The economic power of Generation Y has registered on the radar of several major banks around the US.
Over the past decade, lifecycle value chain analysis has given birth to numerous product bundling strategies by retail bankers. However, well conceived plans disconnect from results when the willingness to execute is lacking. For the most part, I have not witnessed a conviction by banks to invest in customer groups that show future potential but lack today’s profitability.
Millennials fit this profile, but things might be changing. Bank of America, PNC Bank, and Wells Fargo are just a few of the institutions rolling out products designed to engage Generation Y where they are, and encourage them towards a long term financial relationship.
Bank of America launched its “Keep the Change” program in late 2005. The program awards customers by rounding up debit card transactions and depositing the difference in a designated savings or checking account. The bank will match 100% of the savings for the first 3 months of the program and 5% thereafter. The bank reported that it had 2.5 Million customers enrolled and that the program was responsible for over 700,000 new checking and 1 Million savings accounts.
PNC Bank introduced its Virtual Wallet during 2007, aiming to attract Millennials who are seeking a bank that understands their needs and speaks to them in their preferred channels. The online banking account offers simple tools to help with budgeting, bill paying, and savings. The Virtual Wallet micro-site offers a slate of quick videos that play out life scenarios like “Danger Days” (those days when “you have a lot of bills a-coming”) and “Wallet Wisdom” with tips on how to make an informed purchase and when to pull the trigger. An instant poll on the site showed that spending on gas (48%) outpaced eating out (43%) for those that had voted. Cocktails and coffee were distant followers. This is a great example of bank not acting like a bank and it works! A Dec. 8 Business Week article stated that more than 20,000 accounts have been opened so far, over 65% from new customers and 70% from the Generation Y demographic.
Wells Fargo offers online budgeting tools as a sweetener for opening a checking account and participating in online banking. My Spending Report is a tool that has gained notoriety as easy to understand and use. Yes, there are quite a few online alternatives to Quicken, including billQ, Mvelopes, and Mint, but sourcing your online financial management tool from a solid brick and mortar bank brand has its advantages.
There are more examples of banks seeking engagement with Generation Y and the good ones will be chronicled here. Maybe at last, retail banks are on a path to create brand stickiness rivalling their retailer counterparts. Just imagine how powerful the statement “You’ve got to open a Virtual Wallet” would be when spread across social networks.