Bankers Confronted by Wide Millennial-Generation Gap

DALLAS — Banks have a lot of work to do if they want to increase their appeal to younger bank customers.

To win over millennial customers, banks must offer free technologies that work straight out of the box, and they need to minimize red tape. To hire and retain the best millennial-generation employees, banks need to appeal to younger workers' social consciousness as well as their ambitions.

Those perspectives were evident during a pair of panel discussions held Monday at the American Bankers Association annual convention.

The challenge of courting millennials is daunting, said R. Daniel Blanton, chief executive of Georgia Bank & Trust in Augusta. He referred to a recent survey showing that more than 71% of millennials — roughly those born between 1980 and 2000, which is now the largest single demographic group in America — would rather go to the dentist than a bank.

Bank must to figure out how to serve customers without forcing them to walk into a bank. For one panelist, that creates another problem: younger customers set the technological bar very high.

"Every possible piece of technology, they want it and they want it now," said Mark Whalen, president and chief operating officer of Needham Bank in Massachusetts. "They want it to be easy to use, and they want it to be free. This generation is very fee-averse."

The challenge is greater for community banks, which often lack the resources to be on the cutting edge of new technology, requiring many to rely on their tech vendors' expertise. In addition, a recent survey from the Federal Reserve Board found that 40% of community banks are reluctant to add new technology products over the next three years.

"We don't have the resources to make those new tools ourselves, so we're relying on our partners," said Daniel Schrider, president and chief executive of Sandy Spring Bancorp in Olney, Md. Finding vendors that can roll out reliable new products is critical because "if you try it with millennials and it doesn't work the first time, you've lost them," he said.

Even a successfully introduced technology can be a "two-edged sword," due to security concerns, Blanton said. Georgia Bank's rollout of mobile check deposit was very well received, though "we've also had $40,000 or $50,000 worth of fraud on it," he said.

Beyond providing the right products, banks must do a better job marketing to millennials, panelists said. When Blanton asked conference attendees to raise their hands if they had developed a strategy specifically tailored to millennial customers, only a third of the attendees' hands went up.

The key is to embrace new forums for advertising. Schrider described what millennials said in a recent focus group at his bank: "Don't advertise on TV because we only use NetFlix," he said. "Don't do radio ads because we only listen to iTunes and Pandora."

Millennials also place a great value on local commitment and social responsibility, so small banks should make sure their advertisements stress their connections to the community. Needham Bank has had success with an ad campaign focused on the idea that "buying local means banking local," Whalen said.

Emphasizing those values can help community banks not just win millennial customers, but hire and retain the best young employees. The ABA held a second panel consisting of millennial bankers, who said banks need to offer younger workers a sense that their work is meaningful. At the same time, banks need to broaden recruiting to include more socially conscious candidates.

Banks should ask questions during the interview process about volunteer work and philanthropic concerns, said Katie Boyd, senior vice president at FirstCapital Bank of Texas. "Those employees tend to be more loyal … and to hold themselves to higher standards," she said.

It is also important to try and minimize the red tape and busywork and, if possible, avoid having workers use outdated, cumbersome technological systems. "We're intolerant of inefficiency," said Siya Vansia, executive marketing coordinator at ConnectOne Bancorp in Englewood Cliffs, N.J.

More than anything, banks that are struggling to engage the younger generation should look honestly at the problem, and ask themselves why bankers often have the reputation of being outmoded and technologically out-of-touch.

The demographics of the conference panels themselves underscored the generational problem facing the banking industry. Three young bankers were on the stage, explaining their generation's concerns to many hundreds of bank executives who were predominantly middle-aged or older.

"If everyone thinks banking is an outdated industry … maybe there is a reason," Vansia said. "Banking is still very much stuck in the past, I hate to say."