The Big Idea | Independent Banker

Bruce Lowthers
FIS | Chief Operating Officer, IFS
Posted on December 18, 2014


Originally published in Independent Banker.

Much has been written about opportunities associated with the millennial generation. It’s big, it’s diverse, and it’s connected to people but unattached to organizations. It’s late blooming. It’s burdened with debt but also optimistic about the future.1

Regardless of when researchers define the beginning of the millennial generation (sometime during the early 1980s, ending during the early 2000s), the generation encompasses at least two distinct life stages today. The majority of the younger millennials, especially if they’re students, are still living at home with their parents, while the older ones are building their own nests.2

Although most millennials are banked, they are more likely than other generations to be unbanked or underbanked defined by the FDIC as having a bank account but also relying upon alternative financial services outside of   the banking system. However, it’s a mistake to talk about the unbanked and underbanked   in one breath. The unbanked are far less educated than the underbanked and tend to have lower household incomes.

In contrast, the underbanked are more likely to be in a transition phase toward brighter financial futures. They have higher incomes: and educational levels. More often city dwellers, they favor large national banks and are I generally profitable customers because of the fees they pay. Mobile banking services are table stakes in attracting them, and loyalty programs are helpful in retaining them.

Research conducted by FIS(TM) indicates that the majority of student millennials are banked but nearly one-third are underbanked. Student millennials with bank accounts are just as profitable as the average customer because they tend to pay fees and use low-cost digital channels to make transactions.

Student millennials represent an attractive target and a huge opportunity for engagement by community banks at a time when the cohort most needs financial guidance. However, community banks are falling short of attracting millennials, especially those still in school. While community banks attract nearly their fair share of millennials who aren’t enrolled in school, they only attract 2 percent of student millennials.

The FIS Payments Study underscores the tenuous relationship that banked millennials-especially ones in school -have with their primary financial Institutions. Student millennials are:

  • Less likely than others to consider their primary financial Institution for a new service (44 percent would consider)
  • More likely than others to switch If they believe they were overcharged (40 percent would switch)
  • As likely as non-student millennials to switch for a better online/mobile service (25 percent would switch) or a better loyalty program (25 percent would switch)

Millennial dissatisfaction leaves banks vulnerable to losing ground with the most Influential generation in coming decades, and alternative financial services continue to exploit the opportunity to capture a share of the millennial financial wallet. Significantly higher percentages of millennials use alternative financial services, including prepaid cards.

Prepaid cards allow students to gain control over their spending-an attribute that more than half (57 percent) of them cite as important when choosing a payment method. Increasingly, prepaid cards are emerging on high school and college campuses to help students control and track their spending while providing safe and easy access to funds.

Millennial discontent with big banks could open the door for community banks to form relationships with these young consumers, but only if the banks deliver on the digital convenience millennials demand. What millennials want-and what many will switch for-Is anywhere and anytime access to their funds. Nine out of 10 millennials with smartphones regularly conduct mobile financial transactions.

FIS GenNOW Financial Services addresses the needs and preferences of millennials, especially those in transition. The turnkey, white label solution offers the benefits of prepaid cards, but also meets the demand for mobility and needs of student millennials, who are often short on funds and budgeting wisdom. With GenNOW, they can:

  • Load money to their prepaid cards through a mobile app and have immediate access to funds
  • Make expedited bill payments using a mobile app and avoid late payment charges
  • Track spending and balances easily and manage their finances on the go
  • Get rewards for usage and meeting budgeting goals
  • Receive notifications of offers reflective of buying habits and interests

GenNOW provides community banks with a vehicle to compete effectively against both large financial institutions and alternative financial service providers, recapture revenue from opt-in transaction fees, acquire new customers at a low cost and retain customers who increasingly turn to others for services not currently provided by their primary financial institution.

For more information, contact FIS at 800-822-6758 or

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Bruce Lowthers
FIS | Chief Operating Officer, IFS

Beginning his career as a certified public account, Bruce now serves as the Executive Vice President of FIS, the world’s No. 1 financial technology provider, and as the CEO of Global Retail Payments. His division is responsible for $2.6 billion in revenues and encompasses financial services, emerging commerce and retail services.