new jersey bankers associationsource: goldman sachs – data story millennial 19 bad bank customers...

© 2015 – FinPro, Inc. 0

**DRAFT - Confidential: For Discussion Purposes Only**

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Millennials Matter FinPro Annual Conference

April 23, 2015

© 2015 – FinPro, Inc.

Table of Contents . . .

Why Should Banks Care ………………………………………………………. 02

Millennials – Who are they …………………………………………………….. 04

Millennials in Your Work Force ………………………………………………... 09

Millennials As Customers ………………………………………………………. 18

Conclusions ………………………………………………………………………. 27

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© 2015 – FinPro, Inc. 2

Why Should Banks Care


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Millennials

92 Million

Generation X

61 Million

Baby Boomers

77 Million

Millennials represent the largest generation in US history, even bigger than the

Baby Boomers . . .

The most widely accepted definition for Millennials is people born from 1980 to 2000

3

Sources:

US Census Bureau

© 2015 – FinPro, Inc. 4

Millennials – Who are they


They have grown up in an “always on” digital world, where social media gives

them the platform to reach the entire world . . .

5

Millennials:

Generation X:

Baby Boomers:

Sources:

Goldman Sachs – Data Story

Millennial


They are highly educated but have graduated into a weaker economy with lower

levels of employment and lower income levels then prior generations . . .

6


Millennials have a different definition of success . . .

Baby Boomer:

Success = Stability

Generation X:

Success = Young and Rich

Millennials:

Success = Pleasure

7

© 2015 – FinPro, Inc. 8

They just have a different perspective on life and a little chip on their shoulder . . .

Sources:

Directed by Stephen Parkhurst

© 2015 – FinPro, Inc. 9

Millennials in Your Work Force


There are 4 key stages to employing Millennials . . .

Attract

Employ

Retain

Promote

10


You’re a damn good place to work, show it . . .

11

Attract


Be Aggressive! Go out and get the employees you want . . .

Aim high!

The number of Millennials with a desire to take on a leadership role is limited

Don’t settle for just anyone, go after the cream of the crop

Hire for personality

Skills can be taught , but finding the right personality is crucial

This is key to finding a long term employee

Make your culture known

Have a range of different employees interview the candidates

Empowers existing employees, while demonstrating a flatter culture that Millennials desire

12

Employ


Debunking the myth on flex hours . . .

13

Employ


You found them, you hired them, your trained them, NOW DON’T LOSE THEM!! . . .

14

Retain


Let them spread their wings and fly . . .

15

Promote

MENTOR!, MENTOR!, MENTOR!

They think differently and have different priorities but they still need your

help

Stick to the Career Path

It was planned and built with them, FOLLOW IT!

Prepare yourself to cede control

They will most likely have a different management style as they rise

through the ranks, trust them or get rid of them


Millennials are not the same as Baby Boomers, or even Generation X

Don’t try and change them

Understand what motivates them and use it

Let them work from home where possible

Utilize flex hours

Empower them

Create a team environment, collaboration is key

Mentor, mentor, mentor

Cede control, learn to trust

16

Recap . . .

Footnotes:

Sources:


News Flash: Millennials Are Coming One Way Or Another . . .

The current battle going on between Millennials and Baby Boomers is useless.

Millennials will be a dominant force in the work environment and companies will have to

deal with them.

17

Sources:

Written and Directed by Jared

Neumark


Millennials As Customers

18


Good Bank Customers Argument

“The Millennial generation is the largest

in US history and as they reach their

prime working and spending years, their

impact on the economy is going to be

huge.”

“As Millennials enter their peak home-

buying years, their reluctance to enter

the housing market could change. The

cohort’s sheer size, plus its desire to

settle down in the future, could lead to a

surge in home sales.”

Source: Goldman Sachs – Data Story Millennial

19

Bad Bank Customers Argument

“More than half of millennials report they

live paycheck to paycheck and are

unable to save much money.”

“Crippled by college debt and the lowest

salaries in decades, millennials may be

good prospects for prepaid cards and

overdraft fees.”

“Millennials may fail to stick around at a

bank long enough to become profitable”

“Millennials are five times more likely to

close all accounts with their primary bank

than customers over age 50.”

Source: Kevin Tynan’s American Banker Article: “Millennial

Customers Aren't All They're Cracked Up to Be”

There is a huge debate about whether community banks should focus on

millennial customers . . .


