How to Design a Millennial Bank

What should traditional banks and credit unions consider in order to offer a level of service that will meet younger generation expectations? Can banking organizations remain relevant in the future, or will they be replaced by fintech or 'big tech' alternatives?

Subscribe to The Financial Brand via email for FREE!There has never been such a considerable generational gap. This gap is due to a significant technology boom that formed a modern generation of tech natives. The digital world has created new behavioral patterns and interaction principles influencing the values of the younger generation.

It is not surprising that businesses, organized in the pre-digital era by people from the previous generations, encounter adaptation problems in today’s world. Of course, they still have an army of loyal customers from previous generations, but evidently, their growth prospects are limited if they don’t adequately serve the needs and expectations of the next generations..

Young people are gradually taking more and more resources into their hands — according to the statistics, this age group will control $7 trillion of assets by the year 2020 in the US. Today, they are the largest group among customers buying a house for the first time.

Traditional business survival depends on overcoming generational conflict and on its adaptation of new technologies and the ability to respond to the demands of the digital world and digital consumer. It is vital to see the difference between the demands of the future customer and the previous generations to create an effective business strategy and also to understand it, taking into account UX design.

Fully Digital Consumption

The younger the customer or member, the less he/she really wants to interact with business representatives to solve his problems when using a product or a service. Around 30% of Generation Z stated that they prefer to find information online and cope with the problem themselves.

Their multitasking capability is shocking. They are able to interact simultaneously with dozens of digital channels. Emails are gone, left only for business communication. Still don’t have alerts and notifications in your service app? Well, that’s no good. Don’t hesitate to enable them. Use as many digital channels as possible … be everywhere with your younger consumers.

The digital consumer born in the past 15-20 years lives in a world of innovation they understand, and most of all, appreciate the real-time experience. This means that banks and credit unions must closely monitor trends and use situational marketing to provide hyper-personal experiences. It’s important to switch from traditional advertising to native formats.

According to a PwC study, only 25% of banking products are available online – usually it’s not as easy to find a mobile app, and the app itself is far from being perfect. Become omni-digital, but be careful. Nothing can be as annoying for customers as useless advertising notifications.

Many banks still invest in the channels which are ineffective for reaching and generating response from the new generation. Users wish to make more transactions online — from simple payments and transfers to loans and investments.

The implementation of new tendencies doesn’t always correspond with the regulatory requirements of customer identification (KYC) and to the regulations on money laundering that may be beyond companies, but the ones who manage to do this, will gain access to a large potential audience and provide a good future for their business. So, get ready for a cashless society.

Design Rules the World

Unlike previous generations, the new generation loves with the eyes, not with the ears. Don’t expect a catchy tagline to be an excuse for outdated site design and apps. Visual details are paramount for the new generation.

Preference is given to the visual content and the brands are judged by their taste and the beauty they bring into the users’ lives. It also means that visual channels are dominating in user experience (e.g. social media feeds, apps, chats, video blogs, visual mems).

In particular, young people don’t like to talk on the phone. Studies show that the younger the target group of users is, the less popular phone communication is. Forrester research revealed significant differences among “Millennials” — only 49% of respondents from generation Y (23-37 years) preferred communication with company representatives on the phone, in contrast to the Generation Z (16-22 years) — 38%.

Still, the Millennials are the most active age group using social media for communication. For example, instead of calling support, the younger generation will look for a tutorial on the Internet or will contact the company online. They’ll be frustrated if they don’t find anything of that kind.

Total Transparency

The younger generation is used to sharing private information. Therefore, they’ve got a different attitude towards privacy. Easy registration and services with open ID are better for them than time-wasting secured forms. They won’t understand why the provider complicates the usability of the service because of safety standards.

The Millennials really appreciate the quality of the service and they are willing to sacrifice something to obtain a maximum level of service. According to a Salesforce study, 61% of respondents do not mind sharing their personal information with businesses, hoping it will make product or service interaction both offline and online more personalized. Also, 58% of Millennials said that they are ready to share this information to get more accurate recommendations related to their interests.

This is the obvious difference between young people and the previous generations — for example, among the group of baby boomers (i.e. people born in the period 1943-1963), only 41% of users would share personal information.

So, it is important to rely on their data if it will help to improve their life and make your service more useful. But be prepared that this rule also works in the opposite direction. Users expect honesty and transparency from your business. Perhaps, privacy is becoming a relic of the past in the digital world.

Authenticity Instead of Loyalty

Younger consumers don’t stick with brands and are not loyal to them. Why? Because they can find hundreds of the same offers online, evaluate them with ratings and reviews, and choose the most suitable one. Unlike the traditional approach of creating brand value through mass advertising, multiple repetitions, and a unique proposal, in future, the main value of any brand will be its social capital: the number of fans recommending this service and hyping it online.

