Banks Are Forgetting an Entire Generation

Outdated practices are forcing Millennials to find alternative banking solutions


Joshua Burleson

2 years ago | 7 min read

Outdated practices are forcing Millennials to find alternative banking solutions

Millennials are currently the largest generation employed in the United States. However, they only currently own about 3% of the total U.S. wealth, compared to boomers who own 60%.

In fact, older millennials (those born in the 1980's) entered the workforce during the 2008 recession which caused them to experience a higher cost of living as well as stagnate wages.

A 2016 study showed that these older millennials had wealth levels 34% lower than where they most likely would have been had the financial crisis not occurred, and many are still trying to recover.

Most business models in the banking industry are geared towards the financially-sound older generation, which is understandable considering that’s exactly who is in charge — the average bank CEO age being 58 — of most of the banking industry.

But this practice is a huge mistake and can end up hurting banks in the future, since it’s estimated that by 2025, millennials will control almost 50% of the nation’s personal income, and are anticipated to inherit over $68 trillion by 2030 from boomer parents, which will be one the greatest wealth transfers in modern times.

The fallout of the recession, as well as the focus of conventional financial institutions being geared towards the older generation, has caused a severe distrust in traditional banks and as a result, millennials are turning towards more unconventional financial services that use a digital approach, such as “Neo Banks” (digital banks with no physical branches) Cryptocurrency (Bitcoin), and Peer-to-Peer payment and lending methods (such as Venmo).

As these financial technology (FinTech) businesses develop, they offer a better understanding of a clients’ needs through personalized products and services, and can even expand these services to a broader segment of the global population.

With the popularity of FinTech growing, banks need to change how they do business TODAY if they want to have any hope of surviving past the boomer generation, because while the wealth might not be there yet, it will be and if banks continue to disregard the needs of this generation, they will lose the chance to turn them into lifelong customers.

So, what can a bank do to cater more towards the needs of a generation that doesn’t trust them? One way, is by providing a service to help give real financial advice to them, such as the money coaching service offered by Capital One.

They don’t want someone who is going to just tell them to, “Stop buying avocado toast,” but actually HELP them create a plan and work towards building a solid financial future.

Providing a basic guidance service such as this can help empower the generation who holds an average student loan debt of $34,504.

Banks might even consider going a step further with this approach and maybe offer a consulting service geared towards teaching younger customers the importance of financial stability, such as helping them file their taxes or even partnering with local colleges to offer workshops on what it takes to start a small business.

Another fundamental component to the younger generation that traditional banks neglect is technology. Millennials witnessed an evolution of technology during their lifetime like no other, and banks — especially smaller banks — aren’t seeking a way to utilize available tech to make their products more accessible.

Offering digital products like simple peer-to-peer transfers or features such as microsavings (Rounds your spending up to the nearest dollar and deposits the difference into a secondary account) will help the bank become part of their routine, digital lifestyle.

Technology can also provide a way to gain customers by letting them open accounts online. Not everyone wants, or has the time to, sit at the bank for an hour just to open a simple checking account.

Many are either in school or at work during normal 9 to 5 banking hours, so allowing this process to be done on their time, at their convenience, and outside of standard hours is essential.

This could also be helpful from a customer support perspective. If they have questions or problems with their account or debit card, they may not be able to come in right away or have time to sit on hold for the “next available representative.”

Being able to communicate with someone either via email or even chat directly through the app, over SMS texts, or even through social media, makes the bank more accessible to the customer.

When it comes to technology, banks need to keep in mind that the younger generation knows more about it than boomers, having helped fuel the growth of the tech industry by constantly using it more than any other generation.

After all, the iPhone launched in 2007 and as of 2018, has sold more than 2.2 billion units, and 93% of millennials own smartphones, compared to 68% of boomers. Having a digital platform geared towards millennials is key if a bank hopes to engage with them and can even help the bank save money as well.

One reason Neo Banks are successful is because they don’t have the numerous costs that come with owning a physical branch. Even traditional banks are reevaluating the need of physical branches and are opting to close the brick-and-mortar in favor of a digital platform.

While not all traditional bank are in a position to make such a drastic move, if they were to simply reevaluate how some small services are offered, they could find that most would be beneficial to both bank and customer if offered digitally.

For instance, a bank could email monthly statements or make them available online or via their app, and only mail physical copies upon request instead of having the default be “mail statements unless enrolled in e-statements” as I’ve seen with many banks.

This won’t only make it more convenient for the customers, by always having their statement a click away, but will also save the bank money from having to print them every month as well. Providing technology that also tracks the spending habits of the individual could also prove beneficial.

Letting the customer see exactly where their money is going could help them make better spending decisions and keep banks from having overdraft and charged off accounts.

While a strong digital platform is probably the most important component for banks when it comes to millennials, banks also need to look at what products they are offering.

As someone familiar with the banking industry, I have noticed that most products are pretty generic — free checking, senior checking, interest-bearing checking, basic savings, etc. — and while this may be a safe, simple business plan it does nothing that sets it apart from hundreds of other banks.

The younger generation has goals and dreams just like any other, so why offer them so few choices for an account? Personalize the products in a way that shows you are there to help them reach their goals.

For example, if someone wanted to save up for a wedding, have an account they can open where they can enter the desired amount they want to save (such as $20,000) as well as a time-frame and let the account show them how much will need to be saved each month to meet that goal.

Let them actually view their progress and actually see that $20,000 goal drop to $18,000, $16,000, $5,000 each time they make a deposit so they can feel a sense of determination and eventually a sense of accomplishment as their goal amount gets closer to $0.00.

Tailoring products to the individual is important and helps a person feel like they are more than just another customer. For the younger generation who saw their parents lose their life savings and even their homes during the 2008 economic crisis, they need to know that their bank actually wants them to succeed.

As for the banks who want to keep physical branches and attract the younger generation, look at the way other brands are designing themselves compared to your bank.

While 50 shades of beige and wood paneling, giant chandeliers, and large oak desks (that probably still have grooves in them from where a 30-pound typewriter once sat) might bring back fond memories for the older generation, all it’s going to say to millennials is, “Outdated.”

And an outdated bank usually means outdated products, outdated services, outdated industry. Banks need to modernize their branches and make them more visually appealing if they want to attract younger customers.

That doesn’t mean they have to turn into a Capital One Café, but branding is very important for businesses to stay compatible to their customers. Designing your branch to look sleek and modern instead of making the customer feel like they just stepped 50 (or 150) years into the past shows that you want to stay relevant to the next generation and are willing to adapt to the changing world.

It’s difficult for a lot of banks to understand the needs of the younger generation. They are modeled to cater to boomers because that’s the generation that has money, instead of trying to reach out to their entire community — the millennial generation — who are still trying to recover from the 2008 recession while a new recession begins, causing more setbacks, job loss, and severe financial woes.

If banks don’t shift their products and fee structures to a way that communicates an authentic commitment to helping them improve their financial situation, they will go elsewhere. In 2018, FinTech became a $127.66 billion industry and is projected to be $309.98 billion by 2022.

They are constantly evolving and adapting to meet the needs of their customers. If banks don’t want to lose an entire generation to them, then they need to reform and reshape themselves before it’s too late.


Created by

Joshua Burleson

Banker, Artist, Published Author, Investor Email:







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