How to appeal to a younger generation
One of the most profound questions lenders are asking themselves today is “How do we capture the Millennial consumer?” They are a generation apprehensive of borrowing, having lived through the Occupy Wall Street movement and the Great Recession of 2008. So, lenders today need to ask themselves, “What can we do to earn the Millennial generations trust, and what technology do we need to obtain relevancy?”
For Millennials (born 1981 to 1996), their day has come. This year they are 22 to 37 years old: They are the prime market for lenders now. When Millennials strike out to buy a car or a home, lenders will have little chance to make the loan if they don’t already have a relationship with them. This is one of the reasons it is vital for banks and credit unions to think about the habits of Millennials—and Gen Zs—as the lenders adopt new technology. Recognizing that practices, needs, and personalities can vary by generational cohorts, lenders need to become better students of each generations peculiarities. This means that the technologies lenders adopt should conform to those practices, needs, and personalities.
The Great Recession of 2008 was a defining moment for Millennials. Many of them graduated from college when jobs were scarce and their student debt heavy. They’re leery of debt, and have delayed borrowing money for new cars or homes. In a sense, the Great Recession has given lenders a few extra years to forge relationships with Millennials. As they focus on this cohort, they should consider these characteristics reported by the Pew Research Center:
- First of all, they are by far the most educated generation: 29% of men ages 21 to 36 and 36 percent of women have completed at least a bachelor’s degree. Among Boomers in 1985, when they were in a similar age range, 22% of men and 20% of women had four-year degrees. This augurs well for their earning power down the road.
- They’re less likely to be married: 57% have never been married. When “The Graduate” hit theaters in 1967, the expectation of marriage immediately after college was typical for the Silent Generation, who were then ages 22 to 39. For Millennials, first marriages are happening in their late 20s, and the biggest reason they wait is they don’t consider themselves financially prepared.
- They’re more diverse: 56% were non-Hispanic whites in 2017, compared with 84% for the Silents in 1965. The share that is Hispanic is five times as large among Millennials (21%) as it was among Silents (4%). The share that is Asian has also increased, while the share that is black has remained roughly the same. Whatever picture you have in your mind of a Millennial, expect reality to challenge your expectations and to continue changing.
- They’re wedded to their smartphones: 92% own smartphones, compared with 85% of Gen Xers (those who turn ages 38 to 53 this year), 67% of Baby Boomers (ages 54 to 72) and 30 percent of the Silent Generation (ages 73 to 90).
- They are active on social media: 85% use social media, and they have been faster than older generations to adopt new platforms, such as Instagram (52%) and Snapchat (47%).
How Lenders Can Reach Millennials
So what does all of this data mean? It means lenders need to be available anytime and anywhere – meeting consumers everywhere. The data clearly shows that Millennials are on their smart phones, all the time. To capture this market, your institution must be available online and on any mobile device. You need smart adaptive online lending technologies, and platforms that enable consumers to open new accounts quickly, and effortlessly.
If your institution fails to modernize, you risk becoming a relic of the past. Each day more and more products are being purchased either online or from a cell phone. In 2015, over 70% of all purchases on Amazon were from a mobile phone. Your institution should treat loan products and new accounts the same way; your millennial consumer is on their phone – meet them there!
Account opening and loan origination software (LOS) that conform to Millennials’ behaviors show that you consider them important. That recognition is fundamental to developing trust. If you are able to deliver services seamlessly through mobile apps, you build loyalty and you might be able to get their attention when they need a loan. The consequences of ignoring consumer habits can be catastrophic, leading to dismal revenue growth for your institution. If you don’t have a mobile app or online portal available anytime and everywhere, you don’t exist to Millennials.