As a result, instead of market positioning, that usually doesn’t have anything to do with reality, the brand authenticity and its correspondence with the values of selected niches, confirmed in its actions, and also its willingness to build customer-oriented relationships, based on the business model, become of utmost significant for the business.

Millennials and digital natives (even older than the Millennial generation) don’t need any explanations: they judge everything by their own experience. It is important for them to feel their value to the company. If a young man or woman reckons the business is not careful enough for him/her, they will go to a competitor. No regrets.

For example, in the Forrester survey, 21% of Generation Z stated that a reason to change the company could be the poor social media support and the lack of functionality of the product, not to mention a bad mobile app (23%). Note: these statistics apply not only to retail companies and start-up services, but also to the organizations with which earlier generations have been interacting for years such as banking organizations.

The Kasasa study revealed that 82% of Millennials don’t mind changing banks and 83% of them would go to the competitors who offer more favorable conditions (interest rates, cashback, etc.). 65% of the users would choose a more convenient mobile app.

Disrupting Media

The younger, digital native generation consumes content in a completely different way. Forget about TV and commercials. Become a favorite service of а popular blogger, and no advertising is needed. Create useful content inspiring customers and they will become your loyal customers and advertising agents (and free of charge).

Today, blogging and gathering loyal audience is typical for the younger generation. They start making their online communication network from their childhood. So, they are no longer traditional media consumers. They become media themselves.

Young consumers are the most demanding critics, not forgiving brands for arrogance, deceit and neglect. Their expectations of the minimum level of service often meet the highest quality standards and they do not forgive mistakes. The news of bad service spreads quickly, filling thousands of sites. For any brand this could be the beginning of the end.

In practice, the younger generation doesn’t mind speaking publicly about their user experience. According to Accenture statistics, 70% of Generation Z who purchased offline and online, wrote reviews and 40% stated that they do it regularly.

Given this reality – that Millennials are the most active users of social media – it’s unprofitable to upset these customers, because they not only quickly switch to the competitors, but also express their discontent publicly.

Social Responsibility

Millennials understand the meaning of life and they are therefore more focused on human values. And at the same time, they are incredibly pragmatic. This means, they will not swallow the brand’s promises – they are keen on certain actions: here and now. Actions that will change the world for the better.

Empty marketing promises do not work with this younger consumer. Brands will have to answer for their words and to show the meaning of their existence. It may seem surprising, but the new generation is aware that they are guests on this planet, and looking for responsive service.

Younger consumers are aiming at not just saving the planet for future generations, but also at improving it. The companies who don’t share these values have no place in the future. If you still haven’t become “a green company” – do it.

Expecting Dialogue

With the social networks, communication has become a primary activity for young users. They are in a constant interaction with each other through digital channels. This means that the brands of the future should be open for dialogue. They can’t expect that cooperation will remain unilateral, as in “take it or leave it”.

Younger users are used to the fact that their opinions are heard. The willingness to dialogue is becoming the hallmark of today’s service. Consultations about complex products are really important. The feedback, properly collected, and processed becomes a valuable source of business insight for development and improvement.

Reorientation of Business Processes on Youth To Reduce Costs

Now more than ever, young people are increasingly impacting on business. Millennials and Generation Z will soon take a lot of resources into their hands, becoming the most important consumers for any business.

Their preferences are quite different from those of their parents, but the banking industry is too conservative. Many banks are still reticent towards digitalization, preferring to invest in the improvement of the old business processes. Meanwhile, outdated working methods and values like “a wide network of branches” are now not only unprofitable for the company, but also pulling the business down.

Ultimately, it is a question of money — according to PwC calculations, the average cost of a single transaction in offline branches is $4, while online and mobile banking are respectively $0.09 and $0.19 per transaction.

In 2014/2015, the Millennials surpassed the baby boomers, becoming the most influential world group as far as earnings, spending, and assets. Soon, their total spending will reach $10 trillion, and the total capital will be $59 trillion, including assets inherited from their parents.

While companies are trying to satisfy customer groups who have less future influence, their younger audience flows to competitors who understand the importance of meeting the needs of digital-natives. Those unwilling to change will lose a lot of money and their position in the market in several years.

Omni-Digital is the New Black

Currently, the development of UX and the marketing of most financial firms are guided by the so-called “omni-channel” customers (i.e. those who use online banking, visit the office, visit the site and use call support). According to PwC, the number of such customers has significantly decreased in recent years.

Instead, there is a growing number of “omni-digital” customers who do not use physical communication channels, like going to a branch or using a call center. Instead, they use only digital channels to solve their problems. According to statistics, 46% of bank customers now only interact with their financial institution digitally.

This means that to attract the Millennials, the modern financial organization should engage customers not only by its own resources, like apps or website, but also by the platforms that are typical to customers, such as GAFA (Google, Apple, Facebook, Amazon).

