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The growth opportunity that cannot be missed — millennials

Kevin Dobbs is a senior reporter and columnist. The viewsand opinions expressed in this piece represent those of the author or his sourcesand not necessarily those of S&P Global Market Intelligence. Follow on Twitter@Kevin1Dobbs.

To saythat millennials and how to cultivatethem as bank customers — have collectivelybecome a fixture of interest on the conference circuit is probably an understatement.

The SNL Financial Community Bankers Conference this week in suburban Dallas punctuatedthis. Millennials weretop-of-mind for many at the conference, and discussions about how to win their favorpeppered the two-day event.

It was not for lack of a good reason. Those that make up thismassive generation — roughly 80 million Americans born between the early 1980s andthe early 2000s — will with their vast numbers gradually come to dominatethe U.S. economy, both as consumers and business leaders.

A decade from now, banks will simply need this generation in theirfolds — both to fortify customer bases and to fill out their ranks of lenders andmanagers.

Of course, like the generations before them, many young millennials in their 20s have only begun to establishthemselves in the work force and as such do not currently stand apart as particularlyprofitable bank customers. Many are not yet at the point where they are seekingmajor commercial loans or establishing long-term wealth-management relationships.

It might be easy for the typical communitybank to overlook them, as Ron Shevlin, director of research at Cornerstone Advisors,suggested at the conference. But he said millennials already are becoming importantfor banks' retail operations and will, in time, graduate into higher levels of thefinancial realm, making them appealing for banks' other business lines, includingcommercial lending. Millennials inevitably will become business owners and corporatedecision-makers, and all lenders need strong ties to people in those roles.

Pick up any business publication orlisten to any number of conference speakers, and one is bound to hear sweeping generalizationsabout the millennial generation — that these young people have grown up withhovering parents who meet their every wish, giving them a sense of entitlement ora need for constant positive feedback, particularly in the work force. There areno doubt myriad examples to support these assertions, but there are of course plentyof others to debunk them.

Case in point: Just a few blocks from the conference site, 20-somethingWendy Williams was walking to her job at a retail outlet this week. "It's mysecond job," she says, without a hint of self-pity. "I'm a [restaurant]server, too. I work 50 hours a week. I'm saving up to pay for my own college nextyear — nursing school."

Does she feel entitled to a college education or anything else?"I'm sorry, but that's an insulting question," she responds.

The one seemingly undeniable trait of millennials is that they have grown up in a high-tech world, one in whichthey can connect to their friends, to businesses or with strangers on the otherside of the world via the mobile device in their hands. They have come of age ata time when technology has made the world one in which they — and almosteveryone — is increasingly accustomed to speed and convenience when it comes tofinancial transactions or any transactions.

On that point, Williams concurs, as her iPhone dings with varioussocial media alerts.

Against that established backdrop, banks are or at least shouldbe moving quickly to ramp up tech-driven offerings. As they do this, they couldnaturally assess preferences of younger customers and learn how to provide themthe services they want.

"The reality is, you have to be tech-savvy," Shevlintold bankers, emphasizing that as the overarching theme when it comes to millennials, rather than generalizations abouttheir collective emotional state or neediness relative to other generations.

Banks, he suggested, should analyzethis cohort of customers — or potential customers — as they would any other. What kindsof products are they drawn to? Early indications, he said for example, are thatyoung adults today prefer credit cards over debit cards, giving banks with leancredit card operations motivation to beef them up.

Or how do they prefer to interact with their bank? (Or financialtechnology alternatives, in many cases.) As bankers have come to know, millennials — and increasingly most everyoneelse of working age — wants to get their routine financial transactions done viathe device in their hand and, preferably, via an easy-to-access application. Communitybanks, Shevlin said, do not have to be at the absolute forefront of technology,but they do need to study their own local markets, understand what is wanted fromcustomers on the tech front, and stay on top of it. Or they risk losing out to majorbanks or fintech alternatives.

And it seems likely to hold as good advice for years to come because,as Peak Performance Consulting Group President David Kerstein said at the conference,it is almost inevitable that advances in technology will continue to permeate Americanlife. "We would expect changes in behavior to even increase" in responseto new technology, he said.

The younger the customer, the more years lie ahead for greaterchange to unfold. Williams, for one, currently has only basic bank accounts. Shehas only been in a branch once in her life, as far as she recalls. But she checksher savings levels regularly online, and when the time comes that she might needa student loan to supplement her savings, or down the road, a mortgage or new-carloan, she is certain she would prefer to manage such processes online. And preferably,she would do this via an app she can download and use to seamlessly navigate theloan application and closing processes without having to make the time in her busyschedule for a trip to the bank.

"I mean, if you can do it that way, why wouldn't you?"she said.