To answer the questions we must look at the segments that make up the

generation . . .

20

Millennials

Fiscal Rookies

Online Living

ATM Nation

Payday Prospects

New Nests

Loan Rangers

Starter Ranches

City Strivers

Young Urban

Renters


Then we need to understand which customers are in our markets . . .

21

Segment Name New Jersey % of Mix

Fiscal Rookies 88,879 20.73%

Online Living 48,420 11.29%

ATM Nation 52,614 12.27%

Payday Prospects 44,985 10.49%

New Nests 23,405 5.46%

Loan Rangers 75,391 17.58%

Starter Ranches 6,705 1.56%

City Strivers 44,752 10.44%

Young Urban Renters 43,670 10.18%

Totals 428,821


Next we have to determine if we want them as customers . . .

Filled with younger

apartment dwellers,

Mostly under-35

Lower-middle-class

to midscale incomes

Few income-

producing assets.

Most attended

college and now

work at a mix of

white-collar and

service jobs

Entry-level salaries

Many are paying off

student, car and

personal loans.

Preoccupied with the

here-and-now

expenses of early

childrearing

22

City Strivers Fiscal Rookies Online Living

25- to 34-year-old

couples and families,

upper middle class

living in suburban towns

and areas.

High utilization of online

banking, stock trading

and bill paying.

Own a homes and have

upscale incomes, but

only have modest levels

of income-producing

assets and are still

paying off student and

personal loans.

Purchase life insurance

policy to protect the

family.

Young couples and

families.

Relatively high incomes

25- to 44-year-olds

Not saving a lot of

money

Average levels of

income-producing

assets.

Carry debt from student

and auto loans

First home mortgages

Dabbling in investment-

style insurance and

mutual funds for their

401(k)s.


Looking at these segments banking needs in more detail further demonstrates

which Millennial customers we should target . . .

23

Fiscal Rookies Online Living

New Jersey

HSHLDS

W/ACCT

% MKT

HSHLDS

AVG

BALANCE

POTENTIAL

MARKET

DEPOSIT PRODUCTS:

Non-interest DDA 53,548 60.2% $7,377 395,011,119

Interest DDA 42,377 47.7% $7,592 321,731,978

Total Transaction/DDA 83,619 94.1% $8,571 716,743,081

Savings - Regular 76,740 86.3% $10,778 827,075,782

Money Market 21,255 23.9% $11,910 253,146,560

CD 12,489 14.1% $14,854 185,523,717

IRA-CD 1,870 2.1% $14,795 27,668,602

Total Savings 80,981 91.1% $15,972 1,293,414,645

TOTAL DEPOSIT PRODUCTS 87,610 98.6% $22,944 2,010,157,726

LOAN PRODUCTS:

Mortgage 55,401 62.3% $148,208 $8,210,913,783

2nd Mortgage 5,460 6.1% $41,854 $228,519,647

Home Equity LOC 9,701 10.9% $22,364 $216,952,387

Total Real Estate Secured 56,119 63.1% $154,250 $8,656,385,817

Auto 49,874 56.1% $18,104 $902,948,744

Student 22,508 25.3% $29,539 $664,854,810

Other Personal Loans 9,668 10.9% $11,224 $108,511,241

Total Installment Credit 60,577 68.2% $31,445 $1,676,314,777

Bank Credit Card 81,783 92.0% $6,477 $529,702,527

Overdraft 14,493 16.3% $3,555 $51,516,125

Other PLOC 7,798 8.8% $11,231 $87,574,517

Total Revolving Credit 82,835 93.2% $10,693 $668,793,186

TOTAL LOAN PRODUCTS 86,725 97.6% $126,855 $11,001,493,780

98.6% have a deposit accounts

Strong levels of core deposits

with a focus on checking and

savings accounts

Limited total dollars in CDs and

money market accounts

97.6% have a loan account

Highest dollars are in real estate

loans - focus on 1st Mortgage

Also strong demand for auto

loans, student loans, and credit

cards



which millennial customers we should target . . .