Millennials could care less about the safety of their personal data – they are willing to share it in order to get a more convenient personalized service. But, it is not enough just to gather information, it also needs to be properly processed. The promising domains here are the use of machine learning technology, artificial intelligence, and predictive analytics approaches.

Using these tools, it’s possible to conduct instant scoring and automatically respond to the loan application, or even offer it at the best moment, using digital channels.

You can offer services and products based on a particular consumer’s spending – a credit card with favorable conditions of purchasing abroad for frequent travelers. Insurance can be automatically offered to someone who’s just bought a car. This use of new technologies will enrich the user experience and raise banking services to a new level.

Outstanding Experience Creates Value

Interviews show that it’s crucial for the Millennials to feel important as customers and not just a figure in the bank financial reports. All aspects of interaction between the finance company and the customer should aim at better relationships. Impressions and experiences from service are essential aspects for every modern business. Not only online. The full customer journey should be thought out to the finest detail.

Even if a bank or credit union closes all the branches except the main office, it needs to create the right atmosphere there. For the new generation, cheap furniture, electronic queues, or in opposite – pretentious tables of precious wood with consultants in gold-rimmed glasses and heavy coats, would be seen as quite odd. They would prefer a trendy coffee shop or co-working space — places that are more suitable for good and easy communication.

The design of every touchpoint in the customer experience must be verified and justified according to the peculiarities of clients. Every detail of the service has its value and must be properly designed. Design is no longer a way to create product packaging. Nowadays design is a way of thinking and providing competitive advantages.

You need to be careful of consumer expectations, taking into account perception patterns before implementing them into your business. It’s the only way traditional businesses can create something valuable for their customers and survive in the age of disruption.

The Service Must Be Built Around the Consumer

In order to win Millennial and Generation Z consumers, transferring the activity into the digital world is not enough for your organization. Banks and credit unions need to put the consumer in the center of the universe and double their efforts in ensuring the highest quality design, and a reliable, personalized, and cheerful user experience.

In our world where a consumer can order a meal, book a ticket to a distant country, call a taxi, and request maid service in a couple of clicks or taps on a smartphone, banks and credit unions must not stay behind in the service level. There are already a lot of fintech startups offering a variety of services, from quick loans, and remittances to investments. They are designed in an intuitive format for young users.

Young people are open to the world – they prefer to spend money on the impressions, not on the things. They are searching for convenience. In the coming years, winning consumers will become the driving-force of the global economy. This will be a successful task for the companies who have a better understanding of the needs of the younger generation and are able to design services which provide an outstanding user experience.

Alex Kreger is the Founder and CEO of , a financial UX design agency that helps online banks and fintech startups engage their customers with a delightful user experience through user-centered design.

All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.


  1. Paul Seibert says:

    Strong and well-articulated opinions better the debate. Alex is in good company when she suggests the demise of branches, as Bill Gates (in 2000), and Brett King in his book Banking 2.0, said the same thing. Technology can replace nearly all branch functions and is critical to competitive positioning in the minds of all members, particularly Millennials. Alex is right in suggesting financial institutions should deliver their savvy technology within an authentic brand, as “brand” has surpassed “branch convenience” as the most important FI selection factor. There may be no branches in the future, but should every FI close all its branches?

    I admit that my member service context is primarily through creating powerful branch experiences. Ludditism aside, there are alternative realities that should be considered when FIs assign future resources. Rather than close all community branches and retain a hub, what about phased change as we see today? Branches are being significantly downsized and becoming another element of omni-channel delivery. If this is not rational why do we continue to see increased market penetration the nearer we get to branches? Why has the number of US branches not declined? How do small FIs compete for brand awareness if they have no physical presence and marketing budgets 100 times less than their national competitors? Is physical presence not a component of authenticity in a brand? If all banks and credit unions closed their branches there would be no debate. The truth is that the biggest, strongest, or most unique would be the only survivors. Is this what we want?

    As Millennials and their successors dominate our culture, FI service models will continue to evolve. Each credit union needs to determine their evolutionary process and the true nature of their target market segments. It is very different for a credit union in San Francisco from one located in the Columbia Basin in Canada, Palmer, Alaska or Little Rock, Arkansas. Credit unions and their markets stand at different positions along the evolutionary path. Seems best to listen to strong rationale on both sides of this critical issue, embrace preferences of new generations, and then fashion your own hybrid reality and path toward evolutionary perfection.

    Alex, thank you for your strong voice and well-articulated position.

    Paul Seibert

  2. Chris Yaldezian says:

    According to statistics, 46% of bank customers now only interact with their financial institution digitally. Which customers are these? The Millennials? Or all bank customers?
    But, it also means that the majority still are traditional omni-channel.

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