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Over 90 percent of banks expect growth in the usage of mobile applications, pushing up demand for fintechs' products and leaving the limited number of fintechs with the power to chose their partners.
Millennials – can’t live with ’em, can’t grow without ’em. And if the banking industry is to survive, it needs to get smart about attracting and retaining Gen Y employees among its ranks.
Fun though it may be to poke fun of Gen Y as socially inept basement dwellers, the fact of the matter is that the oldest end of the Millennial generation has been in the workforce for over a decade now. They’re buying houses and cars (well, sometimes), and they’re saving for retirement (perhaps more consciously than even their parents did). Two years ago, they surpassed Gen X as the largest share of the American workforce, and by 2020, they’re set to make up nearly half of the nation’s workforce.
Unfortunately, though, the banking industry has a little Millennial problem – and not just when it comes to customer acquisition.
“When you look at Millennials and who they would bank with, it’s not just banks, it’s also brand names; Google, Amazon, Paypal, Venmo … You’ve got all these other alternative financial products,” said Laura Hay, managing director at Pearl Meyer and head of its national banking group. “A lot of Millennials would rather go work for them than your typical community bank.”
The Millennial Disruption Index, a study conducted by Scratch in 2014, identified banking as the industry most vulnerable to disruption. Fully one-third of Millennials told the Viacom division in that survey that they think they might not even need a bank in the future, and more than half (53 percent) said they didn’t think their bank offered anything different from any other bank.
If banks are to compete with fintechs, or even if they are to better integrate fintech into their own daily operations, they’ll need to hire people who understand and are comfortable with those technologies.
But Millennials, who came of age during the Great Recession, might well associate “banking” with money-center Wall Street firms, which means community banks aren’t necessarily top of mind when they think about long-term career prospects. The problem is only going to worsen as Baby Boomers continue their mass migration into the fabled land of retirement.
Must it always be this way?
A Familiar Story
At least a few community bankers have been thinking about how they can better appeal to Millennials in the workforce.
Julieann Thurlow, president and CEO of Reading Cooperative Bank, believes that mutual and cooperative banks can be an especially good fit for Millennial employees. In survey after survey, Millennials consistently say they want a collaborative workplace and a good work-life balance, they want to work for a company that cares about its community, and they want to know they’re making a difference. That fits right in with community banks’ commitment to their communities.
“The problem with banking and Millennials is that we don’t tell our story well enough. I would think that our mission and purpose would resonate with Millennials as employees and as consumers,” Thurlow said. “I also think Millennials get a bad rap. We have the right culture; we just need to communicate that value proposition.”
At Reading Cooperative, that meant a change from the formal, hierarchical management structure endemic to traditional banking. Thurlow sought feedback from all of the bank’s own employees as to how Reading Cooperative could improve its employees’ work lives – and their lives. Consequently, the bank seeks out continuing education opportunities, shares bonuses with even its part-time employees, and offers its employees an emergency loan program, so they don’t wind up relying on payday loans in a pinch.
StonehamBank engaged in a similar process of seeking out and incorporating feedback from its employees, particularly its younger employees. Among other things, that resulted in scaling up the bank’s remote environment to give employees more flexible scheduling and offering employees a wellness program, said Shawn Thomas, assistant vice president of information technology.
As far as recruitment goes, Thomas said StonehamBank has had some success with college career fairs, as well as social media. Meanwhile, Thurlow said Reading Cooperative has recruited some younger employees from internship and financial literacy programs.
They may very well be onto something, too. Millennials make up approximately 35 percent and 44 percent of the employee bases at StonehamBank and Reading Cooperative, respectively.
To attract and hold onto those employees, banks may have to be open to tweaking their culture, Hay said. She hears a lot of talk from the banking world, but doesn’t see a whole lot of action to back that up.
“Community banks do a great job with culture and creating a good place to work, but they need to take their strengths and repackage those in a way that a Millennial would understand,” she said. “You’ve got to stop talking and you’ve got to start to make a shift.”
