Banks bid for hearts, dollars of millennials

Battle could bring more rewards and fewer fees

Are you between 21 and 37? Please bank with us. That’s the message millennials are hearing as the battle between the big banks and fintech companies for their hearts and deposits heats up. Personal finance app Empower, the newest entrant in the fray, upped the ante this week by rolling out its mobile bank services, including a feefree checking account with rewards and a savings account that earns significant larger yields than at the big banks. The move comes after Chase began dangling 60,000 rewards points to get more well-heeled young people to sign up for a premium checking account. Other developments are afoot from traditional banks and fintechs, which use technology to improve the delivery of financial services. As the competition intensifies, that could mean more rewards, fewer fees and higher savings rates for these younger adults – and anyone else looking for a better banking experience. “There’s an amazing opportunity to rethink what a bank is in the U.S.,” said Warren Hogarth, CEO and founder of Empower. “People are still paying $300 in fees and not getting a high interest rate on savings. People are frustrated.”

“There’s an amazing opportunity to rethink what a bank is in the U.S.” Warren Hogarth CEO and founder of Empower

To deepen its relationship with holders of Sapphire Reserve credit cards – popular among 20- and 30somethings – Chase last week announced a premier checking account that features perks and rewards typically offered by premium credit cards. Among the benefits: ❚ Access to Sapphire lounges at concerts and events. ❚ Access to presale tickets. ❚ 60,000 free Ultimate Rewards after 90 days. Customers must maintain a minimum balance of $75,000 to get these perks, a large hurdle for the everyday person. But the goal is to please people who want to feel “rewarded for the relationship they have with a bank,” said Dipti Kachru, who co-led the development of Sapphire Banking. Fintechs are also pressuring the bigger banks to rethink checking account fees that can be a game-changer for many millennials. A Gallup survey this year found that people in that age group are most likely to leave their primary bank because of account fees or service changes. “Millennials are acting like their grandparents and great-grandparents, the Depression-era generation,” said Michael Moebs, CEO of Moebs Services, a research firm for the financial services industry. “They are very wallet-conscious and leery of fees. They have a keen eye for value.” As a result, most of the mobile banks avoid charging maintenance, monthly and overdraft fees, and have no account-balance minimums. Some even won’t charge foreign transaction fees, the 1- to 3-percent hit you may incur to place a transaction in a foreign currency. Some of the bigger banks are taking notice. Wells Fargo and Chase introduced mobile banking accounts that don’t have overdraft fees, which generates $17 billion a year in revenue for the industry, according to the Consumer Financial Protection Bureau.