The biggest impact Millennials will have on credit unions, according to a Millennial

Credit unions are crazy about Millennials; and to a degree, the craze makes sense. After all, if you want to stay in business for the long haul, then you have to attract the rising generation.

As a Millennial, I’m always interested to read what people publish about my generation. Today, I read a post entitled, “How millennials select bank products & services, focus group results,” by Meredith Olmstead. Meredith shared some tips she learned from a focus group where “participants were between the ages of 25 to 31 and split 60/40 men to women.”

After reading Meredith’s post, I wanted to share my insights about the impact Millennials will have on the entire retail banking industry.

What Millennials want

I believe the biggest impact Millennials will have on banks and credit unions is that we want to interact with financial institutions (FIs) remotely—because it’s more convenient. Going to a branch to deposit a check is a pain because I have to spend time driving there and I’d rather be doing something else. Instead, I much prefer to deposit checks with my smartphone—anytime, anywhere. In fact, being able to deposit checks remotely is so important to me that I recently moved most of my checking funds to a new FI that has higher mobile deposit limits than my old one

I visit physical branches for only a few reasons, and in most cases I’m annoyed I have to go:

• Mobile deposit limits (i.e., I can’t deposit a check over $5,000). I invoke curses on these limits and long for the rise of bitcoin every time I have to go to a branch to deposit a check.
• Opening a new account. For unknown reasons, some FIs still require people to show up in person to open new accounts, which is terribly inconvenient.
• I have a complex need or question. If I have a complex need or question, then I’ll visit a branch to talk with someone, which brings me to point #1 of Meredith’s post, “Millennials Want Branch Availability for Consultations When Needed.”

I think Meredith’s point is accurate: when Millennials want consultations, they want to talk with humans. However, I’m not sure that necessitates a visit to a branch. Talking face-to-face is still the best way to have complex conversations, but rather than meeting in-person, I might prefer to chat via FaceTime rather than visit a branch—because it’s more convenient.

I use video calling more days than not, either in my business or personal life, because it enables me to have face-to-face conversations with people without being in the same room. A few credit unions, like Xceed, realize how useful video calls are and have already implemented the technology for customer support. I believe it’s only a matter of time until video call support goes mainstream with all financial institutions. But video call technology is just one example of the impact Millennials will have on retail banking.

Ultimately, here’s the big picture: in an industry of commodities, Millennials prefer FIs that use technology to make our lives easier and better.

You want me to drive to a branch?

Many credit unions put a big emphasis on their physical branches, but that doesn’t align with how Millennials want to interact with FIs. When I’m looking for a new financial product, one of my criteria is, “Can I interact with this FI without ever visiting a physical location?” because going to a branch is usually a pain

To build brick and mortar branches, your credit union spends between $250k (for an inline branch) and $2M (for a nice standalone branch), with an average around $1M (plus $250,000 per year to staff it). But which of your branches actually gets the most interaction? Your digital branches! (In other words, your website and mobile app.)

Most credit unions spend only $5,000 to $100,000 on their websites, with an average around $40,000. Yet, most credit unions’ websites get far more traffic than their physical branches. Hence, there’s massive dissonance between how people are banking and where credit unions are investing—and that disparity will continue to grow if credit unions don’t change their spending habits.

Invest in the future of banking

Instead of investing in more brick and mortar, invest in full-service digital branches. Imagine being able to do all of your banking online? That’s what Millennials want and that’s the future of retail banking. And think of the digital branch you could build if you budgeted $1M for your credit union website design?

Sure, you can’t deal with cash and coins through a digital branch, but what Millennial wants to use those relics anyway?