I’ve been careful to avoid categorizing Millennials up to this point, since I truly believe they are a unique bunch. However, it’s hard to avoid the reports that this group of Millennials are in a financial rut. This generalization is supported by strong research. And that research says they spend more than they make and they are entering their careers with much higher debt than Gen-X, Gen-Y and Baby Boomers. Even as this generation, which is the most educated generation in history, continues to find its way, it’s important to note some observations about their spending (and saving) habits. That means community banks have an outstanding opportunity to connect with this generation, and that could carry them into future investment opportunities with these lucrative prospects. Community banks and Millennials have a lot in common, not the least of which includes finding their footing in a complicated marketplace.
Here are three ways community banks and Millennials align, and why this synergy can reap big rewards for both:
Community banks lend themselves to more personalized service. I know my local representative’s name, I know her children’s names, ages and their favorite sports. When I have to deposit a check or take out a loan, Jessica gives me a big wave from behind her desk, and if she’s not busy with another client, she’ll come over to check in. Jessica knows my financial situation, one of the most personal things you can share with someone. We’ve been through thick and thin — house closings, loans, new jobs and plenty more. This is the true essence of what is so cool about my community bank. They get me. She gets me. And I almost know her number by heart.
Millennials crave this personal relationship with their bank. They are smart — as mentioned earlier, they are the most educated generation in history — so they have lots of questions, and since their financial situation is less than ideal (in most cases), they’ll want to learn about how to make smart choices to turn their personal stock profitable. They want someone to trust, and community bankers offer a stronger, more personalized relationship than their larger counterparts.
It’s hard to avoid the “buy local” movement that has swept the nation. With so many international names in the business facing criticism for their corrupt leaders and shoddy business practices, the decision to bank locally is an easy choice for Millennials. In today’s climate, buying local means putting your hard-earned dollars back into the economy where you live, play and work.
The proliferation of “Buy Local” has now moved into all facets of local economies — beyond produce, which is where buy local first developed its legs. And this is a great thing — it helps the environment and our neighbors, and offers personal fulfillment.
Small Business Funders/Entrepreneurial
The FDIC characterizes community banks as having specialized knowledge of their community and their customers, and, because of this expertise, community banks tend to base credit decisions on local knowledge and nonstandard data obtained through long-term relationships. For small businesses and start-up companies with no historical credit data, that means they can rely on community banks for loans and other services. Those who are traditionally unable to satisfy the requirements of the more structured approach to underwriting that larger banks use find refuge — and promise — with their community banks.
This is great news for Millennials, who Forbes and Inc. magazines are calling the “Entrepreneurial Generation.” Statistics show that they are eager to work for themselves, craving freedom and creativity. That means they’ll be looking for support from their community banks to invest in their business plans.
Community banks and Millennials are a match made in heaven. And with the proper digitally powered marketing strategy, community banks will find these targets and show them why their relationship will offer fruitful rewards, including a profitable future.
This article was influenced and supported by the recent study from the Independent Community Bankers of America study on Millennials.