Millennials Have Big Designs On Small Banks

Different generations have different ways of storing their savings. The Greatest Generation might have stuffed it under mattresses, while baby boomers stuck it in the stock market. Millennials, though, march to the beat of their own drums.

Bloomberg Business reported that millennials are increasingly flocking to community and local financial institutions instead of the big banks that their parents were fond of. In data provided to Bloomberg by Accenture, clients to community banks grew by 5 percent annually among 18- to 34-year-olds, and credit unions grew 3 percent among the same demographic. By the same token, large and regional banks saw 16 percent of this consumer base leave for other organizations.

“Traditionally, big banks have been able to dominate with physical presence, having extensive branch networks, name recognition and being able to spend a lot on advertising,” Richard Barrington, senior financial analyst at MoneyRates, told Bloomberg. “[However,] what were once advantages have now become liabilities.”

Cam Fine, president and chief executive officer of Independent Community Bankers of America, claimed that the greater level of customer service that smaller financial institutions are used to providing have struck a chord with the millennial sentiment for authenticity in business. This has led community banks to make a strategic decision: voluntarily take a hit on popular services like free checking in return for a swelling customer base and the growing potential for greater revenue down the road.

“Millennials, in particular, crave more high-touch,” Fine said. “They want to make sure people are paying attention” to their needs.

The reallocation of generational wealth will need to be a little more torrid and a little longer lasting for wider implications to be wrought on the growing payments ecosystem, but millennials’ love for small banks is a trend not to be ignored.

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