The Millennials – 20-somethings, are just starting out, be it that first job, car, home, pretty much everything.
“They are a huge opportunity for brands and banks,” says Katie Sacksteder, vice president at TRU, which specializes in youth research and insights, and recently presented exploratory research about the Millennial generation's relationship with retail banking at the Consumer Bankers Association's annual conference in Phoenix.
What were the key findings? Millennials are overwhelmed by debt and it's keeping them from launching into the roads traveled by other generations at this lifestage, like buying a home. The debt finding squares with a survey last year by The PNC Financial Services Group, of 20-somethings. Some 60% said they were stressed about their outstanding debt. The survey found that on average, the total debt of those surveyed was $45,000, ranging from $12,000 for those ages 20-21, to $78,000 for 28-29 year-olds.
While the saying is if you know better, you'll do better, that's not necessarily the case. According to TRU's survey, many Millennials acknowledged that they should be planning for the future, but said they are caught up in the day-to-day, instead of focusing much on the future.
“It was startling to see how much talk, but how little action there is among twenty-something's we spoke to regarding fiscal planning. While many discussed knowing they should be saving now, they were not actually doing it – even among those who could afford to be saving for their future. Eighty percent of twenty-somethings agree that saving money is important to them right now, but only 20% say that they currently have a 40lk,” says Sacksteder.
A survey by Fidelity Investments last year also found that nationally, 42% of twenty-something working households were saving less than 4% of their income. Other studies have shown that many Millennials have not invested at all, or have shied away from stocks in particular.
When TRU asked Millennials about what they want in banking, the answer was ease and efficiency. This generation sees a virtual relationship with a bank the same way older generations see traditional relationships. They see virtual relationships as having the potential to be more intimate than traditional banking relationships, according to TRU.
Sacksteder shared what she found most surprising. “While Millennials are tech-savvy, they value tools that improve efficiency. At TRU, we have a macro-theme we've observed when it comes to Millennials called The Next Easier Thing. Ease may trump innovation for a generation weaned on Google and touch screens. Today's young consumers expect massive choice, overlaid by an easy interface. We urge brands and marketers to focus on tools that make interactions easier, rather than just introducing novelty for novelty's sake.”
What does all this mean for the banking industry? Says Sacksteder, “Help Millennials navigate debt. Provide a personal roadmap and digital tools, and reward their progress. Many are optimistic about their future, but they also seek pragmatic advice and virtual tools to help them navigate their relatively new independence.”
For sure, there is a ton of help available. In fact, the Millennials have more tools for financial management online and on their smartphones than any generation before them. There are tools that allow them to see their accounts in one place, share advice, establish a budget, set up alerts to help with money management, and more. Truth is, there's little room for excuses. A big part of growing up is taking responsibility.