White Papers

Winning Millennials, Gen X and Boomers in a Digital World

“Millennials’ annual spending power is expected to surpass Baby Boomers by 2018.” - Market Insights

As Boomers get closer to retirement, Gen X and Millennials are now the driving force behind the economy. Their expectations, mixed with an exponential growth in technology, are re-shaping industries including retail, financial services, healthcare, education and more.

Since $16 trillion in wealth will be exchanged between generations in the next 30 years, big changes are coming. In order to address these changes, financial institutions need to be mindful of the needs of each generation (and every account holder). Currently 71% of consumers believe their relationship with their financial institution is only transactional, which makes addressing the needs of account holders a daunting task.

Financial institutions will have to go to unfamiliar territory and provide supercharged and exhilarating digital experiences. They will also need to use analytics and data to provide personalized experiences that empower their account holders across any device.

This digital white paper will help you understand the needs of each generation and how you can create a strategy that meets those needs and grabs their attention.

An Overview of Each Generation


Also known as the 'Me' generation or Generation Y, Millennials were born between 1980 and 2000. For these purposes, we will put them in the 18-34 age group.

Gen X

Also known as 'America's Neglected Middle Child,' Generation X was born between 1960 and 1980. For these purposes, we will put them in the 34-54 age group.

Baby Boomers

Born just after WWII, this demographic paved the way for a resurgence of the US economy throughout the latter half of the 20th century. For these purposes, we will put them in the 54-74 age group.

In this white paper, we will answer five questions about each generation.

1. What are the characteristics of the generation?
2. How do they interact with money in a digital world?
3. What are financial institutions currently doing wrong?
4. What can you can do instead?
5. How can you profit from this account holder relationship?

By the end of the paper, you'll be more knowledgeable than ever about account holder demographics.

Let’s start with Millennials.

1. Millennials

"53% of Millennials would rather lose their sense of smell than their technology." - Newscred

Characteristics of Millennials:

  • Demanding: Because they grew up in an 'everyone wins a prize' environment, Millennials are sometimes self-centered. As the first digitally native generation, they also expect things instantaneously. Having access to companies like Netflix and Amazon drives their desire for immediacy as well.
  • Staying at Home Longer: Millennials are getting married later than their parents, staying at home longer and paying off ridiculously high student debts. Because of the recession and the trillion-dollar student loan market, they have already learned some pretty hard lessons about money.
  • Largest Generation in the Workforce: According to the U.S. Bureau of Labor Statistics, Millennials will overtake the majority representation of the U.S. workforce this year and will represent 75% of the workforce by 2030.
  • Mobile First: Millennials lead active lifestyles and have an 'always on' mentality. Reaching them through email is challenging because their personal email inboxes are flooded. However, texts get a 98% open rate and app notifications (when done correctly) can be very effective ways of reaching them.

How Millennials Interact with Money in a Digital World

Imagine if you were to watch Netflix, and it kept buffering or crashing on you. How soon would you get frustrated and leave? Pretty quickly, right?  Millennials are using their phones for social media, music, ordering food, dating and much more. Do you think they’ll use mobile for managing their money?

Of course! But the experience has to be excellent. If not, they’ll leave like they would if Netflix buffered.

Millennials are seeking an experience that helps them manage their money better. As Forbes reports via CB Insights, "More than $1 billion has been sunk into tech-driven personal finance companies — a whopping $261 million in the second quarter of 2014 alone." Adding to this, Mint.com had 1.8 million users when it was bought by Intuit in 2009, and now it has over 15 million. Mint has its issues, but it is clear from these numbers, that there’s a clear demand for digital money management. Furthermore, Accenture has found that "67% of Millennials are interested in their bank providing tools and services which help them create and monitor a budget."

It follows that if you create an advocate-led culture, you will increase your chances of becoming the primary financial institution for your account holders. See more on this in our battle to be the primary financial institution white paper here.

What Are Financial Institutions Doing Wrong Now?

Financial institutions are very focused on their traditional branch-based models and not enough on putting the customer first. When most financial institutions are asked what is their strategy focused on, improving digital products and putting the customer first nearly always tops the list. But when you look at surveys of where they focus their spending, it’s almost always on regulation. In addition, legacy infrastructure is almost always to blame when the institution can’t move fast enough.

