Banking on Millennials

Imagine growing up in an era where the Internet has always existed. That’s a reality for millennials. The facts of the world are a simple Google away and there’s an app for just about everything – including banking.

Surpassing the ubiquitous baby-boom generation, the cohort of Americans born between 1980 and the mid-2000s now are the largest generation in the United States, representing one-third of the total national population in 2013, according to a study by the White House Council of Economic Advisors.

Millennials don’t behave like the generations before them, and banks are taking notice through their incorporation of online services and smartphone apps. The increase in tech usage also has led to a decrease in physical demand.

In 2013, the nation’s second-largest bank took steps to curb its declining numbers by shuttering drive-thru lanes at numerous Bank of America branches nationwide. Locally, Metropolitan National Bank has instituted virtual tellers at three locations and Mid-Missouri Bank installed two free-standing ATMs to increase its footprint.

“It’s all about a convenience for customers,” said Dan Derges, community president for Mid-Missouri.

Derges said while he doesn’t believe brick-and-mortar banks will go away, a smartphone app and ATM can fulfill most everyday banking needs. “Customers want to bank fast and they want to bank convenient. For young people, that usually doesn’t mean visiting a branch.”

Drive-thru decline
Responding to low teller usage, Bank of America Corp. (NYSE: BAC) first eliminated Saturday drive-thru hours at its 2940 S. Glenstone Ave. branch in July 2013. Beginning Feb. 9, it also will cut Saturday hours at the 633 W. Kearney St. and 4141 S. Campbell Ave. banking centers and eliminate the drive-thru completely at its 710 W. Sunshine St. branch.

“Customers habits change. They prefer online or mobile banking now,” said Diane Wagner, senior vice president of media relations for Bank of America’s central region. “Brick-and-mortar centers are shifting from everyday transactions to more of a financial center. People want to go in and talk about a loan, not make a deposit.”

Declining drive-thru numbers at three Metropolitan National Bank branches led to a similar strategy, but rather than close lanes completely, the bank instituted a virtual teller system.

“When someone uses the drive-thru, they are connected via a camera to the teller in the lobby,” said Dawn Hugo, Metropolitan senior vice president and retail banking executive. “This allowed us to shift our headcount to larger locations and offer more specialized services.”

Hugo said its Kimberling City bank served as a test market, followed by a location in Lamar and most recently its 600 S. Glenstone Ave. branch.

The changes are part of a new strategy Hugo said the bank rolled out in mid-2013 to attract and retain millennials. Not only did the bank add a mobile app, including mobile deposit, but it also redesigned its website allowing customers to open accounts online.

At Mid-Missouri Bank, Derges said it launched an app in 2013, and has since had more than 5,500 downloads and recorded 1.3 million mobile and online transactions.

It also added free-standing ATMs on Glenstone Avenue across from Evangel University and at the intersection of Elfindale Street and Kansas Expressway, north of Sunshine Street.

Millennial mindset
A July 2014 report on banking habits from Arkansas-based Sells Agency indicates half of the millennials surveyed primarily bank on a computer and 23 percent on a smartphone.

The online survey of 322 bank consumers nationwide, ages 24-29, with at least two years of college experience and annual incomes of $25,000 or more, found if banks can attract millennials, they are loyal, with 73 percent very unlikely to switch banks within six months and 82 percent opening multiple accounts at the same bank.

“When we look at our demographics, we found the obvious, our bank was full of boomers. But those boomers are aging out, and we needed to attract and retain millennials,” Hugo said. “There is always going to be a need for brick-and-mortar banks, but they’re going to look different. How? We aren’t sure yet, but they will.

“In big metro areas, banks are going more cafe style. They are small and feel more like a Barnes & Noble when you walk in. Maybe our market will go there, maybe it won’t. For us, that is the million-dollar question.”

Derges said physical branches are Mid-Missouri’s bread and butter, providing one-on-one customer service and a hands-on feel.

“That’s not going away,” he said.

But going the way of drive-thrus, Derges also predicts branch locations will diminish in coming years.

“There just won’t be as great of a need,” he said.[[In-content Ad]]