Credit unions are missing an opportunity to build their future if they aren't working to attract young members and their business, Kris Wickline, consumer program manager at CUNA Mutual Group, told attendees Tuesday at America's Credit Union Conference in Boston. (Photo provided by CUNA Mutual Group)
BOSTON (6/25/09)--Credit unions are missing an opportunity to build their futures if they aren’t working to attract young members and their business, Kris Wickline, consumer program manager at CUNA Mutual Group, told attendees Tuesday at America’s Credit Union Conference in Boston. Credit unions that ignore this consumer segment do so at their peril, as complacency will result in this generation building relationships with other financial institutions, Wickline said. “You can’t afford to wait until they are the most profitable customer segment or have the most income power,” she said. “By then, they will have established financial relationships, and it will either cost you more to get them or you risk not getting them at all.” Also called Millenials, Generation Next, Generation Net or Gen O, members of Gen Y were born between 1977 and 1995, making them 14 to 32 years old. A close second to baby boomers in volume--roughly 76 million in Gen Y to 77 million boomers--this generation’s income is poised to outpace boomers’ by about $500 billion in about eight years. In the meantime, they represent the borrowers of the future to credit unions with their peak borrowing years right around the corner. Credit unions have an advantage in seeking to serve the financial needs of this generation because credit unions are trusted, have experience and a long history of advocacy, which are attractive characteristics to Gen Y, Wickline said. The time for credit unions to strike in serving young adults is now, she added. CUNA Mutual conducted market research with young adults in 2008 to understand their financial needs and behaviors. “To no surprise, we found that all the key life goals of young adults require the support of some type of financial product or service,” Wickline said. “Whether starting or building their careers, continuing their education or owning their first home, credit unions can offer young adults specific products and services to help achieve their goals. This is definitely good news, but there are barriers that credit unions need to overcome. “Our research found that for young adults, there are more important considerations than trust or having the right products,” she continued. “Access is crucial. In fact, for young adults, access trumps trust, products and services when it comes to selecting a primary financial institution. And unfortunately, it’s also an area where our research shows that both members and non-members think credit unions fall short.” Strong online capabilities and a great user experience are “table stakes” for serving Gen Y. They expect to be able to research and apply for products online quickly and easily. But they also expect to do business for certain things in person. For this generation of consumers, having multiple access points and integrated delivery channels are key. She added that serving their basic needs--building or repairing credit, debt management, money management and asset building--will create a more lasting relationship with this generation because they tend to favor one-stop shopping for their financial needs. Also, developing a business strategy around this generation isn’t enough; credit unions must turn that strategy into action by appealing to the unique consumer behavior of Gen Y, she said. Wickline outlined five specific identities of this generation to help credit unions develop their plans to attract this demographic and gave examples of how to make this successful.
* I expect big things!--Because this generation was raised to believe they were special and could do anything, they come with big expectations of the world. The first big expectation is their education. Wickline cautions not to ignore the significance of student lending in developing a longer term relationship. * I connect to transact, communicate and express myself--This generation doesn’t know life without computers, Internet service or mobile phones. They spend more time on the Web than watching television and communicate with peers through text messages and social media, including Facebook and MySpace. Because technology pervades every aspect of their lives, developing and maintaining functional websites is critical to attracting and keeping their business. “Make transacting quick and easy while communicating with them simply and where they’re at,” Wickline said. “Our research also found that young adults are looking for electronic means of communications from their preferred financial institution to learn about other products and services. Unfortunately, the traditional promotional methods that credit unions use are the least preferred by this generation.” * I research, seek opinions, buy and leave opinions--When it comes to making buying decisions, they do their own research, but seek reinforcement from their family, friends or the institution from which they’re buying a product. Credit unions should provide user recommendations on their websites to help influence Gen Y decisions regarding financial services. * I can save the world, for real--Gen Y was raised with a strong sense of community and taught to think in terms of the greater good. More schools encourage volunteering, supporting the message of social and environmental responsibility and making this generation the most socially conscious consumers to date. Credit unions should promote their values and community activities, and explore opportunities to either facilitate or engage young adults in community activities. * I love my helicopter parents--Wickline reminded the audience of the hovering nature of Boomer parents. Never before has a generation been so nurtured as Gen Y. Given this reality, parents can function as both the influencer and the decision maker with their Gen Y children, depending on the product and consumer’s age. She suggested leveraging marketing, communication and promotional efforts with parents when appropriate.
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