Who else is tired of hearing about the immense steps financialinstitutions need to go through to attract the coveted millennial?

Admittedly, the future is bleak: In a survey of 10,000 peopleborn between 1981 and 2000 conducted by Viacom subsidiary Scratchas part of its Millennial Disruption Index project, financialinstitutions were not only found to be among the most unlikablebrands with this demographic, one-third of the respondents believed they would not need a bank at all in thefuture. A recent report by the Center for Generational Kineticsbrings more bad news, reporting that some five million millennials don't even have a checking account, citing distrustin banks as the main reason.

So, what's a credit union or community bank to do?

Perhaps look toward greener pastures … understanding that whilethe future potential of millennials is meaningful, their moreimmediate payoff is quite elusive. Balancing your marketing effortswith a healthy dose of long-term nurturing among younger segmentscombined with a focus on the more short-term wins is key.

Enter two emerging and untouched small business segments worthyof a credit union's or community bank's attention: Women BusinessEnterprises and Minority Business Enterprises. Businesses certifiedas WBE or MBE are loud and proud of this designation as both apoint of differentiation and a way to empower their gender orheritage.

Major companies are recognizing this underserved segment, likeWal-Mart's “Empowering Women Together” program, which encouragesthe purchase of products from small WBEs around the world. The endbenefit is the program empowers these women to create new jobs andimprove the lives of their families and communities.

Community banks and credit unions should also take heed of theopportunities these segments provide. Here's why:

They're at the forefront of the economic recovery andamong the fastest growing small business segments.

• Women entrepreneurs are growing at a rate five times thenational average over the last nine years, with an estimated 11million women-owned companies nationwide, responsible for more than$1.6 trillion in revenue. This giant leap (45% in the last decade)still leaves women lagging behind their male counterparts in keyfinancial categories, according to a gender-based survey of 25,000small businesses in 2016.
• MBEs have grown 2.5 times faster than the general businesspopulation since 2012. Earlier this year, New York City certifiedits 5,000th MBE, with a goal of 9,000 by 2019. Yet onlyapproximately 10% of city contracts have gone to certified MBEs inthe five boroughs, and legislation has recently been proposed toeven out that ratio. The story is the same across the country: InMinnesota, state contracts going to minority-owned firms have risen6.9% in the last 10 years, topping $138 million in fiscal year2016; similar contracts going to women-owned firms increased 1.3%in the same time period, to $53.6 million.

They have a real fundingneed.

• Women now make up 40% of new entrepreneurs in the United States– the highest percentage since 1996. Yet, they still expressdifficulties in the funding process. In fact, just 4% ofconventional small-business loans go to women-owned businesses,according to a U.S. Senate Committee on Small Business andEntrepreneurship report. Responding to these challenges, localgovernments have created programs such as the Contract FinancingLoan Fund in New York City, which allows minority- and women-ownedbusinesses (M/WBEs) to apply for low-interest contract financingloans of up to $500,000, with the interest rate on the loan cappedat 3% (the federal Small Business Association's rates, consideredamong the most competitive, are typically between 6% and 9%).
• Studies show a similar funding gap for minority-ownedbusinesses. Traditionally, most minority businesses are fundedthrough family, which can be limiting to their expansion.
• Programs including the 8(a) Business Development Program,created by the Small Business Administration to help disadvantagedbusinesses compete in the marketplace, is having some impact, butopportunities still abound to help these businesses that arechallenged to secure funding.

MBEs' and WBEs' raisons d'etre align with the missionsof credit unions and community banks.

• They state strong connections to family and community asfactors in their business.
• They share the same “shop local” mindset and prefer soleproprietor sourcing to big box experiences.
• Their business model demands the level of personal attentionand local decision-making that are hallmarks of community-focusedfinancial institutions.

Where do you start your outreach? Every state publishes adirectory of certified WBEs and MBEs. You can search by businesssize, industry or location, and all business contact information isprovided. Your initial outreach could be to better understand theirspecific financing needs as a means to perhaps modify or developprograms geared to them. The immediate return for doing so may befar more lucrative than focusing your efforts (yet again) on thoseelusive millennials.

Eva LaMere is President at Austin & Williams.She can be contacted at 631-231-6600, Ext. 190or [email protected].