10 minute read
FINANCE
20th Century Babies, 21st Century Customers
How financial technology caters to Millennials
By Tracy Barbour
priscillaramirez65 | twenty20
In November, Credit Union 1 (CU1) opened Financial Center South near the Dimond Center mall in Anchorage to give its membercustomers a new way to bank. The sleek, self-service facility has virtual teller machines, multiple advisory suites, open-concept consultation areas, a coffee lounge—and no teller lines.
“It’s the cutting-edge of ‘branch’ innovation in our state,” says Interim President/CEO and Chief Technology Officer Mark Burgess.
Members of CU1 can use video machines to complete routine transactions, or if they have more complicated needs, they can tap on the screen to get assistance from a local employee, also by video.
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“These machines free up in-branch employees for non-routine service to personally consult on questions or be readily available to facilitate more complex financial arrangements,” Burgess says.
Financial Center South combines elements of traditional and virtual banking. It’s emblematic of how CU1, First National Bank Alaska (FNBA), KeyBank, and other institutions are using technology to connect with their largest customer demographic group.
Today’s Thirty-somethings
Millennials, the generation of Americans born between 1982 and 2000, represent about 83 million adults and more than one quarter of the nation’s population, according to the US Census Bureau. They are the country’s largest living adult generation—and the group continues to grow as young immigrants expand its ranks. Individuals in this age bracket are also more diverse than the generations that precede them; they are more likely to be foreign-born and speak a language other than English at home.
Today, the Millennial generation is the fastest-growing customer base for financial institutions, and many banks and credit unions are adjusting the way they do business to cater to their banking predilections. For example, when Millennials want to conduct a transaction, they expect to be able to do it quickly and smoothly through a single channel. They generally prefer not to travel to a physical branch, spend time on hold waiting for a customer service representative, or even log onto a financial institution’s website.
Research indicates that Millennials want to complete banking activities with minimal fuss, and in the past few years, the COVID-19 pandemic has spurred more Millennials toward mobile and online banking, according to the American Banker Association (ABA). Since the pandemic began, 55 percent of Millennial customers have used apps on phones or other mobile devices as their top options for managing their bank accounts—an increase from 45 percent pre-pandemic, according to ABA’s October 2021 survey “How Americans Bank: Before and During COVID.” For the survey, Millennials are
Credit Union 1's Financial Center South.
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defined as individuals born between 1981 and 1996.
Catering to Millennials
Millennials constitute about 12 percent of the customer base at FNBA—and they’re growing in number, according to Dustin Hofeling, the bank’s senior vice president and IT systems and support director.
“We proudly provide secure and convenient digital solutions our younger customers want and expect while offering a personalized in-person experience to meet their evolving financial needs,” Hofeling says.
Over the past ten years, FNBA has seen a substantial shift from traditional online banking to mobile banking. In the banking world, “online banking” typically means using a personal computer and a web browser, whereas “mobile banking” equates to a smartphone app. “Although this trend started with the Millennial group, we see customers of all ages shift to a mobile-only preference,” Hofeling says. “In rising to the challenge, we have taken great strides to develop mobile apps for Apple and Android platforms. Furthermore, we ensure that all of our customer-facing online portals are mobile-responsive. In other words, it is essential for us that the user interface is ‘painted’ to fit any sized screen (from a smartphone to a tablet to a traditional browser).”
Extending those digital accommodations into the physical world is even more important for CU1, where 32 percent of its nearly 95,000 members are in the Millennial age range. As Alaska’s only statecharted credit union, 100 percent of CU1’s members must either live or work in Alaska; therefore, according to CU1 Director of Corporate Communications Jessica Gallagher, “This 32 percent is uniquely reflective of an Alaskan demographic.”
The Millennial segment at CU1 favors transactions, products, and services that are quick and accessible from anywhere. “We may not have physical branches in every community in Alaska,” Gallagher says, “but our members can access their funds and improve their financial future from anywhere, thanks to our focus on electronic services.”
Technology is also a critical piece of today’s loan application process, which credit union members have come to expect. “If you’re ignoring that expectation, you’re not going to delight
Nearly one-third of CU1's 95,000 customers are Millennial age, a higher proportion than most other banks.
Dustin Hofeling Senior Vice President and IT Systems and Support Director First National Bank Alaska your Millennial audiences in particular,” she says. “We take technology a step further by never settling for just the basic services that Alaskans need. We want our tech services to truly meet our members where they’re at in their financial journey—and that means continually innovating and improving what we offer.”
Options Geared for Millennials
Members still want the option of inperson visits at times, Gallagher says, so the credit union has brought a “tech touch” to those interactions as well.
