For millennials, Gone are the days of standing in line at the bank.
The generation that saw its parents banks foreclose on homes and go under in the Great
Recession aren't ready to return to big banks.
And according to a bunch of recent studies and surveys it's come down to trust.
This is Hugh son. He covers the banking sector for CNBC.com.
I want to say in the next 20 to 30 years,
millennials will inherit trillions and trillions of dollars.
If millennials now, you're effectively going to be killed in 10 or 20 or 30 years.
Those trust issues are causing big banks to spend billions to cater to the millennial
generation, whether it's through coffee shops, smartphones or cold hard cash.
Millennials are poised to overtake baby
boomers in numbers. Getting them to trust big banks again is a high stakes affair.
Here are three ways banking is changing and how big banks are trying to keep up.
The younger generations have spoken and the cell phone is fast becoming their primary tool.
It's a wallet as much as it is a communication device.
They really want to do everything on their phones and they want to do things pretty
seamlessly without talking to people. They order Ubers, they get rides on their
phones, they get dates on their phones, they get food through Seamless web on their phone
and why should banking be any different.
Which is why the bank branch in the future is really in your pocket. It's the iPhone.
Apps such as Venmo, Cash App and Chime, have
caught on in recent years in big banks want a slice of the pie.
A group of big banks recently launched, a
similar payment platform, and rolled it into their normal banking services.
Bank of America even included a marketing push to reach millennials with national payback a friend day.
Many young people can also invest right from
their phones with services like Robin Hood and JP Morgan's You Invest.
Ultimately, banks want to fend off these
growing FinTech firms and make a one stop financial resource for millennials.
If you've got an auto loan. If you've got a
credit card. If you've got a checking and savings if you've got rewards points. It's
all going to be visible on one place, one portal, which is your your bank app, and
it's gonna be really easy to use.
Some services haven't quite reached the point where customers can do everything from their phone.
For those times when we do need to step into
an atrium, millennials don't want to drab lobby and banks know that.
Admittedly, you don't really need to go to the bank all that often.
So basically they're shrinking in size and square footage.
They're adding many more ATMs and basically ATMS on steroids that can do maybe
90 percent of what you can do with a human
teller. And then we're turning them into more experiences and advice centers.
Capital One has started changing its banks
into cafes to reach the latest generation of bankers. It opened its first cafe in New
York City and slowly began expanding in recent months. Millennials can meet friends,
grab coffee and speak to financial experts all in one place.
Ninety-one percent of millennials who had a
credit card said they regretted the debt they'd racked up. That's compared to 81
percent of baby boomers according to a 2018 survey from NerdWallet.
Yet, they're anything but wary about credit card rewards.
A 2017 study found that millennials placed
rewards as the second highest reason they picked a specific credit card. And banks are eager to tap into this.
JP Morgan Chase, for example, targeted millennials when it released the Chase Sapphire reserve card in 2016.
I think at that point it was a 100,000 reward points and three times points for things that Millennials do all
the time we go to restaurants, order Ubers, go on vacations and trips. It's cost JP
Morgan so much they've actually charged more than half a billion dollars worth of fees to
revenue because people are actually using the points faster than the banks anticipated.
All in all millennials are a goldmine of untapped potential for big banks.
As the generation gets older, Millennials are going to start buying homes, having families
and planning for retirement, and big banks want to be there for all of it.