AUSTIN, Texas (4/20/09)--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 members of the Texas Credit Union League Thursday.
Wickline spoke to a group of credit union leaders during the league’s annual meeting in Austin. 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 roughly $500 million in about eight years. In the meantime, Gen Yers 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 Gen Yers financial needs because credit unions are trusted and have experience and a long history of advocacy, which are attractive characteristics to Gen Y, Wickline said. 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 added. Wickline said this generation is worth attracting because of three distinct Gen Y characteristics. They are:
* Influential--Since they are early technology adopters, they technologically influence the rest of society, including their Boomer parents; * Active--Gen Y members are active consumers of financial products. They are more likely to experience life events that trigger financial decisions--relocation, marriage, job change; and * Efficient--Because this generation has grown up with technology, they expect immediate action. While some businesses worry about serving this demanding demographic, Gen Y members also are more efficient to serve. They are more likely to transact and serve themselves using the least expensive channels.
“So the question becomes whether you want to spend the money to acquire them now or spend the money trying to woo them away from Bank of America later,” Wickline said. “I can tell you which will cost less.” 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 it tends to favor one-stop shopping for their financial needs, she added. Wickline outlined five specific identities of this generation to help credit unions develop their plans to attract this demographic, and gave scenarios of how to make plans successful:
* “I expect big things!” Because this generation was raised to believe they were special and could do anything, they come with big expectations. 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. The members 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. * “I research, seek opinions, buy and leave opinions.” In making buying decisions, they do their own research, but seek reinforcement from family, friends or the institutions selling a product. Wickline suggested credit unions 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. Wickline said 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, Wickline said 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.