Helping Millennials through the Latest Financial Storm
There’s no question that the fallout from COVID-19 has been far-reaching, as the virus has affected the lives of everyone across the globe, regardless of demographics. From a financial standpoint, the pandemic has hit Millennials particularly hard.
Millennials, defined as individuals born between 1981 and 1996 (ages 24-39), came of age during the 9/11 tragedy, entered the job market during the Great Recession and are now grappling with the pandemic recession while still relatively young in their careers. According to Ana Kent, a policy analyst at the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, Millennials have carried the effects of the Great Recession for most of the past decade and are therefore not generally as well off as their older generation counterparts were at the same age. As such, the economic effects of the pandemic have the potential to cause dangerous setbacks to this age group as Millennials commonly have little to no financial cushion to handle financial hardships. They are also facing job loss, which makes them especially vulnerable to the shutdown, having spent much of their lives failing to reach economic goals. Financial institutions are in a perfect position to help these struggling Millennials and here’s why they should:
They are the largest generation
Millennials have surpassed Baby Boomers as the largest adult generation of Americans at 72.1 million people and despite being among the hardest hit financially, they still have significant spending power. They are entering their prime spending years in their mid-thirties, becoming the largest discretionary spending group, up +3-4% per year. They are also the most diverse generation with almost half belonging to a minority group.
They spend, but are also price-sensitive
Because Millennials are less wealthy than their predecessors, they care about price and won’t spend a lot on brands that don’t have an obvious point-of-difference from competitors. However, they will still pay more for status and quality.
They are tech-savvy
They shop on smartphones and use them to seek out the best deals. They prefer specialty stores to department stores due to perceived value and superior service and will often shop at discount retailers to save money. They also like the convenience and instant gratification of online shopping, so they use their devices to shop from retailers like Amazon who can deliver quickly.
They invest in things important to them
Millennials are committed to environmental causes and board diversity when investing in companies.
They value accessibility and convenience
Despite being tech-savvy, this generation prefers megabanks to digital-only banks. According to a report conducted by Quidini, Millennial consumers value banks with self-service kiosks, a simple online banking platform and an easy-to-use mobile app. Smaller banks can and should still target Millennials, but should offer personalized services that matter to them, such as money saving strategies, socially responsible investment opportunities and digital platforms they can access on their phones easily.
They need help, especially now
A 2019 US Financial Health Pulse survey revealed that only 24% of Millennials were financially healthy before the pandemic, making the majority of the group unable to be financially resilient during this difficult economic climate. Additionally, 54% were struggling somewhat financially and 22% were having significant financial difficulty before the shutdown. The 2020 Deloitte Global Millennial Survey discovered that one in five global Millennials were out of work by May and one in four of the younger Millennials 25-30 had either been laid off or furloughed.
Spending patterns and attitudes that existed prior to COVID are likely to shift as Millennials may opt to move out of cities as they start families and will want to purchase cars and houses (items which had previously been less important to them).
How can financial institutions help?
There isn’t one magic solution to helping Millennials, so it’s best to use a customized, personalized approach. Helping them find ways to save or make money will go a long way to establishing a strong, lasting relationship. Millennials look for diverse service offerings in their financial institutions, not just a place to hold their money. According to a survey conducted by TransUnion, 86% of Millennials currently worry about being able to pay bills and loans. 40% cite paying credit card bills as their most pressing concern (U.S. Financial Health Pulse survey). Banks would be wise to offer their Millennial customers bill reduction services as long as they are simple to use.
ApexEdge provides a user-friendly money-saving platform that can be easily adopted by companies to help their customers save money quickly and effectively. We offer expert bill negotiation on a wide variety of products and services, as well as subscription cancellation and other value-added enhancements, which can all be managed on an app. This is not only ideal for Millennials, but also for financial companies that want to stand out from their competition by providing simplified, compelling products and services. Contact us today to find out other ways you can help Millennials begin to build a brighter financial future.
Sources: group.pictet, thefinancialbrand.com
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