When it comes to the perception of financial institutions, there are contradictory feelings from consumers, especially when age informs the viewpoint. While younger generations — both Millennials and the younger Gen Z-ers — happen to be primarily big-bank customers, it’s not necessarily because they like banking with larger financial institutions. Big banks capture their attention by focusing their marketing efforts on their “superior” technology, which overshadows smaller community banks.
The truth is — and this is nothing new — consumers across all generations prefer the localized, personal service they receive from community institutions. They just need to be made aware of their products and services. In fact, community banks have similar products and services that younger generations look for in a financial institution. That’s why community banks must highlight both their innovative products and their reputation of excellent customer service through solid marketing and advertising efforts, attracting the new generation and gaining their lifelong loyalty.
Impressing younger generations is not always as easy as it may seem. In fact, Millennials, for instance, are the least engaged with their banks, and when they experience problems, they are more likely to switch to a competitor. Despite those hurdles, community banks need to gain traction with this generation to generate greater market share — especially since current deposits are held by the older generations.
Community banks are known for going above and beyond, which has resulted in loyal customers. However, individuals who grew up with new technology at their fingertips everyday tend to want more than just a personal experience. A recent Kasasa study noted that consumers have changed their expectations of what a community bank should offer, with most consumers looking at products and services first when determining where to bank.
“The reliance on digital technology also influences Gen Z’s attitudes regarding where they might turn to for future banking needs,” according to Fiserv’s research arm, Raddon. Local financial institutions must therefore work harder to stand out; generating innovative digital services and better product offerings is just the start. If you have enhanced digital products and services, but no one knows about them, does it really matter?
Piquing their interest
How do you get in touch with younger generations? Grabbing their attention can be hard, so banks need a simpler strategy — create an approachable and relevant experience. “Win them over now, and maybe, they’ll be customers for life,” explains a recent Forbes article.
Millennials were the first to really embrace new technology as opposed to older generations, and Gen Z grew up seemingly with all of life’s answers in the palms of their hands. With more ads popping up every day, these individuals see more pervasive advertisements than any generation before them. CBS News reported that, “We’ve gone from being exposed to about 500 ads a day back in the 1970s to as many as 5,000 a day today.”
Because of this overload, it’s harder to sift through all of the banking advertisements claiming to have the best financial products for their needs — and smaller banks are falling behind in this area. While 75 percent of Americans would choose a local bank over a national megabank if they offered equal products, they often are unaware that local financial institutions offer those products at all.
It may be tempting to think that the way financial institutions appear to the public, via social media and the press, doesn’t really matter. But, according to a consumer behavior study, seeing information posted about financial institutions does influence people’s financial decisions.
Community banks need to leverage marketing and advertising to share their positive reputation and innovative products to these younger generations. It goes beyond just advertising, however; it must be targeted to the right audience with the right messaging.
The generation that’s always “plugged in” still wants the personal touches that come with banking local, but to meet younger generations where they are, financial institutions must utilize their most powerful marketing tools — communicating across all digital channels.
More than half of Millennials say positive reviews and word-of-mouth reputation are very influential, and almost 40 percent say that seeing people post or share about products on social media would influence their choice of financial products. This is social media’s time to shine — community banks can rely on networking sites, like Facebook and Yelp, to do the heavy lifting for them, letting their customers share their experiences, discuss their favorite products and more.
The key is focusing their marketing and advertising dollars on emphasizing that smaller financial institutions offer the same quality banking products as megabanks, have enhanced engagement with their customers and have a superior reputation for working with their community. The Kasasa study shows that because, “A majority of Americans claim these types of promotions don’t go unnoticed — more than 83 percent would take action if they saw advertisements for a banking product or service that interested them with younger adults more likely than their older counterparts to act on them.”
Additionally, the study showed that more than half would research the product or service if they saw it advertised online, and one-fifth said they would ask their friends about banking products and services that grabbed their attention. This means that community banks need to rely on targeted marketing through their digital channels to reach these generations and meet them where they already are — on their phones, online and on social media.
Ultimately, to gain traction with younger generations, community banks need to maintain a positive reputation while offering and promoting the innovative technology that Millennials and Gen Z are seeking from a financial institution. By broadcasting products and services across their digital channels that their customers are already on, banks can increase their brand awareness, customer retention and account acquisition.
As the youngest generations head into their prime spending years, community banks must focus their marketing budgets on the technology they already offer and the superior reputation for customer service they already have to win over a new generation, earning their loyalty and deposits for life.
Keith Brannan is chief marketing officer for Kasasa. Reach him at [email protected].