The virtual teller machines at CU1’s Financial Center South allow for a self-serve, tech-forward experience. Help from an on-screen expert is just a tap away. Customers can use the virtual teller machines like a typical ATM, or they can tap the screen to speak with an expert at CU1’s eService Center. “Millennials are certainly more comfortable with technology than earlier generations, but sometimes that personal touch and human interaction is also highly valued,” Burgess says. “Video interactions are the perfect blend of these two worlds. Beyond virtual teller machines, our members can access video appointments with a CU1 expert at any time through our online appointment scheduler, and particularly these days, those video appointments are extremely appreciated.”
FNBA is also leveraging technology to streamline the loan application process for its customers. The bank provides secure loan origination tools on FNBAlaska.com, where customers can apply for consumer and mortgage loans anytime—which is a convenience everyone can appreciate no matter their age.
In late 2021, FNBA launched a new Mortgage Loan Servicing Center, an online portal that provides additional functionality customers have requested. It offers enhanced abilities that include setting up automatic payments from any account, a dashboard with quick access to history and electronic documents, and easy-to-follow reporting capabilities. “We continually enhance our underwriting process and offer new automation tools to create a convenient and secure experience for our customers,” Hofeling says. “Evolving
technology enables us to continue to provide Millennials the local service they are looking for without visiting a branch.”
The bank also offers Zelle, a cashless payment solution. Zelle is quicker than other third-party payment products like Venmo or Cash App, Hofeling says. “If you send money to a friend, they immediately see that money in their bank account,” he explains. “In this sense, Zelle is faster than a traditional wire, especially when using First National’s mobile banking app. Services like Zelle help us keep pace with Millennial banking needs.”
KeyBank, which operates fourteen branches in Alaska, also offers Zelle and other digital tools to help customers of all ages manage their finances. The bank’s free EasyUp option allows users to pay down debt with each KeyBank debit card purchase and automatically build a savings account. Other digital options from KeyBank include mobile app, mobile deposit, and mobile alerts.
Enhancing Technology
Beyond South Anchorage, CU1 is relying on technology to reach
Mark Burgess Interim President/CEO and Chief Technology Officer Credit Union 1 Millennials in the most remote parts of Alaska. “This state is widespread, as we all know, and that means some areas of Alaska are underserved when it comes to financial services,” Burgess says. “But at places like Credit Union 1, where we aren’t afraid to step beyond brick-and-mortar facilities, we aren’t limited by the road system or miles between our members any longer. Any Alaskan can join us because our technology MARK BURGESS Credit Union 1 bridges the gap. We can reach any corner of Alaska with the loans people need for a new snowmachine, home repair, travel Outside, et cetera.”
Millennial or not, Burgess says, every generation needs to know their financial institution has their back: “When we can’t be together in person— whether due to personal logistics or just personal preference of younger generations—technology makes it possible to maintain a really close and positive relationship as our members grow through all stages of life.”
Changing the Banking Business
In many ways, Millennial customers have been instrumental in altering the way financial institutions do business. For example, twenty or more years ago, banking transactions were conducted almost entirely in branches. Although branches still play an important role, banks and credit unions are looking at digital platforms as a parallel to brick-and-mortar banking. “This mindset helps drive both the investment and resources needed to grow this portfolio of products,” says FNBA’s Hofeling. “The term ‘mobile-only’ comes to mind,” he adds. “We are focused on creating and promoting a mobileonly banking environment for our customers. We closely benchmark our digital offerings through strategic planning, reviewing feedback, and looking at ways to grow and expand this solution set.”
As FNBA engages and expands its Millennial customer base, it will continue to foster and implement their feedback, Hofeling says. “In fact, over the next several months, we are excited to implement significant digital and electronic enhancements. Announcements of these changes will be forthcoming very soon.”
Millennials are also affecting business processes at CU1. This year marks the credit union’s 70th year of serving Alaskans (originally established in 1952 as the Anchorage Teachers Federal Credit Union), and its business processes and offerings have changed significantly in those years. “Many of our members remember the days of paper “drafts”— aka checks—but we’ve also seen our members embrace the change from cash to plastic debit and credit cards,” Gallagher says. “Today, we’re offering digital wallet and tap-to-pay with a whole new level of convenience, and Alaskans welcome those changes as well.”
For any technology to be successful, CU1 has to prioritize communication to ensure its members can ask questions, get help, and grow their comfort with a particular service. “But again and again, we see this happen, and our members’ financial lives improve for the change,” she says.
To that end, CU1 continues to prioritize the leading edge of technology, according to Burgess. It is always on the lookout for trends and future possibilities to stay ahead of what the next generation—customers born
DUSTIN HOFELING FNBA in the 21st Century—will demand. “We want to be building trust and guiding people to the best options for their financial journey—not waiting for gaps to appear,” he says. “Across any age group, this ensures that we’re meeting our goal in this state to lead change, uplift others, and value people in everything we do."
JESSICA GALLAGHER Credit Union 1
