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Vendors at BAI Offer Advice, Products for Reaching Millennials

Fiserv, Microsoft among those helping banks come up with strategies for serving younger customers.

One theme at the BAI Retail Delivery show in Las Vegas this week was that banks need to do a better job of reaching the 80 million U.S. Millennials in the 18-to-29-year-old age bracket. Vendors had research, ideas and solutions for winning over this segment.

Microsoft shared a report at the show called, "Millennials Need Bankers, They Just Haven't Met You Yet." In an online survey of 1,675 U.S. adults, Microsoft found that given the choice, 60% of Millennials would choose never to set foot in a bank again, but to handle everything online, and 90% say they are confident they can manage their personal finances. However, 22% say they are open to financial advice. Surprisingly, though, Baby Boomers are heavier users of most online banking features than Millennials, except for linking and opening accounts online.

The survey asked Millennials what they would come back to a bank branch for. About half (52%) said financial planners, 47% said accountants, 38% said investment brokers, and 37% said insurance agents.

Millennials surveyed see the benefit of using personal financial management tools: 59% of young PFM users said it gives them a greater understanding of how they spend their money, 52% said it helps them live within their budget, 43% said it results in fewer overdue bills, 40% said they pay fewer penalties and late fees due to PFM, and 31% said they bounce fewer checks and have fewer overdrafts because of it.

To help millennials interested in better budgeting and saving (which research has shown this group to be), Fiserv has added personal financial management capability to its Corillian online banking software, which is currently used by 100 banks. Steve Shaw, internet banking and electronic payments group director, and Geoff Knapp, vice president, online banking and consumer insights, electronic banking services at Fiserv, showed me how this works.

The PFM module is integrated with Corillian online banking and online bill payment, so user data is automatically populated in the tool, which is basic. "It's not for that 10-15% of highly sophisticated Quicken-type users," Shaw acknowledges. "The vast majority of consumers want to transact, pay bills, transfer money, and see a simple analysis of their money," he says.

The software produces a pie chart that shows the bank customer where his money is going: household expenses, food, appliances, clothing, etc.

Fiserv automatically categorizes payments at first, giving users a head start, but users can modify spend categories and their definitions. Quicken, on the other hand, forces the consumer to come up with his own categories from the beginning, Knapp points out.

The Fiserv tool lets users set up alerts so that if they're overspending in an areas, they'll get a message letting them know. Shaw and Knapp say these features help engage the customer and help the bank deepen the customer relationship.

The next step for this tool will be extra help and advice with savings, a goal especially desired by millennials. A savings module will be part of the next release, in mid-2011, Knapp says.

Fiserv is also preparing new household research that it will release shortly. The company spends more than $1 million per year in customer research, generally targeting U.S. online households.

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