by Michael Bradley
Special to Delaware Business Times

[caption id="attachment_21925" align="alignright" width="150"] Bruce Colbourn[/caption]

Even though Bruce Colbourn does not spend his days posting Snapchat stories, live streaming everything and cutting the cord from cable TV, he devotes a lot of his time to trying to think like a millennial. He has even taken to acting like one, although he hasn't yet thought about buying a pair of skinny jeans.

As Delaware Market Executive for PNC Bank, Colbourn is responsible for finding ways to maximize his bank's business. As 2017 begins, much of that depends on finding ways to make sure people younger than 25 will be turning to PNC. Few of them have gigantic resources at their disposal, but if banks like Colbourn's can find ways to attract young customers now with technology and convenience, they will likely stick around when their wealth grows.

"We've really been adapting to the expectations of millennials and the "˜igen' for quite some time," Colbourn said. "We consider that group anybody who was born in 1996 or beyond."

There are plenty of reasons for banks to be looking at the under-30 crowd. There is a definite difference between the way someone 28 banks and the habits
of a person seven or eight years younger. Even though it sounds odd to think that 50-something parents have much in common with their kids, they are looking for many of the same banking features as are much younger customers.

"Regardless of demographic, we have to be more accessible across many platforms," Colbourn said. The new year promises to be extremely interesting for the banking industry, and not just because of the youngsters. Issues like continued consolidation, regulatory relief, the growth of non-bank financial options and the need to boost fintech access and security will also provide a variety of challenges for financial institutions across Delaware and the country.

The millennial market is clearly one of the more interesting, since young people's affinity for technology is driving so many different business approaches. Continued improvements in delivery systems, coupled with the growing use of devices, has forced banks to create platforms that allow for greater convenience. In 2017,
the institutions able to produce more creative and efficient approaches to mobile banking will be the most successful.

[caption id="attachment_21924" align="alignleft" width="150"] Matthew Lee[/caption]

"I believe you will see more regional and community banks enhancing their marketing of short-read financial-related content through social media and digital channels," said Matt Lee, COO at Applied Bank. "The content can deliver financial guidance for millennials while cross-selling bank products and services."

The goal, according to Colbourn, is to create virtual relationships with young customers now, so that when they need a personal connection in the future, they will turn to the bank with whom they have been dealing through technological methods. "Hopefully, we'll be the go-to bank for them then," Colbourn said.

Part of having that opportunity will be banks' abilities to avoid becoming part of the consolidation frenzy that has prevailed in the industry. From 2009-15, the number of banks nationwide dropped by 22 percent. It's likely there won't be a dramatic increase in 2017, since many community banks have already been acquired, but the trend will continue, and it is likely to create some big challenges for banks and customers.

One involves small businesses and how they will gain access to loans and other financing options. Community banks have long been the main source of that capital, but as their numbers drop, it may be harder for larger institutions to replicate the relationships on which those local lenders thrived.

[caption id="attachment_21927" align="alignright" width="150"] Mark Vitner[/caption]

"Many small businesses have lost an avenue for financing," said Mark Vitner, managing director and senior economist for Wells Fargo Securities. "They're not big enough to borrow from larger banks.

"[Consolidation] could also continue to hinder the recovery in housing markets, because community banks would do residential improvement loans. They were in the neighborhoods and knew what needed to be done."

The new administration has made plenty of noise about potential regulatory relief across many different industries, and the banking world can expect some loosening of restrictions. The biggest target will be the Dodd-Frank Act, which has generated considerable ire in the industry since its 2010 passage. Lee doesn't expect a complete overhaul but does predict some easing of the act's components. Nick Lambrow, president of the Delaware region for M&T Bank, would like to see that - and other regulations - rolled back somewhat.

[caption id="attachment_21926" align="alignleft" width="150"] Nick Lambrow[/caption]

"The industry has been facing a regulatory burden, and it looks forward to seeing some review of the regulatory environment," he said. "Hopefully, the industry will be able to be more efficient."

According to PNC's Colbourn, 59 percent of the bank's customers used non-teller channels during the third quarter of 2016. That's up from 57 percent in the second quarter of 2016 and 53 percent in Q3 of 2015. "Clearly, that's the way things are going," Colbourn said. Customers want to make deposits at ATMs and on their phones. They want transfer funds remotely and apply for loans and credit cards across electronic platforms. Though there will always be a need for face-to-face interactions for more complicated banking products and services, there is no denying the growth in fintech as institutions vie for market share in an increasingly device-driven world.

It's fun for consumers to see new applications, but most of the fintech work is being done on the security necessary to allow safe use of the platforms. It's certainly not sexy, but anyone who has grappled with identity theft or fraud appreciates the efforts of banks to make sure any informationthat is shared is free from easy  access by the bad guys.

"The big issues surround cybersecurity," Vitner said. "I don't know how quickly the consumer-oriented parts of fintech will be adopted, but there is big work being done behind the scenes. There are some big hurdles to overcome in order for financial institutions to utilize all the technology that's available."

The Fed's expected raising of interest rates should lead to more profitability for industry, and the continued growth of non-bank financial options will provide competition, but there is a feeling that 2017 will provide opportunities for the banks across the state and country.

"There is a renewed enthusiasm," Vitner said.

And not just for the millennials.