Financial institutions (FIs) of all sizes struggle to recruit and retain younger employees and customers – a challenge exacerbated by the rise of neobanks that offer enhanced experiences, streamlined processes, and faster decisions.
Bringing in younger customers is critical to the long-term survival of banks and credit unions. It is important to shift from merely pitching products and services to addressing pain points and areas of frustration.
An SRM survey conducted last summer found that, for customers between 18 and 24, the most-important reasons for selecting a financial institution are great service (12% of respondents), easy-to-use products (11.3%), and quality of products (9.3%).
Customers between 25 and 34 prioritized great service (10%), knowing someone who used the FI (8.9%), and quality products (8.1%).
Of course, banks and credit unions are spending more time and resources improving their technology offerings. The winners will take those improvements and layer in other policies and procedures that appeal to younger prospects.
Here is a look at some of those specific endeavors.
Appeal to altruism: One way to get the attention of younger prospects is to get involved with particular causes, including those tied to Environment, Social, and Governance (ESG). For instance, a credit union in central Tennessee has developed ties to Root Nashville, a nature conservancy nonprofit.
Our survey discovered that 21% of customers between 18 and 35 regard climate change as an urgent consideration. Interestingly, the issue resonates more strongly with the 35 to 44 demographic (with 41% feeling a sense of urgency).
Add customized rewards: FIs are working more with third-party vendors to provide payments-related perks that appeal to Gen Z and millennials. One credit union I spoke with offers cashback rewards for certain merchants, highlighting a retailer each month (Chick-fil-A kicked off the effort). Another FI reimburses Spotify costs for younger customers’ accounts.
Poll the audience: One of the best ways to find out what younger prospects want is to ask them. Several banks and credit unions have formed focus groups comprised of consumers who are 35 and younger.
Relax dress codes: More FIs recognize that consumers want to bank at institutions where the employees look more like them. Efforts are increasing to diversify the frontline workforce and loosen appearance standards. One executive noted that his credit union had lifted an unspoken rule barring tattoos. And a significant percentage of that FI’s social media strategy features its new, more relatable workforce.
Rebrand and rename: Another way to create distance from banking stereotypes is to rebrand in a way that deemphasizes (or eliminates) the terms ‘bank’ or ‘credit union’ from signage and marketing materials. BB&T and SunTrust took a gamble that people would adopt the Truist brand – drawing some blank looks at first – but the name seems to be widely accepted two years after the megadeal was announced.
The Bottom Line
Appealing to younger consumers requires more than a forward-looking digital strategy. Successful FIs will identify fintech partnerships that offer unique experiences and rewards, along with marketing strategies that highlight socially conscious initiatives. SRM can help banks and credit unions evaluate how their offerings meet the needs of younger millennials and the Gen Z cohort entering the workforce.