Keeping up with the millennial generation ... at the ATM
by Yonas Marcos, President and CEO, Star Financial Services
Whether it's a local, regional or even a national brand, people are traditionally drawn to names they know.
However, consumers in the millennial demographic — i.e., those born between 1981 and 1996 — have been steering away from large, corporate brands, drawn toward smaller, less well-known companies.
This trend, known as reverse branding, has propelled the rise of a contingent of younger adult consumers who are less inclined to patronize big companies with flashy logos, catchy slogans and nationwide — or even global — reach.
Spending data suggest that affordability and value are of utmost importance to this contingent. They are also more likely to favor brands that have a compelling story to tell and those that speak to millennials' standards of moral, ethical and conscientious behavior.
Or, as a recent article by Forbes put it: "Generally, millennials choose to vote with their wallets for brands that tell inspiring stories, conduct business ethically or contribute to their personal brands." However, a millennial consumer is known to be brand loyal, once they are won over.
Millennials crave experiences
Millennials have a strong preference for buying local and are demonstrably more willing to spend their money on experiences than on stuff.
While total discretionary spending among U.S. adults has nearly doubled in the past 15 years, money spent on travel, eating out and recreation has far exceeded expenditure on household goods, cars and other physical items, according to studies from HSBC Bank and the Bureau of Economic Analysis.
Millennials use cash
Millennials use cash and ATMs on a daily basis. In fact, a study by the Federal Reserve showed that millennials use cash more than other demographic groups in the United States. According to that same U.S.-based study, nearly 50 percent of transactions under $25 are in cash and 60 percent under $10 are paid in cash.
A blog posted at Banking.com cited results from a survey by marketing research firm Phoenix Synergistics suggesting that millennials "view the ATM as central to how they manage their money and go about their daily lives."
Another study by BI Intelligence found that millennials prefer to do their banking online or at an ATM. More than half (60 percent) of the millennials polled in the study said that they do not visit a financial institution branch on a regular basis.
Millennials prefer surcharge-free ATMs
Millennials tend to be frugal and prefer surcharge-free ATM transactions. The single biggest reason millennials move their checking accounts between financial institutions is to obtain access to free ATMs, according to data from Phoenix Synergistics.
The survey found that 46 percent of millennials who moved their checking accounts to other institutions in the last two years said they did so in order to be able to access surcharge-free ATMs.
These trends are a true opportunity for banks and credit unions fighting to win the hearts and minds of millennials.
A few ways financial institutions can win over millennials include:
- Branded ATMs in the community — Partnering with a local ATM operator to provide more surcharge-free ATM locations is a terrific way to serve cardholders of all ages. It helps to increase brand exposure and is typically an affordable way to expand an ATM fleet.
- Event ATMs — Sponsoring or placing branded ATMs at local events is another potentially effective approach to consideration. A recent white paper explained the benefits of using branded ATMs at local events to increase brand exposure and generate brand loyalty among younger cardholders.
- Surcharge-free ATMs — Banks and credit unions that want to cater to millennials might want to consider joining a surcharge-free network. Financial institutions have a number of surcharge-free regional or nationwide networks to choose from, including Allpoint, MoneyPass and, for credit unions, the ATM sharing network of Co-Op Financial Services.
Understanding your target market and remaining in the know about spending trends is key to marketing. For financial institutions to keep up with the leading edge of trends in consumerism, watching the spending habits of millennials is a key factor.
Yonas Marcos, a native of Addis Ababa, Ethiopia, is President and CEO of Star Financial Services. Since founding Star in 2007, Yonas has built the company into a nationwide provider of ATM equipment and processing, branding and outsourcing.