However, if you were to do a focus group with 100 Millennials, less than 10 would be able to tell you what legacy systems are, and almost none would be able to tell you what regulations you face. They don’t care. They just want a great banking experience.

Regulation, compliance, and security are big priorities, sure. Very important. One poor move here and your entire company could be ruined. But when leading venture capitalists like Marc Andreessen are saying of finance that "we could reinvent the entire thing,” that’s got to make you sit up and rethink your traditional business model.

Furthermore, looking at the chart below, do you think the trend toward consolidation is going to slow down as Millennials become more demanding and new competitors enter the equation? It’s not likely. As a COO of a community bank said in an interview with us, “embrace technology or become a dinosaur.”

Lastly, according to CUNA, the average credit union member is getting older and older. If financial institutions want to survive as Millennials begin to dominate trends and the workforce, they will have to turn this trend around and appeal to younger demographics.

What Financial Institutions Can Do About It

Financial institutions have control over two things right now: internal culture and technology.

In terms of internal culture, digital has to be more than just a project. McKinsey believes organizations should be "unreasonably aspirational” and “create a stretch vision." In light of this, digital initiatives need to come from the top down, and everyone needs to understand why the initiatives are important. An outdated product-focused model that doesn't give attention to the customer is not going to cut it for digital natives.

While legacy products can be hard to manage, financial institutions still have control over their technology. One option is to start a separate digital-only financial institution with a completely new back-end to attract these users. This is a great thought, but unfortunately for most institutions this is not practical. The other option is a fully fledged SOA (service-orientated architecture) or taking an API-driven approach through middleware to be more agile. Different sections of the core can then be upgraded piece by piece, so over time financial institutions can have a modern, robust framework to compete with the more modern back-ends that new competitors are not held back by.

How Financial Institutions Can Profit From This Relationship

One of the most common comments we hear from community banks and credit unions is, “I have an aging account holder base and I want to attract more Millennials. The issue is that Millennials don’t hold nearly the deposits Boomers do and don’t make the same level of income.”

This may be true in general, but:

  1. Millennials are the future or your institution

  2. Many Millennials are Moneyhawks (a phrase coined by Javelin Strategy and Research that refers to your most profitable account holders)

A few facts about Moneyhawks, according to Javelin Strategy and Research:

  • There are 31 million Moneyhawks in the U.S. (13% of population)
  • They control 41% of the deposits and 33% of investable assets
  • 20% of Moneyhawks are at high risk of leaving their primary bank or credit union

Adding to this, Javelin Strategy and Research found this puts an estimated 103 million financial accounts and $1.1 trillion in deposits into play, plus another $5.8 trillion in investable assets. That represents 72% of deposits held by potential switchers, and 71% of investable assets. Financial institutions can't afford to ignore numbers like these!

How to Win Their Business

Moneyhawks are generally digital natives. If your financial institution can deliver an immersive and engaging digital experience and you can get it in front of them (think of the ‘try before you buy’ mentality), you will win their business.

According to Javelin Strategy and Research at our Sundance Fintech Festival, you should offer the following advantages:

1. Let them monitor all their accounts in one place
2. Allow access anywhere, anytime
3. Enable the ability to move money when and how they want
4. Offer flawless security
5. Make it easy, make it work
6. Help them view and do (action it)

For more on this, check out our 7 tips to lead the digital banking revolution white paper. 

Conclusion for Millennials

BBVA Compass sums up how to cater to Millennials very well in one of their research reports. They say that “Millennials fully expect innovation in banking to come from outside of the industry,” and they say that “offering digital banking won’t be enough to build a long-lasting relationship.” Instead, they suggest that “banks and credit unions should create a strategy for this segment. Financial Institutions should advise young people on how to manage their finances, seek Millennials’ feedback, hire young employees, and partner with financial disruptors.”

If you want to lower the average age of your customer or member base, you have to re-imagine the entire way you do things. You can no longer be transactional. You have to put the needs of account holders first and offer better digital experiences.

2. Gen X: America's Neglected Middle Child

“In the U.S. the expectation is that every generation does better than the last one, but that has not been the case for Generation X." - Signe-Mary McKernan, Urban Institute

Gen X has had it tough. According to PEW Charitable Trusts, “despite earning higher income at the same age as their parents, they have much less wealth.” 

