The constant fighting over the services of banks on campuses, particularly in college continues to heat up because of a lot of controversial regulations that banks tend to propose. Bank marketers are always finding ways to get inside college campuses as a way of targeting millennials for community banks. Their goal is to provide checking accounts and prepaid cards in order to aid students financially especially when it comes to financing their daily activities as well as their school expenses. Partnerships by banking institutions in colleges and universities is also common where the students are being provided by a co-branded debit card that can also be used as their identification card in school.
But there is a catch for partnerships between schools and banks with regards to providing financial services to students. Schools may be able to receive a share of the revenue that banks make while providing services to their students and also assistance when it comes to federal financial aid disbursement. These types of arrangements sometimes are beneficial to banking institutions because not only because of the exclusivity and the fee income, but also because it is a good way to gain new customers as well in the form of the students’ parents and friends. Once a potential client chooses a bank to work with, it is unlikely for them to find new banks because reaching out to millennials like college students allows financial institutions to attract long term customers.
The Real Challenge
The United States Department of Education has just announced that they have new proposed regulations that will affect around 8 to 9 million college students in the country. The regulations will be setting out tougher and harder standards that will be mandating larger transparency. It will mostly affect the agreements between campuses and banks and will target specifically prepaid and debit accounts of college students. The Department of Education said that the lack of transparency and the incomplete information that is being provided to students are areas of concern with reference to how banking services are being introduced to college students.
According to the Secretary of Education, students need more information about their account options especially when they first open an account with a financial institution. For example, students should be able to choose their own checking account options without having to utilize debit cards and be charged with extra fees.
Even though Millennials’ love of mobility is well-documented, their need for occasional insight and advice is not mentioned as often when referring to banking services. This reality, coupled with the referenced DOE proposed regulations, offers opportunities for community banks and credit unions to interact and engage with these important customers and members. These institutions, long known for offering a personal touch, as well as needed transparency around account information and management. Also, many of these FIs are uniquely qualified to offer a wide range of services to Millennials and others, ranging from informational outreach and advice to the latest in online and mobile banking.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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