Banks should create a strategy especially focused on the millennial segment to entice the group, recommended a report by BBVA Compass.
The millennial customer segment, the most educated and tech-savvy generation in the US, offer a huge opportunity for banks but fulfilling their demands can pose big challenges for banks, said the report.
According to BBVA Compass economist Marcial Nava, US has 75 million consumers aged between 18 to 34 who are highly educated but have student debt on them, and refrain from pursuing much mortgages, credit cards and other financial services.
The financial meltdown has further dampened their trust of millennials in the financial sector.
Competition has become fiercer with entry of new players in peer-to-peer lending, crowdfunding, payment platforms and virtual currencies who are providing better value propositions with more simplicity and transparency.
According to Nava, "A vast number of young adults demand banks to engage in the kind of relationship that helps them not only to access credit but to navigate the intricacy of their financial life cycle. If banks do not embrace these changes, non-banks will."
Nava further highlights in the report that millennials expect banking innovation to come from outside of the industry, and merely offering online and mobile banking will prove insufficient to develop an enduring relationship in this era.
He also suggests various measures for banks on this issue which include advising young people on finance management, looking out for feedback from millennials, hiring young employees, and joining forces with financial disruptors.