Who else is tired of hearing about the immense steps financial institutions need to go through to attract the coveted millennial?
Admittedly, the future is bleak: In a survey of 10,000 people born between 1981 and 2000 conducted by Viacom subsidiary Scratch as part of its Millennial Disruption Index project, financial institutions were not only found to be among the most unlikable brands with this demographic, one-third of the respondents believed they would not need a bank at all in the future. A recent report by the Center for Generational Kinetics brings more bad news, reporting that some 5 million millennials don’t even have a checking account, citing distrust in banks as the main reason.
So, what’s a credit union or community bank to do?
Perhaps look toward greener pastures… understanding that while the future potential of millennials is meaningful, their more immediate payoff is quite elusive. Balancing your marketing efforts with a healthy dose of long-term nurturing among younger segments combined with a focus on the more short-term wins is key.
Enter two emerging and untouched small business segments worthy of a credit union’s or community bank’s attention: Women Business Enterprises (WBE) and Minority Business Enterprises (MBE). Businesses certified as WBE or MBE are loud and proud of this designation as both a point of differentiation and a way to empower their gender or heritage.
Major companies are recognizing this underserved segment, like Walmart’s “Empowering Women Together” program, which encourages the purchase of products from small WBEs around the world. The end benefit is the program empowers these women to create new jobs and improve the lives of their families and communities.
Community banks and credit unions should also take heed of the opportunities these segments provide. Here’s why:
They’re at the forefront of the economic recovery and among the fastest growing small business segments:
- Women entrepreneurs are growing at a rate five times the national average over the last nine years.
- MBEs have grown 2.5 times faster than the general business population since 2012.
They have a real funding need.
- Women now make up 40% of new entrepreneurs in the United States—the highest percentage since 1996. Yet, they still express difficulties in the funding process. In fact, just 4% of conventional small-business loans go to women-owned businesses, according to a U.S. Senate Committee on Small Business and Entrepreneurship report.
- Studies show a similar funding gap for minority-owned businesses. Traditionally, most minority businesses are funded through family, which can be limiting to their expansion.
MBEs’ and WBEs’ raisons d’etre align with the missions of credit unions and community banks.
- They state strong connections to family and community as factors in their business.
- They share the same “shop local” mindset.
- Their business model demands the level of personal attention and local decision-making that are hallmarks of community-focused financial institutions.
Where do you start your outreach? Every state publishes a directory of certified WBEs and MBEs (like this one for NYS). You can search by business size, industry, location, and all business contact information is provided. Your initial outreach could be to better understand their specific financing needs as a means to perhaps modify or develop programs geared to them. The immediate return for doing so may be far more lucrative than focusing your efforts (yet again) on those elusive millennials.