The college-bound “Millennial” generation born between 1982 and 2000 will represent the next mass affluent group. Financial institutions will need new marketing approaches.
The race to attract Generation Millennial (Gen M) has become increasingly important since this group is not tied to longstanding financial relationships. By reaching out to the college segment, financial institutions can add new customers very early in their financial life cycle, which helps build loyalty. As members of Gen M age, they will have increasingly sophisticated financial services needs and will often look to their existing financial institutions for new services. So attracting this group early is key.
In a new report, The Millennials, Financial Services, and the Web, Celent reveals the opportunities in Gen M for insurers, investment providers, banks, and card issuers. According to the report:
- Overall awareness of financial products and services has grown over the last few years in the Gen M group.
- Gen M highly values remote channels, such as email, Internet, and mobile phone.
- Checking accounts and debit cards are still the most pervasive products for Gen M.
- Gen M uses debit cards more frequently than other payment forms and for lower dollar values than other age segments.
- Investment by financial institutions in the Internet channel can pay off handsomely.
“GenM is the first generation to grow up online and to grow up without the need for a landline phone,” says Dan Schatt, co-author of the report and senior analyst at Celent. “Given the ubiquity of mobile handset adoption and internet usage among college students, banks that want to tap into this demographic will have to invest heavily in the mobile and web channels, the number one preferred way for this segment to communicate and obtain information about financial providers.”
At the same time, Gen M continues to look to one of the most traditional channels out there for information about providers: their parents. “Parents remain one of the top influences on Gen M’s choice of provider, particularly for insurance,” says Ashley M. Evans, co-author of the report. “Financial institutions that can mine their databases for customers with college-age children have an opportunity to market to young consumers through one of their most trusted channels.”