Return to site

How to Tailor Financial Services to the Millennial Mindset

· Millennials,Business,Banking,Money Management,Advertising

Millennials—people born between the late 1970s and the early 2000s—are quite possibly the most-studied generation of all time. Marketing efforts are heavily directed at millennials. This is especially true of digital marketing.

There are a few characteristics that define millennials. These include being highly computer literate, having a more optimistic outlook on life, and possessing a level of confidence that is sometimes described as borderline narcissism.

Another lesser mentioned trait of millennials is the “fear of missing out," also abbreviated as FOMO. What is millennial FOMO? Compared to preceding generations, millennials tend to compare themselves to their peers more frequently, using peer accomplishments as a barometer of success.

This is especially true when it comes to financial success. Major players in the financial industry have taken note of so-called millennial FOMO and are using it to connect with this generation.

What Causes Millennial FOMO?

Millennial FOMO stems from the constant exposure to social media networks that bombard users with what is essentially a carefully curated version of another person’s life. FOMO prompts millennials to mimic the behaviors to which they are routinely exposed. This includes financial behaviors. Trading sites are even emerging that capitalize on millennial FOMO by giving investors an inside look at the trading activity of others.

FOMO-driven financial decisions are problematic for several reasons. First, making financial decisions based on what others are doing (or not doing) can spell disaster because there is no way to see the full picture of another person. Additionally, it is never wise to make financial decisions without considering your personal goals and circumstances. What works for someone else might spell disaster for you.

millennial workforce

Recently, Deloitte studied millennial decision making when it comes to finances and found that many members of this generation would benefit from financial counseling. The study revealed that about 60 percent of millennials had low to moderate confidence about their ability to reach financial goals.

Another 35 percent of millennials indicated that they definitely need help navigating their finances. Sadly, nearly 70 percent of respondents reported that they needed assistance with basic things like creating savings goals. However, only one-third of those surveyed stated that they would seek financial help from a bank.

Challenging Millennial FOMO

With millennials more apt to copy the financial moves of their peers, a unique challenge is presented to traditional financial institutions. Millennials are demanding something different from the traditional brick-and-mortar financial experience. Banks that cannot keep up fall off customers' radars.

Millennials have demonstrated that a digital financial experience is preferable. Additionally, this group is accustomed to having financial information at their fingertips due to the ubiquity of mobile apps. Deloitte’s study made it clear that most millennials are active savers. As a result, this group would serve as an ideal user base for financial tools focused on saving and wealth building.

Growing up in the digital age, millennials are accustomed to instant gratification. This mindset also applies to finances. The ability to chat directly with support agents via social media is a huge selling point for any financial provider.

The fears of millennials must also be addressed. Many of these individuals reported feeling some level of anxiety surrounding finances. This means that it's important for financial institutions to be more transparent to build the trust of this group.

Millennials Love Non-Traditional Financial Services

Although this group tends to shy away from traditional banking, millennials absolutely love non-traditional financial services. By nature, millennials are open-minded. This often leads them to seek alternatives to banks that better meet their needs.

Research conducted by BrandCap revealed that millennials ranked non-traditional financial brands ahead of traditional banks. Further, consumers age 18 to 34 favor all-digital financial brands over banks. In addition, top fintech apps surpassed traditional banks and money transfer services in the value of transactions processed.

online services

Why do millennials favor non-traditional financial services? One of the main reasons is convenience. Traditional banks tend to do things retroactively rather than proactively and rely heavily on the input of investors and board members. Non-traditional financial services are more customer-centric. This means that they regularly seek customer feedback and use it to continually improve processes and enhance service offerings.

Solutions for Millennial FOMO

Studies continue to show that millennials have a decidedly different view of finances compared to previous generations. This new outlook requires a new approach. The chief requirements of financial apps and services are convenience and flexibility.

Millennials want to be connected to their peers but also value personalized products and services. Both traditional and non-traditional financial institutions can tap into this market by collecting and implementing consumer feedback efficiently.

Traditional banks must learn to empathize with millennials and conduct the research necessary to learn what resonates with this group. Old ways will not attract new consumers. As a result, it is recommended that institutions take a social approach to financial literacy, investing, and saving. If millennials feel that a company understands their goals and motivations, they are more likely to trust that business.