The Millennial generation — those with birth years ranging from the early 1980s to the early 2000s — have raised some controversy for a number of reasons. There are certain assumptions, some of them misperceptions, about Gen Y. For instance, some say they are addicted to the Internet and social media — and that may be largely true. Some believe Millennials are privileged. This is so false, at least financially. For the first time in US history, the millennial generation is poorer, more indebted and less employed than the proceeding generations.
Regardless of these thoughts about the mind frame of Millennials, this generation is on the rise and financial services has taken an interest in winning them over. So why is the financial services industry so interested in this hashtag-generation? They are reaching their financial potential, that’s why.
The number of Millennials will soon outnumber the Baby Boomers. As of now, Millennials are estimated to spend over $1 trillion a year, of which $430 billion is expected to be discretionary funds. And according to a recent BCG study, the millennial generation is reaching peak earning and buying power, which they predict will cause a dramatic increase in spending by 2030. What should financial services know about the millennial generation to best benefit from them?
Here are two truths and one lie to help you understand that frame of mind of Millennials and financial services.
#1: Millennials engage with brands more extensively and personally than other generations.
#2: Millennials financially overextend themselves to attain high-end brands.
#3: Millennials are the most trusting and loyal demographic when it comes to attitudes towards banks.
Can you guess which of these is the lie?
#1: Millennials engage with brands more extensively and personally than other generations — TRUTH
This may seem obvious. It’s intuitive knowledge that the millennial generation—infamous as heavy users of social media and mobile devices—would be more likely to engage with brands because they are online. But in the financial services industry as a whole, the industry has been slow and hesitant to adopting digital practices.
Those financial brands that are online can benefit from this fact: Millennials expect their values to be reflected in the brands they utilize. This can range from the importance of privacy to liking pictures of cats. Regardless, the best financial services brands on social media are humanizing their brands by going beyond money and statistics. A good example of this is American Express on Instagram. They masterfully incorporate their brand with pictures and videos of things like puppies, food and music. What more could a young adult want?
So while Millennials want to engage, they have stipulations and expect brands to meet them. But just because the brand is fashionable or well known does not mean these young adults will buy into the hype.
#2: Millennials financially overextend themselves to attain high-end brands — LIE
Surprise! According to Forbes, Millennials are one of the most pragmatic generations since those that experienced the Great Depression. Forbes found that Millennials tend to trade up for brands only when it matters. If the brand value is weak, they’ll go generic. Most Millennials value saving money so they can afford experiences like traveling to Europe or going to the latest Beyoncé concert. But according to a recent study by UBS, Millennials are more likely than any other generation to believe that working hard and living frugally are the best ways to attain success.
#3: Millennials are the most trusting and loyal demographic when it comes to attitudes towards banks — TRUTH
This may surprise many considering this is the generation that came of age during the 2008 recession, however the truth is in the numbers. NewsCred’s UK survey results indicate 81% of 18 to 24-year-olds trust their bank. That’s great news for the financial service industry, especially when taken with the statistic that 66% of Millennials trust a bank more when it offers them helpful, useful content. Financial services can capitalize on this by delivering personalized, informative content on platforms that their young consumers engage with most frequently, like the Internet.
How can financial services better market to these consumers?
Knowing these facts, financial services firms need to update their strategies. The first step is to humanize the brand. Millennials want to see more than money. They want to trust their banks and see with whom they are engaging.
How can financial services do that? Use social media. Use infographics and attention-grabbing pictures to spice up the brand’s social media presence and encourage engagement in a more personalized and creative way. Millennials want to engage, but they seek out brand content that they can identify with and relate to. Brands should use lifestyle topics to create an instant empathetic connection for the consumer and show that their brand is more than a bunch of numbers.
As the millennial generation comes “of age,” the financial services industry must update online profiles and humanize brands to better engage with clientele. The key is to provide a personalized customer experience that produces strong, creative content that young adults can relate to.