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Banks Urged to Step Up Tech Game

[Sunday, January 18th, 2015]

Millennials expect their banks to be just as tech-savvy as they are, according to the latest BBVA Compass report. If they want to attract and keep young customers, banks will need to make sure their websites and mobile capabilities are up to the task of meeting this generation’s demands.

The Millennial generation represents 75 million U.S. consumers age 18 to 34, and the economists at BBVA Compass called them “the most educated, tech-savvy generation in the U.S.” They said it would be a challenge for banks to live up to Millennials’ expectations. As well as being highly educated and technologically advanced this generation is also carrying heavy debt from student loans and aren’t generally looking to take out mortgages, accrue credit card debt, or utilize other financial services traditionally offered by banks.

Millennials are “tethered to their smartphones,” as BBVA put it. Banks must make sure they are offering top-quality mobile and online services. But this isn’t all they can do to engender customer loyalty among the younger set. The BBVA Compass urged banks to offer financial advice, seek feedback from their younger customers, hire young employees and partner with providers of new technology and financial innovation.

Simplicity and transparency, not just technology

The new players in today’s financial field are peer-to-peer lending, crowdfunding, using mobile payment platforms and virtual currency. Millennials have an innate distrust of big banks, due to the financial crisis of 2008 and the Occupy Wall Street movement, and banks will have to prove themselves in order to overcome Millennials’ suspicions. Simplicity and transparency are highly valued among young people; qualities banks must embrace if they are to be successful in catering to their needs.

“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,” said Marcial Nava, an economist with BBVA. “If banks do not embrace these changes, non-banks will.”

The full BBVA Compass report, authored by Nava and titled, “The Millennials Paradox,” is available online at the BBVA website. The BBVA’s five-member research team is led by BBVA Compass Chief Economist Nathaniel Karp, and analyzes the U.S. economy and Federal Reserve policy on an ongoing basis. They create models and forecasts for growth, inflation, policy, and industry.

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