HOUSTON, Jan. 6, 2015 /PRNewswire/ -- Millennials are the most educated, tech-savvy generation in the U.S. and represent a natural opportunity for the financial industry, but meeting their expectations will be a challenge for banks, according to the latest BBVA Compass report.
Millennials are starting adulthood in a more complex economic environment, writes BBVA Compass economist Marcial Nava. The 75 million U.S. consumers aged 18 to 34 are highly educated but laden with student debt, limiting their access to other forms of credit. They're also delaying marriage and aren't pursuing mortgages, credit cards and other financial services as much.
Moreover, the financial crisis dented their trust in institutions, especially the financial industry, and new actors — in peer-to-peer lending, crowdfunding, payment platforms and virtual currencies — are stepping in to capitalize by offering value propositions based on simplicity and transparency.
"A vast number of young adults demand banks to engage in the kind of relationship that helps them not only to access credit but to navigate the intricacy of their financial life cycle," Nava wrote. "If banks do not embrace these changes, non-banks will."
In fact, Nava wrote, millennials fully expect innovation in banking to come from outside of the industry. And while many millennials are tethered to their smartphones, simply offering online and mobile banking won't be enough to build a long-lasting relationship with this market, Nava writes.
Instead, banks should create a strategy for this segment, he says. Banks should advise young people on how to manage their finances, seek millennials' feedback, hire young employees and partner with financial disruptors, among other initiatives, to reach this group.
Led by BBVA Compass Chief Economist Nathaniel Karp, the bank's five-member research team analyzes the U.S. economy and Federal Reserve monetary policy. For its analyses, the economists create models and forecasts for growth, inflation, monetary policy and industries. The economic research team also follows a variety of issues that affect the Sunbelt states where BBVA Compass operates.
In addition to Karp and Nava, the bank's economic research group includes Kim Fraser, Shushanik Papanyan and Boyd Nash-Stacey. Follow their work on Twitter @BBVAResearchUSA and @BBVACompassNews.
About BBVA Group
BBVA Compass is a subsidiary of BBVA Compass Bancshares Inc., a wholly owned subsidiary of BBVA (NYSE: BBVA) (MAD: BBVA). BBVA is a customer-centric global financial services group founded in 1857. The Group has a solid position in Spain, is the largest financial institution in Mexico and has leading franchises in South America and the Sunbelt region of the United States. Its diversified business is geared toward high-growth markets and relies on technology as a key sustainable competitive advantage. Corporate responsibility is at the core of its business model. BBVA fosters financial education and inclusion, and supports scientific research and culture. It operates with the highest integrity, a long-term vision and applies the best practices. The Group is present in the main sustainability indexes. More information about the BBVA Group can be found at www.bbva.com.
About BBVA Compass
BBVA Compass is a Sunbelt-based financial institution that operates 673 branches, including 342 in Texas, 89 in Alabama, 77 in Arizona, 62 in California, 45 in Florida, 38 in Colorado and 20 in New Mexico, and commercial and private client offices throughout the U.S. BBVA Compass ranks among the top 25 largest U.S. commercial banks based on deposit market share and ranks among the largest banks in Alabama (2nd), Texas (4th) and Arizona (5th). BBVA Compass has been recognized as one of the leading small business lenders by the Small Business Administration and recently earned the top ranking with customers in American Banker's 2014 annual reputation survey of the top 25 largest U.S. retail banks. Additional information about BBVA Compass can be found at www.bbvacompass.com, by following @BBVACompassNews on Twitter or visiting newsroom.bbvacompass.com.
BBVA Compass is a trade name of Compass Bank.
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SOURCE BBVA Compass