vast ATM network and convenient branches as the most important factors when choosing a bank.
Maybe this is because it’s where they want to obtain advice. Likewise, corroborating my view that those early account openings are nervous moments for the youth, the majority are opening their first deposit, savings and mortgage accounts in a branch. Note that this has stayed fairly consistent between Millennials and Non-Millennials (see charts, “Percent of Accounts Opened in a Branch in the Past Year” and “Percent of Accounts Opened Online in the Past Year”).
Millennials prefer mobile-first bank access with branch falling way down the list to fourth place after internet (desktop/laptop) and ATM. The older folks like internet first and, intriguingly, branch second, so the old folks out there will keep those branches alive for a while yet (see chart, “Current Channel Usage”).
I don’t expect it to stay that way, but this is in line with the reasons why the banks are in a major branch consolidation program as, given ten years or so, the idea of the large branch footprint will be nonsensical. Instead, banks need a Genius Bar-style distribution network modeled on the Apple structure of being where most of the consumers are at, namely, shopping malls and airports. The rest can be remote capture, self-service and pop-up stores.
There’s a whole raft of other stuff in the research that’s worth noting but, for me, this bears out my gut feeling that Millennials are not some new generation who shun the world’s traditions. Rather, they are growing up in a world that’s tough and want the reassurance that, when it comes to money (which is serious), they will be looked after by firms they trust because they are licensed and regulated, not because they are loved.
Mr. Skinner is chairman of the Financial Services Club, CEO of Balatro Ltd., comments on the financial markets through his blog the Finanser, and is the author of Digital Bank. He can be reached at firstname.lastname@example.org.