Characteristics of Gen X:

The Recession Hit Them Hard: The timing of the recession couldn't have been worse for Gen X, with the majority of them buying a house at peak prices and the recession drastically reducing that value. CNBC found they have 60% more debt now than someone of the same age in 2000.

  • There Are 82% More Millennials Than Gen X: In the US, there are roughly 89 million Millennials, 75 million Boomers and only 49 million Gen Xers. Despite being the MTV Generation and producing music from Pearl Jam, Smashing Pumpkins and Vanilla Ice, they have quickly been forgotten by the media in favor of Millennials.
  • Way Behind in Retirement Savings: Siena College Research Institute found that less than half of Gen Xers track income and expenses on a monthly basis. Furthermore, 82% say they're way behind schedule when it comes to saving and planning for their retirements.
  • High Education and Earning Potential: PEW Research found that adjusted for inflation, the median family income for Xers is $71,100, versus $63,100 for their parents at the same age. They are arguably also better educated than any generation before them. 43% graduated from college. Given their age, Gen Xers still have a robust earning potential.

In sum, Gen X are highly profitable customers or members who are in serious need of your help. Eric Carter from Financial Finesse, a financial education firm, agrees. He said in a recent interview with Yahoo! Finance that "I’m very cautiously optimistic for Gen X. They’re still the furthest behind other generations, but they are the most aware of the difficulties they’re in. They know they’re in trouble." 

How Gen X Interacts With Money In A Digital World

While Gen X is a substantially smaller generation than the other generations, their current circumstances make them fantastic targets for financial institutions. They have high incomes and high debts, and many of them don’t know what they have done wrong. A lot of them are living the 'American Dream,' with their nice house, cars, beautiful families and loyal dog. According to MetLife, “82% of Gen Xers own their own home.”  But they are swarming in financial trouble and stress and need help from a trusted advisor like their primary financial institution.

Ted Jenkin, founder of oXYGen Financial, a leading financial planning advice practice, believes that "many clients in their late 30’s to late 40’s are not as worried about retirement as they are about figuring out an exit plan from the job they have grown to hate and move into something that they love."

Furthermore, as the housing market comes back and the economy continues to strengthen, many Xers are purchasing homes from the generation older than them. In fact, the Joint Center for Housing Studies of Harvard University says that “75 percent of homes sold by adults age 55 years or older are purchased by younger buyers.”

Finally, Gen X are technically led with more than half of Gen X buyers using a mobile device during their home search. Among those who did, 22 percent found the home they ultimately purchased via a mobile device. 

What Are Financial Institutions Doing Wrong Now?

Because so many Gen Xers have underwater homes, they generally have a lack of loyalty towards their primary financial institution. Adding further to this pain, 27% of Xers have to pay fees on their accounts versus just 14% of mature generations. This had led to only 41% of this generation being loyal towards their primary financial institution.

Given the lack of loyalty Gen X feels towards their primary financial institution, the industry shouldn’t be surprised that they’re susceptible to switch. If financial institutions want to win, they have to find a way to build more trust, advocacy and loyalty towards this age group.

Another area where financial institutions could improve is helping Gen X with financial planning. According to a Northwestern Mutual Study, “70% of Gen Xers believe their financial planning needs improving and they're looking for help.” The graphic below from MDRT demonstrates this further:

However, while this generation needs your help with financial planning, a lot of them want to be able to action it themselves. CNBC found that “Gen Xers and their younger Millennial peers are significantly more likely than older generations to engage in 'self-directed' investing decisions.” Backing this up, according to a report from Aite group 44 percent of Gen X and Gen Y investors have shifted assets to another investment firm or switched investment providers due to availability of online tools.

What Financial Institutions Can Do About It

Within Gen X, there are a number of unique segments. As you can see below from Cisco's study of 7200 banking consumers, while each segment has their own unique way of interacting with your institution, what they all want from banks is personalized advice and better offers.

If financial institutions want to win more of this age group, they need to provide digital money management tools that can provide personalized advice. Yet at the same time, these tools should allow them to reach conclusions on their own terms.