24

Online Living City Strivers

New Jersey

HSHLDS

W/ACCT

% MKT

HSHLDS

AVG

BALANCE

POTENTIAL

MARKET

DEPOSIT PRODUCTS:

Non-interest DDA 28,961 59.8% $7,304 211,529,183

Interest DDA 22,588 46.7% $7,881 178,014,394


Savings - Regular 42,162 87.1% $11,256 474,581,304

Money Market 14,081 29.1% $11,120 156,583,142

CD 6,861 14.2% $12,525 85,934,304

IRA-CD 815 1.7% $12,127 9,882,325

Total Savings 44,851 92.6% $16,209 726,981,074

TOTAL DEPOSIT PRODUCTS 48,029 99.2% $23,247 1,116,524,652

LOAN PRODUCTS:

Mortgage 32,709 67.6% $193,246 $6,320,931,109

2nd Mortgage 3,080 6.4% $49,669 $152,992,369

Home Equity LOC 6,633 13.7% $28,464 $188,803,286

Total Real Estate Secured 32,954 68.1% $202,185 $6,662,726,764

Auto 26,435 54.6% $18,885 $499,207,087

Student 14,407 29.8% $30,188 $434,917,958


Total Installment Credit 33,654 69.5% $33,923 $988,678,593

Bank Credit Card 45,812 94.6% $5,565 $254,943,882

Overdraft 7,285 15.0% $4,537 $33,055,280

Other PLOC 3,732 7.7% $11,815 $44,094,551


TOTAL LOAN PRODUCTS 47,589 98.3% $167,760 $7,983,499,053


Strong levels of core deposits

with a focus on checking and

savings accounts

Limited total dollars in CDs and

money market accounts


Highest dollars are in real estate

loans - focus on 1st Mortgage

Also strong demand for auto

loans, student loans, and credit

cards.



which millennial customers we should target . . .

25

City Strivers

New Jersey

HSHLDS

W/ACCT

% MKT

HSHLDS

AVG

BALANCE

POTENTIAL

MARKET

DEPOSIT PRODUCTS:

Non-interest DDA 21,658 48.4% $1,031 22,326,511

Interest DDA 8,601 19.2% $1,074 9,237,260


Savings - Regular 24,122 53.9% $975 23,521,504

Money Market 1,255 2.8% $1,320 1,656,488

CD 236 0.5% $5,395 1,275,450

IRA-CD 18 0.0% $5,071 92,204

Total Savings 24,522 54.8% $1,083 26,545,646

TOTAL DEPOSIT PRODUCTS 35,996 80.4% $1,614 58,109,408

LOAN PRODUCTS:

Mortgage 836 1.9% $89,131 $74,556,896

2nd Mortgage 73 0.2% $17,902 $1,302,172

Home Equity LOC 55 0.1% $2,131 $116,262

Total Real Estate Secured 891 2.0% $85,266 $75,975,321

Auto 16,648 37.2% $13,160 $219,081,197

Student 7,928 17.7% $19,042 $150,974,045


Total Installment Credit 21,658 48.4% $18,296 $394,945,310

Bank Credit Card 24,458 54.7% $3,828 $93,627,476

Overdraft 2,964 6.6% $1,715 $5,084,016

Other PLOC 2,200 4.9% $6,234 $13,716,697


TOTAL LOAN PRODUCTS 32,414 72.4% $17,997 $583,348,821


Lower average deposit balances

Deposits that they do have are in

checking and saving accounts

Limited to no usage of CDs and

money market accounts.


Limited to no real estate loan

demand

Strong demand for auto loans,

student loans, and credit cards


The final step is to create the correct bundle for the segment you choose . . .

Fiscal Rookies &

Online Living

Auto Loans

Online/Mobile Banking and

Bill Pay

Credit Cards and Lines of

Credit

Residential Mortgages

Convenience

26

Fiscal Rookies & Online Living Deposit Relationship:

Checking Account

Safety Savings Account

Special Children’s Account

Loan Relationship:

First Time Home Buyers Mortgage with a

lower rate tied to checking account

Auto loans with competitive rates

Delivery Channels:

Strong mobile and online line banking

platform that includes mobile money

transfer apps

Free ATMs

Ability to associate with local cause

Financial wellness and education


Conclusions

27


The Millennial generation is the future. Bankers need to adjust their thinking in

order in order to survive . . .

Attract and Retain the Correct Customer:

28

• Segment customer identification S

• Ascertain needs A

• Link products to needs L

• Effective delivery of products E

• Sales culture S

Attract and Retain the Correct Employee:

1. Be Millennial Friendly

2. Target the Cream of the Crop

3. Make them Want to Stay for Life

4. Mentor! Mentor! Mentor!

5. Embrace Change

new jersey bankers associationsource: goldman sachs – data story millennial 19 bad bank customers...

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