The Benchmark: Episode 3 feat. Randy Hopper and Chelsea Krost | Blend

The Benchmark: Episode three

Welcome to The Benchmark, powered by Blend. In this video series, Blend’s executives meet with leaders across industries to share insights about growth and success during a time of extraordinary change.

For this episode, Blend President Tim Mayopoulos met remotely with Randy Hopper, former SVP of mortgage lending at Navy Federal Credit Union, and Chelsea Krost, a leading millennial influencer and brand marketing strategist.

Tim, Randy, and Chelsea had a wide-ranging discussion: millennials’ growing expectations for digital-first experiences in financial services amid the coronavirus pandemic; how financial institutions can do a better job of meeting shifting consumer expectations, particularly among millennials; and why financial literacy and homeownership may be more essential than ever before. Watch part one here:

Continue watching part two on our YouTube channel

Explore four takeaways from the video

1. Millennials are digital natives who also value personalized guidance

“We definitely have seen a strong proliferation of preferences for digital services,” said Randy.

“But millennials still value that human interaction and it really is a balance. So we’re investing at scale in both the people side and in digital services.”

Tim said that as a dad to two millennials, he can appreciate how they like to do everything through “a piece of glass.” He has observed, however, that when it comes to financial services — particularly big, life-changing transactions like buying a home — millennials prefer to start an application online but then really appreciate being able to talk to an expert whenever they have a question or need more guidance.

Randy and Chelsea agreed that the key to success for financial institutions is being able to offer a smart combination of digital touchpoints as well as the human touch — especially during this time when consumers want to be able to conduct their financial business safely, securely, and remotely.

“Millennials are quick to turn to their iPad, iPhone or mobile device to do research before making a decision,” said Chelsea. But they also might “feel inclined to have an in-person conversation to get it done. When it comes to millennial consumers and where we choose to commit with any financial service, trust is essential.”

2. We have seen the future and it includes more self-service tools

“As long as I’ve been in banking, which is now many decades, people have typically relied on folks coming into the branch or calling them on the phone or having some other kind of non-tech experience,” said Tim. “The pandemic has changed all that very quickly and radically.”

Just as it’s impacted many other businesses, COVID-19 has given the banking industry a big jolt. While many bank branches remain open, oftentimes with scaled-back days and hours, a growing number of consumers prefer to do their banking from the safety and comfort of their home.

This trend was taking shape long before the pandemic and aligns with how consumers shop for other goods and services. While some banks, credit unions, and independent mortgage lenders were slower to adapt to these changing consumer preferences in recent years, the shelter-in-place guidelines fostered a real sense of urgency within the industry.

Fortunately, Navy Federal Credit Union started moving towards greater digital agility months before the health crisis hit.

“We launched (Blend’s Digital Lending Platform) a year ago,” Randy said. “We’ve been going more digital and the timing of that could not have been better given everything that’s unfolded in 2020. Two-thirds of our incoming applications are through self-service channels. Members can take the time that they need to work through the process. We’re seeing very strong success.”

To Chelsea, an abundance of self-service tools make perfect sense.

“Millennial consumer expectations are being set by other kinds of consumer experiences completely outside of financial services,” she said. “Whether it’s watching a movie on Netflix, ordering something with a few taps on Amazon, or using their iPhone for everything, millennials expect financial services to be just like that and really can’t understand why banking in general, and mortgage in particular, isn’t like that. Millennials love self-service solutions.”

3. The health crisis reminds us of the importance of financial literacy

“A lot of financial institutions were focusing on building solid relationships before 2020, but now more than ever that is so critical to everything we do,” said Randy. “Because it’s not just your lending relationship and credit cards, auto loans and mortgages. It’s also your deposit health and how you are doing financially. It’s more important than ever for consumers to understand what their options are should their income become constrained.”

The U.S. unemployment rate jumped higher during the first 90 days of the pandemic than during both years of the Great Recession, as the number of jobless swelled by 14 million people through May.

Businesses were shuttered, employers announced layoffs, and many out-of-work Americans were suddenly forced to dip into savings, apply for emergency loans, or make dramatic lifestyle changes. For many millennials who entered the job market during the 2008-2009 financial crisis and are still dealing with student loans and credit card debt, it has been a particularly unsettling time.

Financial institutions can now play a vital role by promoting financial literacy. Bankers can provide trustworthy and much-needed guidance on key money topics such as budgeting, managing debt, building savings, and short- and long-term goal-setting.

“It’s been a really tough time for us to earn and save, and I think we’re trying to figure out how to do that smartly and wisely,” said Chelsea. “In the era that we’re living in there’s so much uncertainty, fear, and income loss, which is only going to make the need for educating consumers that much more important.”

4. Even amid uncertainty, homeownership remains in reach for millennials

“Every study I’ve ever seen of millennials indicates they have the same desire for homeownership as previous generations,” said Tim. “The real question is will they actually be able to act on that expressed desire or not.”

Randy believes millennials absolutely can if they plan wisely. He pointed out that millennials make up the largest share of Navy Federal Credit Union’s membership and that 60% of the institution’s purchase loan originations are from first-time home buyers.

“That’s why education is so important for us,” he said. “The key to millennials is to get educated early on, because there are steps you can take to put yourself on solid financial footing so you can achieve that dream of homeownership. It does take discipline, it does take budgeting and hard work, but it can be done.”

“I’m future-predicting here,” added Chelsea, “but I’m already seeing many millennials prioritizing looking for their first-time home. Because in this climate we realize that our home is our bunker, it is our sanctuary, and we are working and living and even operating our children’s virtual schools from home.”

Want to hear about Chelsea’s experiences as a first-time homebuyer? Check out our YouTube channel for more from The Benchmark, powered by Blend.

Ready to learn more about building digital dexterity? Explore our new ebook Mastering digital agility: Staying nimble to navigate change.