How To Profit From This Relationship

Taking everything we have discussed so far, if financial institutions want to win and profit from Gen X they need to help them fulfill both their short and long term goals. In the short term they need to be helped out of debt. With $12,026 in credit card debt on average and 42.6% of Gen X homeowners underwater, they can be helped by either:

  • Refinancing
  • Finding easy wins to cut back on expenses OR
  • Helping them prioritize their debts so they can pay less interest and pay them off quicker

With refinancing, if you understand what products they use outside of your financial institution and the interest rates of those products, you may be able to offer them a better rate. See how you can do that here.

In terms of finding easy wins to cut back on expenses, there are always the big ticket items (downsizing house, car, etc.). But given that Gen X places a lot of their identity in those material possessions, that may be easier said than done, and it will be a much tougher conversation. The other way to create wins usually comes from day-to-day expenses and substituting experiences. If your average Xer drinks two cups of coffee at Starbucks a day, that's $8 a day, $56 a week and $2912 a year. As you can see, these day-to-day expenses quickly add up. You can help them see how these expenses affect their lives by providing digital money management products to help them visualize and see how much they could save if they cut back in these areas.

Lastly, if you can help account holders see what happens when they prioritize the way they pay off debt in different ways, it can be incredibly powerful. For instance, prioritizing highest-interest debts first or lowest-balance first can have severe impacts on long-term interest paid. Visual tools that users can play around with are perfect for this kind of scenario. See an example here.    

Conclusion for Gen X

Tammy Hughes and Claire Raines from the Institute of Canadian Bankers summed up Gen X well when they said, “This generation has always used ATMs and were the first to use the Internet for most of their financial transactions. They avoid the bank; it’s nothing personal, they just have other priorities about how they spend their time.”

While Gen X is not quite as technologically progressive as Millennials, they are fast followers. They are getting into the prime of their earning careers, they have had their fair share of financial difficulty, and they are looking for help. They are a great opportunity for financial institutions if they engage with their through an advocate led approach that provides guidance and advice.

3. Baby Boomers

"Despite common belief, Boomers are the fastest growing social media adopters in the U.S. Over half of those over 65 use at least one social media site.” - Mashable

Even though they have a bad rep for not using technology, Boomers aren’t as big of a dinosaur as some people might think.

Characteristics of Boomers:

  • More Digitally Savvy Than You Think: "Once Boomers and Seniors utilize online banking, they become avid users of online banking services such as bill payment and personal financial management. In fact, Seniors have a higher active use rate of Bill Payment than Gen X,” according to Digital Insight.
  • Actively Use Online:  As online banking has been around for 15-20 years, Boomers have become more comfortable with the technology and now enjoy its convenience. The Financial Brand says, “71% of Boomers bank online at least once per week, and their use of smart phones and mobile technologies will grow exponentially over the next few years.”
  • Nearly 50% Financially Support Their Children: Almost half of Baby Boomer parents support their adult children financially through loans and living expenses, according to the National Center for Policy Analysis
  • Exhibit Highest Levels of Anxiety: Baby Boomers have the lowest rate of poverty among all age groups. Yet according to US News, they exhibit the highest levels of anxiety. “They worry about their health, losing their friends, their children moving away and financial issues such as the stability of their pensions, the stock market and retirement programs."

How Boomers Interact With Money In A Digital World

Charles Schwab found that 60% of Boomers have less than $100,000 saved for retirement and 36% have less than $10,000. Furthermore, many people are now working longer out of necessity. According to David Lyon, CEO at Main St. Advisor in Chicago, "You would have to live under a rock to not see that people are living longer, healthcare costs are increasing. The combination of that gives people a pretty good feeling of instability."

Boomers have a lot of concerns about their financial future, which provides a lot of opportunity for financial institutions to help guide them to greener pastures and become their trusted advocate.

As well as providing opportunities to be a trusted advocate, Boomers are also starting to adopt mobile technology. In the past three years Market Insights found their use of mobile is way up. Specifically, social networking is up 1,113%, product information searches up 567% and listening to music is up 266%.

Their adoption rate is even higher in regards to tablets. According to Nielsen, “38 percent of Mass Affluent Boomers own a tablet.” Whether sitting in front of sitcoms for weeknight television or watching football on Sunday, they like to be able to manage their financial lives from the comfort of their sofa. Digital provides great opportunity for Boomers too.

