MakovskyTuesday, September 1, 2015
Is it possible that millennials could have something in common with people from the 1930s?
The answer is yes. They share similar attitudes towards financial institutions, attitudes most likely held by their great grandparents. The Great Depression of the 30s fostered an attitude of mistrust towards banks and other financial institutions. In that era, the stock market’s plunge and the run on banks caused people to rethink their approach to managing the little money they earned or had left. Rather than banks, people saved money at home. Coffee cans, Mason jars, cigar boxes and “under the mattress” became substitutes for banks.
Fast-forward to today. The 2015 Makovsky Wall Street Reputation Study reveals that almost seven out of 10 U.S. millennials (69%) — ages 18 to 34 years — reported trust was still missing in financial institutions, compared to consumers age 35 to 54 (59%) and 55 and over (54%). It is believed that one of the reasons why millennials’ trust in financial institutions lags the rest of the population could be the lingering effects of the financial crisis and recession.
This aura of mistrust among millennials appears to have hindered financial institutions ability to build customer loyalty. The Makovsky study reveals that millennials were more likely to change to an alternative digital financial services provider because of unauthorized access and theft of personal data (79%), negative news relating to their financial institution (75%), lower costs or fees (76%), and the availability of advanced and mobile technology for more helpful financial services (68%). Also a higher percentage of millennials reported that not keeping up with new technology and service innovations was a big threat to financial service firms’ reputation. Further indicating their preference for on-line financial services, millennials (49%) would be much more likely to consider banking and financial services from digital alternative providers like Google, Apple or Amazon is available, compared to consumers age 35 to 54 (37%) and age 55 and over ( 16%).
Of course, the recent turmoil in the global financial markets as well as the negative perceptions about Wall Street greed fanned by our political leaders adds to this environment of mistrust.
Trust is at the core of building customer loyalty and it is critical for financial institutions given the important role they play in people’s lives. Beyond advertising featuring celebrity spokespeople, financial institutions must:
- Add and enhance services designed to appeal to millennials and reinforce the safeguards for protecting consumer information. While nothing is foolproof, cybersecurity is a critical element in the communications process.
- Engage consumers in a two-way dialogue. Social media fosters such dialogues and trust can be established through one-on-one communication.
- Remember the customer comes first. It is not just about the company and its track record; the central focus should be on the customer’s needs. This needs to be reinforced in every form of communication.
- Be a good citizen. Millennials care about the environment and other social issues. Financial institutions need to demonstrate that it is not only about making money but also about concern for the issues millennials care about.