Banks Have Their Eyes on Millennials

Having a hand in the millennial market is key to a business’ long-term survival. At least, it will be while the millennials are in their prime earning and spending years; when Gen Z gets into that slot, reports suggest an entirely different kettle of fish will be waiting. At any rate, millennials are the spending leaders for right now, and that means some changes in how business is done. Banks are starting to come around to this, says a new Archer Group report, and making changes accordingly.

One of the biggest changes, the report notes, is an increased focus on mobile operations. It’s become almost a caricature that millennials are into online and mobile options long before any kind of physical contact, so it explains why Venmo alone was responsible for just over $17 billion in transactions by itself in 2016.

Banks needed a way to compete with that—who needs to hit the ATM for cash when they can just Venmo a payment (that Venmo has become a verb is a likewise sign of mainstreaming) to someone—and so came Zelle from the major banks. That’s been a good move for said banks, as growing numbers of users are getting behind it in a bid to get in on peer-to-peer (P2P) mobile payments use.

It’s not just Zelle that’s driving millennials back to the banks, but rather a package of initiatives as well. Banks are focusing on a more seamless experience between the physical and mobile experiences, as well as some improved aesthetics designed to get more users excited about the prospect. Security has also been ratcheted up to get more users in the door and working with a program.

These are all worthwhile points; adding P2P payment mechanisms addresses a need that was being filled by a third-party app, while ramping up security and user experience seldom goes wrong. The only potential problem here is that banks may be too late to really get in on the market. Apple Pay celebrates its third birthday this October, and Venmo is already processing transactions in the billions. Why would anyone jump ship to take advantage of a bank’s offering?

Until the banks can answer that question, they’re likely to find themselves also-rans in the market that they largely created.