What Are Financial Institutions Doing Wrong Now?

Given all of the financial concerns Boomers have, financial institutions have not done a good enough job in helping them manage their finances more effectively. From what we have witnessed (although every consumer is unique), a large number of Boomers:

  • Have lost trust in the stock market, as many of them got burnt in 2008
  • Are concerned about retirement and if they have enough to live off
  • Struggle to know where to put their money as term deposits have provided low returns in recent years
  • Have less faith in mutual funds due to high fees and low returns in the last decade

Financial institutions need to find ways to prove to these Boomers that retirement is possible by providing tools to help them prepare. While an advisor in the branch is great, given the rise in technical savviness of Boomers financial institutions need to take advantage of digital tools that can supplement in-person advice. Through digital tools, Boomers can get a clearer visualization of the impact that changes in day-to-day spend has and they can also see the impact various asset classes have on their future returns.    

Lastly, financial institutions need to find ways to make Boomers more engaged. Gallup Research found that 12% of Boomers are actively disengaged and emotionally detached from their financial institutions. Yet if financial institutions were able to to make those account holders more engaged, Gallup shows that it could lead to an increase of $82 billion in deposits and $443 billion in investable assets. As we will explore, an advocate-led approach can help you win over a lot of Boomers too.

What Financial Institutions Can Do

With 75% of account holders currently having four or more financial accounts and the average household having roughly 16 financial relationships, there is a huge opportunity for banks and credit unions with boomers.

Boomers are turning to financial institutions like yours for help. If you can provide them with tools they can get advice from digitally and in-person, not only will you drastically improve their financial lives, but you will gain more deposits, IRAs, investments accounts and car loans from them. Not to mention word-of-mouth referrals!

If you imagine a scenario where account holders can collaborate on ideas with an advisor in the branch and then they can take these tools home to share with their families (and educate their children). These families can learn how to:

  • Find key areas where they can reduce spending
  • Manage debts more effectively
  • Set goals
  • Find stable returns that can allow them to reach retirement more quickly

In return, your institution can benefit from:

  • Greater loyalty
  • Higher deposits
  • An increase in IRAs
  • More money market and CD accounts
  • Increased car loans
  • Home renovation loans or equity

How To Profit From This Relationship

There are two highly profitable financial products that you can promote to Boomers. They include:

Car Loans
As Boomers work longer, they still require a car. They have strong credit and high net worths, which leads to higher quality loans. Furthermore, cars represent freedom and youth to them.  According to the University of Michigan’s Transportation Research Institute,  "Consumers in the 55- to 64-year-old age range are now the most likely to buy a new car, overtaking Gen X in the 35-44 year old range because of the impacts of the recession on overall wealth and the large number of licensed drivers in this age group."

Renovation Refinancing or a New Mortgage
80% of Boomers own their own homes. As they get closer to retirement they are going to do one of two things. They are going to either:

  • Downsize their existing larger home as they no longer need all of that space OR
  • Renovate their existing home because selling would be too risky

The Joint Center for Housing Studies of Harvard University (JCHS) found that "homeowners older than age 55 accounted for about one-third of housing turnover in the US between 1997 and 2007. As Boomers hit retirement age in the next two decades, that figure will grow stronger. In turn, they will make lifestyle changes, either by moving, or updating existing homes to attract buyers." This means there are large opportunities available to financial institutions. 

Final Thoughts

As we have explored, financial institutions need to create specific strategies to attract each segment based on their unique needs. However, we have also seen that ALL consumers need help with their finances and all consumers demand more digital and more customer-centric experiences because of their interactions with leading tech players such as Amazon and Google.

In order to capitalize on everything we discussed today, your experience needs to be personal, show all of your users’ accounts in one place, be available on any device, be secure, and give the customer unique advice so they can act on it and drastically enhance their finances.

Account holders are demanding advice in a digital world, so if you choose not to employ it, your competitors or third parties will. After all, Mint already has over 15 millions users.

If you understand the importance of what we have discussed and you want to be an advocate for account holders to drive more trust, stickiness and more loyal account holders, we are excited to see how we may be able to collaborate.

We hope you enjoyed this white paper!

The MX Team

P.S. Here are some other resources you may find useful: