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In a world of avocado toast, themed yoga classes and “athleisure apparel,” it would seem “wellness” stands at the forefront of millennials’ minds. But how far does the definition of wellness span for these individuals? While some argue that Fitbit doesn’t go quite far enough to digitize the pursuit of complete physical wellness, few notice that financial wellness represents an aspect of millennial life that is far from, well … healthy. Likewise, financial institutions can do more to aid millennials in taking those first important steps. The question is, how?
First, the basics. Millennials have not yet mastered the fine points of financial wellness, albeit for many reasons: lower employment rates, smaller income and towering student loan debt among them. As to that last factor, the total figure now surpasses $1.3 trillion, while the average Class of 2016 student carries $37,172 in student loan debt. To put that in perspective, a graduate who wants to dedicate $400 a month to paying down that $37K figure will need ten years to do it, assuming a 5 percent annual interest rate. With that kind of albatross, who would expect millennials to have any funds to invest, let alone buy bank products?
Though the challenges millennials face are often cited in the media, the financial fallout from them is too often ignored—as well as the stress they create, which can create a troubling feedback loop with physical wellness. What sets finances apart from other challenges faced by this group is the lack of innovation in remedying the problem. That is: Financial institutions can step up their efforts to guide millennials to financial health. But they can also take a cue from an unexpected source—millennials themselves.
Millennials have significantly changed the playing field across innumerable facets of industry. Consider, for example, the sharing economy behavior that shows millennials making a sharp break from their parents. With so many others “uberizing” merely to play to their millennial consumers, it’s a wonder why banks have moved so slow towards catering to these individuals.
Millennials are famous (or is it infamous?) for their high-tech affinity. And while this might sound superficial to some, it is nonetheless true: Effective engagement with these consumers begins when institutions meet them where they are. They can accomplish this by offering relevant tools that seamlessly integrate into their day-to-day lives. Financial decisions are made constantly, every day, so this convenience is essential to assure they actually incorporate these tools into the decision-making process. By simply being present with user-friendly, high-tech resources, financial institutions have the potential to positively impact a financially at-risk demographic.
Beyond user friendliness, the millennial consumer expects an element of automation; it’s no longer enough to simply present them with half-baked options. For a millennial, saving money needs to be as simple as opting in and allowing an automated platform to do the saving for them. With 34 percent of Americans reporting not a single penny in savings, institutions must recognize that to best assist their account holders in achieving financial wellness, they should offer a product that shoulders some of the money management burden.
A tailored experience is the final piece of the proverbial puzzle. A millennial is fluid in form, so recognizing the different behaviors and needs of each consumer is paramount. No one-size-fits-all solution works for this group. Fortunately, in today’s age of advanced technology, machine learning can provide this tailored experience automatically. Consumers want their tech to be increasingly smart and those smart features applied towards improving their everyday lives. In a culture that celebrates individuality, a personalized platform goes far.
The financial challenges faced by today’s millennials aren’t just repeated historical patterns but rather unique to this generation. What’s more, the ways in which this demographic interacts with the industry are new and evolving. While some industries thrive in this new business mode, banking has so far fallen short, with 91 percent of millennials pointing to at least one personal finance benefit they would like their financial institution to provide via mobile.
But the hesitancy of some financial institutions to jump into the brave new world of millennial interaction is not a kiss of death—nor is the uncertainty of just exactly how to do so. Fortunately, banks can take strides to better accommodate this demographic. While they may be late to the party, financial institutions are starting to explore ways to better equip account holders in achieving financial wellness.
This assistance has the potential to better position and empower an entire generation, despite the formidable challenges they face. And at some point, millennials will inherit a tremendous amount of wealth from aging baby boomer parents. Financial institutions that sit on the sidelines and wait to reap the rewards of that historic transfer should not assume millennial loyalty is guaranteed. There is an imperative to connect now, while there is time to cultivate trust and help struggling millennials reach for, and realize, the full benefits of financial wellness.