A few weeks ago, I wrote a blog titled, "Surprise! Kids Are Going to Bank in New Ways." I admit, the entry was a bit snarky and I was a little harsh on Celent's report, "The Millennials, Financial Services, and the Web."

It's just, as an almost Millennial, I wasn't thinking like a banker, or even a bank customer, who hasn't been using Internet banking, cell phones, or even ATMs, his or her whole life.

Then, while on a family vacation, my step mother mentioned that because her bank is going to start opening later in the morning, she is going to be forced to use the ATM, which she had never done before. She doesn't even have an ATM card!

I immediately thought back to that blog entry and decided to revisit the topic. Maybe the generational differences are not as obvious as I thought.

So, to be fair, I went back to Celent with some questions. Below is the transcript of my e-mail interview with Alenka Grealish, managing director of Celent's banking group.

Q. Do you think banks are getting the message that they will have to communicate with the next generation in different ways?
Grealish: Yes, many bankers have teenage children and see them living in a virtual world with a cell phone. They may, however, overlook the fact that this generation’s delivery expectations and preferences are being set by non-banks, e.g., youtube, secondlife, amazon, eBay.

Q. How can banks serve the needs of those that are accustomed to texting, mobile phones, blogs, etc. while also appeasing their older customers who may not be comfortable even using the ATM?
Grealish: For decades, most banks have tried to be everything to everybody -- and, now one can add, everywhere. Their challenge lies in earning a return on the channel investment. They should welcome Gen M as being the low cost-to-serve generation, which will subsidize customers who have a high cost to serve. They should fear their remoteness to this segment, however. They will have to build loyalty in a different manner, for example through credit/debit card reward programs and relationship bundling.

Q. What do you think will create the biggest problems in meeting the needs of younger generations?
Grealish: I don’t think there are any major problems to serve (any bank can come up with a free student checking account with a cash rewards card), but rather a problem in retention. How do you retain a Gen M’er who opened an account with your bank because of its proximity to home or campus once he or she moves elsewhere? The national banks figure they’re all set given their footprint, but that is not necessarily so. The bank that originates their first auto loan could garner the rest of their wallet.

Q. What do you recommend that banks start doing now to adapt to the incoming customers? What first steps should they take?
Grealish: Capture the Gen M’s checking account and then cross-sell products which helps this segment’s particular needs, such as, to save for relatively small value items (for a car or a down payment for a car or a vacation), manage their credit (e.g., a credit card with charge volume alerts), and expenses (online personal financial management lite which automatically balances a checking account regardless of source of debit/credit and notes pending e-bill payments and automatic debits).

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