Millennials are operating on a different timeline than the preceding generations. And this applies for financial and banking habits as well. Luckily for banks and credit unions, statistics about Generation Y make predicting these habits even easier.
Keep the following four stages in mind when planning your millennial marketing strategy.
Mom and dad
First things first - millennials are, more than any other source, influenced by their parents in their first forays into banking. According to a 2015 study from Bank of America, 62 percent of millennials look to their parents for financial advice, far and away the biggest source of information. They are, in fact, more likely to turn to parents for financial advice than even banks or credit unions.
Your role: Seize this opportunity by marketing millennial- or youth-friendly products to parents - their influence is far-reaching when it comes to securing your future-adult, loyal customers. Use parents as promoters with targeted messaging and collateral.
Introduction to credit
Establishing credit is a key step in the millennial banking journey. And more than generations before, millennials are resistant to the idea of credit cards. Many are opting instead for debit cards, due to a "you spend what you have" outlook and hesitancy due to coming of age during the recent economic recession. Americans on average believe a person should have a credit card by age 22, though among 18- to 29-year-olds, more than 60 percent don't own a credit card.
Your role: While millennials may resist credit card apps, start them on more attractive enhancements. Since mom and dad likely already signed them up for a savings account, market debit or prepaid cards to them around the age they might pick up a part-time job. Then once they begin to live on their own and are used to managing a budget, market credit cards to a now more-savvy financial consumer.
Once millennials have reached post-college-age they'll likely have a new set of bills to pay that they didn't have before. This generation tends to put off purchasing property longer than previous ones, and hence will stick to renting during their 20s. While they won't be giving much serious thought to retirement accounts, mortgages or other big-ticket items at this stage, there are still opportunities for you to help out.
Your role: Budget management is a new concept to millennials at this age. Market some of your convenience services, such as online bill pay or portfolio tools, to further cement your long-term banking relationship. This is more than likely not a business-lucrative time period, but it's key when it comes to loyalty-building.
The big upsells
Closing in on the 30s and settling into a steady job, millennials will be ready to start putting down roots - at least in some cases. By 2015, 31 percent of homebuyers were millennials. And with new, often salaried careers in order, millennials will start to think more about their savings options. By their mid-20s, more than 70 percent of millennials have started saving for retirement in some fashion.
Your role: Keep tabs on which customers are seeing a higher flow of incoming cash. They're the likeliest candidates for applying disposable income to higher-yield savings accounts. And supply material that explains the differences between renting and owning property - many millennials will be surprised how manageable a mortgage payment would be in their budgets compared to their monthly rent payments.
Look to the Future
Keep tabs on your youngest customers as they travel through the millennial banking journey - they'll be your future customer base, after all.
Sources: Bank of America, CreditCards.com, Bankrate, Realtor.com, BNY Mellon