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How banks understand — or underestimate — female millennials

When J.P. Morgan Chase pitched its Chase Slate credit card four years ago to Brooklyn College freshman Judy Tan, the bank made the offer by direct mail. She was already a customer of the bank since her father went with her to a branch to help her open a checking account and sign up for a debit card.

When she received the offer, Tan, 23, was inclined to apply because she’d read an article online that encouraged young people to build their credit scores early in life by obtaining their first credit card—or lose out later because they lack a credit history.

The potential consequences “spooked me a bit and it was the primary reason for applying in the first place,” recalls Tan, who graduated in 2016 and now works for Age Brilliantly, a non-profit online platform for older adults. Yet despite marketing the card to Tan, Chase rejected her application—at first, anyway. Following the advice of a branch officer, Tan waited awhile and tried again. The bank approved her application on the second try. 

Banks are keenly aware of millennial women as a crucial segment.

Millennials as a whole already represent more than 75 million U.S. citizens (24 percent of the population) and will have the greatest spending power of any generation by next year ($3.39 trillion). Assuming roughly half of those numbers represent women, it boils down to an enormous pot of money for banks to consider.

“From a pure business standpoint, millennial women are a huge group,” says Peter Wannemacher senior analyst serving e-business and channel strategy professions at Forrester Research, Inc., Cambridge, Mass. “So they are going to be one of the segments that you as a bank pursue and target.”

Yet there’s often confusion about how best to do that. For example, young women may prefer a different news channel than young men—but such targeting is tactical and not strategic, Wannemacher contends.

To this end, there is good news. Tan’s experience demonstrates how an offer through a conventional channel can succeed even though millennials as a whole strongly prefer digital channels, according to Tuck Ross, head of social media and senior vice president of marketing and digital sales at BBVA Compass, based in Birmingham, Ala.

Here is more good news: Banks have access to a world of data on millennial behaviors, preferences and views. The result is that some banks combine digital and traditional marketing offers for more impact with targeted segments. A direct mail offer “becomes the tangible element of offers presented digitally,” Ross says. “Part of it may be that the direct mail channel is so neglected that it becomes an authentic channel.”

At the very least, the price of the postage may prove to be a valuable marketing investment with broad reach. Millennials currently make up 39 percent of the labor force, according to Satyam Arora, vice president of equity research at Rafferty Capital Markets, LLC in New York.

Yet even with a wealth of data upon which to base a focused approach for young women, banks may not choose to target by gender.

First Tennessee Bank, for example, is more likely to target consumers by age and income, says Aaron Chestnut, director of marketing at the bank. “We’re typically gender agnostic because there are not a lot of effective ways to just go and index against women versus men.”

First Tennessee has found that millennial men and women have similar views on the bank’s key offerings. “A lot of times their views and the importance of what they get out of the value proposition is close enough that you don’t need to need to necessarily target one gender or the other and pay a premium for that,” Chestnut says.

What’s more, Forrester survey data reveals that behaviors and preferences among young women and young men have converged over the past decade—making it less of an imperative to have separate marketing approaches.  

“While older millennial men may have been more technically savvy than women and became early adaptors of mobile banking, among younger millennials there is no significant difference between men and women in the preference for mobile banking,” Wannemacher says.

And though millennial women do not necessarily prefer a disruptor brand, “they are perfectly willing to try out a few different brands, a few different opportunities, and a few different providers,” Wannemacher says.

When targeting segments such as millennial women, bank digital and business executives care more about overarching decisions regarding product portfolio and the value of financial advice than choosing a website to place ads. “In those big components there’s no reason to speak to, or design, digital banking efforts significantly different by either gender or age,” Wannemacher says.

When banks decide to market specifically to women, they choose a variety of ways to do that. For example, when First Tennessee Bank places ads on social media such as Facebook; it might at times choose a gender-specific message, according to Chestnut. For example, the bank may place ads that target the idea of community involvement, which “resonates higher with women than men,” Chestnut says.

The case for developing marketing efforts by gender increases for affluent women, as opposed to the mass market and especially when it comes to investing, according to Chestnut. “Women are more and more curious about financial relationships with advisors,” he notes, especially when it comes to divorce and preparing for decisions they may face if and when they outlive their spouse.

Banks, however, may miss out on how the views of younger women stand in contrast to those of older women, according Leah Swartz, a Millennial woman and content specialist for The Future Cast, a Kansas City marketing consultancy specializing in millennial trends. Millennial women, she says, are more likely to choose a disruptor than a traditional bank.

“I’m a millennial; I haven’t been to a bank in probably a year because I keep all my banking on my phone with Venmo and Mint,” Swartz says. She prefers these platforms because they are easy to use. To the extent banks fail to keep up by offering products and services easier to use than in the past, they will miss out with millennial women, she points out.

Swartz sums this up in seven words that are perhaps worth more than some 70-page report by some highly paid consultant:

“Utility drives loyalty. Utility is the new cool”

Meanwhile, large financial companies need to make bolder marketing moves like those employed by innovators and disruptors, according to David Weliver, editor and publisher of MoneyUnder30, a website that provides financial advice to young adults.

Take the case of Northwestern Mutual Life Insurance Company, says Weliver. “That’s an example of someone in the financial services space that got something right” in marketing.

In 2015, Northwestern acquired investment marketer LearnVest, Inc. The company was founded by a millennial woman, Alexa von Tobel. LearnVest started out marketing low-cost financial plans to millennial women. Now as part of Northwestern, it markets insurance and investing products to all consumers.

By contrast, no large bank has so far followed in the footsteps of Northwestern, says Weliver.

So clearly there is much to learn in tapping the millennial market, especially when considered in light of a favorite banking buzzword: “innovation.” For as innovative bank marketing practices go, “I haven’t seen anything that’s blown me away in terms of its effectiveness,” Weliver says.

Robert Stowe England is a financial journalist who writes about retail and investment banking, financial markets and investing strategies. He is the author of five books, including “Black Box Casino: How Wall Street’s Risky Shadow Banking Crashed Global Finance.”