Published on CU Insight on June 2, 2016
How to be among the few financial institutions they turn to for guidance
Millennial consumers (age 18-34) are willing to forgo traditional banking relationships in favor of non-traditional providers such as retail, telecom and technology firms. Consider the fact that almost three-quarters are likely to use at least one alternative financial services provider, such as Apple, PayPal, or Square (Accenture, 2014). In addition, almost half (45%) are willing to switch banks, credit cards, or brokerage accounts in a heartbeat when a better option comes along (Facebook, 2016).
A great deal of information has been published about the banking habits and needs of Millennials, and how to capture more of their business. As a member of the millennial generation myself, as well as an employee of a financial technology firm, I can see the value of this kind of information. However, since only 8% of us turn to financial institutions for guidance (Facebook, 2016), the real, underlying key to gaining their business is to become their trusted advisor. And this is both more difficult—and potentially easier—than you might suspect.
First, start by asking who we turn to for financial advice now? Seventy-five percent of us consult people we have strong emotional relationships with —family, friends and coworkers. But we also heavily crowd-surf social networks for popular opinions and trends before making decisions, sometimes regardless of the credibility of the sources we find. We talk about everything that’s important to us on Facebook, Twitter, Instagram, Pinterest, and other social media sites. Everything, from romantic relationships, to child rearing, to handling our finances, is fair game.
For example, we drive 40% of the conversation about finances on Facebook, generating 6.5 million posts, comments, likes and shares on financial-related topics in 2015 alone (Facebook, 2016). Specifically, we discuss financial topics such as peer-to-peer payments, loans and mortgages, paying off debts, taxes, banking, investments and credit cards. We look for financial advice about the benefits of higher education, whether renting or buying a home is better, the merits of used and new cars, the advantages of relocating, and what investments to make, just to name a few (State Street Global Advisors, 2016).
Even with all of these ongoing conversations—online and off—53% of us still feel we don’t have reliable sources for financial guidance and perspective. Emphasis on “reliable.” Which voices have the answers we seek? It’s not the products or services that we need to hear about, it’s what sources we learn to have confidence in. Most financial institutions have not yet realized that in their efforts to earn the business of Millennials like me, they are still not addressing this trust gap.
It doesn’t happen overnight, but this is where the opportunity is for banks and credit unions. So, how can it be done?
The answer is simple enough: meet us where we are, and speak our language. Social media channels are an integral part of our daily lives, so much that 47% of us rely on three or more social media channels for our daily news. Banks and credit unions need to have a much stronger presence on social media sites than they do now, and more important, they need to be present in our conversations, sharing their expertise more—and directly promoting their products less.
Being present in our social media networks means engaging with us continuously. This sounds straightforward, but for traditional banks and credit unions, it may be a complete cultural shift. It’s not a task you check off your list every now and then—like placing an advertisement or posting on your own blog—it’s an ongoing, multi-layered dialog you commit to participating in.
There are two equally important aspects to this participation.
First, create valuable content so we’ll follow your feeds and read your information. Do this by posting:
- Third-party research and educational content on how to pay off debt and how to create a savings plan for retirement, education, or a future home or car purchase.
- And sharing topics that we care about to connect with us and build common ground, such as fundraising efforts, charity giving, and other initiatives your institution is a part of to better our community.
- About financial education seminars or events your institution is offering and how we can get involved.
- Daily and at consistent times to establish reliability so we know we can count on you to be there when we need you.
Second, join our ongoing conversations with actionable advice and guidance so that we can learn to trust you over time:
- Respond to all of our comments and feedback, whether it’s positive or negative, to show us that you care and that you’ll be there for us.
- Conduct polls and surveys on social media to actively begin conversations with us about finances. Offer gift cards or free materials as incentives to participate.
- Begin a relationship with us by responding to our posts and comments in groups talking about financial topics.
To work, your social media strategy needs to be a long-term plan for engagement. Building a reliable presence involves consistency over time as much as continuing to provide valuable content that we’ll find relevant and interesting.
The potential reward for this effort will be a financially healthy and knowledgeable population, willing to turn once again to financial institutions as we (and the generations to come) reach financial maturity. You can become the trusted online resource, and even the trusted friend we can count on, when we make important financial decisions.