Forget what you think you know about Generation Y. The nation’s millennials—the biggest and most diverse generation of customers in our nation’s history—account for more than $1 trillion in annual purchasing power. And according to ICBA’s recently released 2014 American Millennials and Banking Study, this generation represents a major opportunity for community banks.
This is a generation raised amid the Wall Street financial crisis, plagued by large amounts of student loan debt, and so risk-averse that more than 60 percent don’t have a credit card. It should come as no surprise that they are looking for financial institutions that are locally owned and can help achieve their entrepreneurial dreams.
According to our survey, locally owned and operated banks are the first choice of all Americans for a business loan or other funding. Further, being a locally operated banking institution is almost twice as important to Americans as being a national or international banking institution. Now isn’t that something? Community banks with less than $10 billion in assets make nearly 60 percent of all small business loans, and that is what sets Main Street apart from Wall Street.
If small business lending is important to your community bank, then the millennial generation is very important. Some business-focused millennials intend to start their small businesses within the next two years. More than 40 percent are very interested in starting their own business at some point in their lifetime, and almost a quarter currently earn part of their income from a business they started or have a stake in.
The millennial generation is also hungry for financial education. They want to be more financially literate, and the nation’s community banks are an excellent resource to quench this thirst for knowledge. This generation is beginning to take the reins of their careers and financial wellbeing, and now is the time for community bankers to become their trusted entrepreneurial advisors.
Millennials have a greater lifetime value as customers than any other generation in the market and are the most likely to refer their friends and family if they have a great experience with your company.
All community banks should embrace this new generation. Millennials are unique and belong with their local, one-of-a-kind community bank. This generation is ready to become community banks’ newest customers, and it is time for community banks to rise to the challenge of serving them.