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Make Way for the Millennials

By: Michael Scheibach

Two emerging, equally powerful and society-changing forces are converging on the banking industry: One is demographic in the form of the Millennial generation, now between the ages of 18 and 34; the other is a wave of new technology altering the payments/transactions landscape.

When these two forces finally merge, which is expected in the not-too-distant future, what we now consider to be banking will have transitioned from a noun (i.e., the business carried on by or with a bank) to a verb, as in the process of making financial transactions (e.g., e-payments, remote deposit, person-to-person payments, etc.).

In other words, banking as we know it is changing — and banks must accept this change to remain relevant. If you need to be convinced, read The Millennial Disruption Index (, the results of a three-year survey of 10,000 Millennials by Scratch, part of Viacom Media Networks. According to the survey, banking is at the highest risk of disruption, with one in three respondents saying they are open to changing their bank in the next 90 days; 33 percent saying they won’t need their banks at all in the next five years; and 68 percent believing the way they access money will be totally different by then.

Although these findings might seem rather dramatic, two recent conferences — Payments 2014 and the Card Forum — only served to reinforce the impact of Millennials on the industry.

Speaking at the Card Forum, Molly McCombe, managing director and chief marketing officer at Citi Retail Services, told attendees that the next generation of purchasing behavior is already here but continually evolving, with Millennials expected to account for 40 percent of all sales in the United States by 2020. According to Patricia Kemp with Oak Investment Partners, 63 percent of transactions will be digital by next year, a result of Millennials’ preference for mobile transactions.

Whitney Stewart, vice president, product management, Higher One, also told attendees at the Card Forum that Millennials want effortless and seamless payments, as well as enabling technology that provides what they want when they want it on the device they prefer. Steve Shaw, vice president, strategic marketing, Fiserv, speaking at Payments 2014, echoed this view by saying that younger generations want account integration (i.e., being able to view their entire financial picture) and effortless personal financial management tools. They dislike checks and are highly engaged with rewards and loyalty programs. Moreover, said Shaw, they use all digital devices — smartphones, tablets and computers — which means banks must be able to provide the same level of service across all channels.

In other words, the challenge for banks is twofold: to develop a “Millennial mindset,” as McCombe put it; and to implement the next generation of payments/transaction technology, even though respondents to the Scratch survey believe innovation will come from outside the industry. More than 70 percent, in fact, would be more excited by financial services from Google, Amazon, Apple, PayPal and Square.

Exhibitors at both conferences showcased solutions designed to better equip and position financial institutions in this new transaction paradigm — both internally with more management and analytic tools, and externally in service offerings. With Millennials wanting such services as remote deposit capture, for example, WAUSAU Financial Services ( introduced Location Awareness, which identifies where remote deposits are captured and transmitted, a critical tool that allows financial institutions to keep a pulse on suspicious activity.