When I began my career in banking in the 1980s, financial institutions in the metro New York City market were targeting a new demographic: young professionals. They offered a relationship product (combined checking, savings and credit accounts) and waived minimum balance requirements for several months and extended lines of credit to recent graduates. The idea was simple: attract young customers with compelling offers and keep them for life.
Fast forward 20 plus years. Today, Generation Y is of age. This generation's preferred modes of communication are unlike those of previous generations, including instant messages, Facebook and Twitter. Almost all have mobile phones but using them for making telephone calls is a secondary function. They watch YouTube regularly but view less television than previous generations. Just as important, they do not trust advertising and are skeptical of marketing claims, preferring instead to rely on the wikis of their peers, often strangers, for their buying decisions. They expect 24/7 access and do not understand the concept of banking hours. Some day this demographic will have substantial assets, so how do we bring them to our financial institutions before we lose them for good?
How do you reach someone whose primary method of communicating is sending thousands of text messages a month? Chances are that your current online banking website is not the answer. Also, reformatting your site to fit smartphone screens and calling it your mobile strategy most likely will not work for Gen Y. Credit unions, like all financial institutions, will need to embrace, in earnest, Gen Y's preferred channels, such as YouTube, Facebook, mobile phones and perhaps virtual world websites. Your credit union's presence in their world must be edgy, informative, collaborative and cool, and not a standard corporate advertisement or online billboard. Credit unions, which have traditionally focused on developing more personal relationships with their customers, have an important head start in connecting with this generation.
It is not that Gen Y dislikes the concept of visiting a credit union branch, or any other financial institution branch, to open an account. But, as digital natives, they are accustomed to comparing all of their available options online when shopping for anything, whether a digital camera or demand deposit account. They will read the blogs and wikis of others for reviews. They will choose whatever recommended option makes the most sense for them. They will shop for price and most likely close the deal online. Blogs and wikis are, therefore, very important decision-making tools for Gen Y, and credit unions should not be afraid of them.
Credit unions that do not give their customers a forum to openly discuss their banking experiences will witness their customers finding a site to vent elsewhere.
Rather than deleting negative feedback, credit unions should respond, express regret and make it right. Unreasonable and unfair comments will always appear just that way. However, it is absolutely proper that credit unions remove defamatory, obscene or other inappropriate content from their websites. Credit unions should also thank customers for positive comments. Most important, credit unions need to show their customers that they are aware of them and care about their experiences.
Credit unions are viable options for this generation as long as CUs provide convenient access that corresponds to their lifestyles, come recommended by their peer group and offer a good deal.
Hard economic times have made Gen Y more frugal and financially responsible than Generation X and baby boomers. With bank accounts perceived as expensive and irrelevant by some of them, this generation will scour the Internet for deals. Gen Y also thirsts for financial advice and guidance. They have no problem doing their homework on what is out there. Credit unions can translate their traditional commitment to developing close relationships with their customers to a successful future.
As credit unions look to launch mobile banking strategies geared toward Gen Y, they must offer more than balance and recent transaction information. Near field communication technology, which enables mobile phones to make contactless payments, is gaining traction. In fact, many wireless carriers have tested virtual wallets to enhance their mobile offerings in anticipation of explosive customer demand.
To win over this generation, credit unions will need to undergo a transformation that should include adopting effective strategies for Web 2.0 and mobile banking; better understanding, anticipating and fulfilling customer needs; and providing a consistent, technologically advanced customer experience across all delivery channels.
Credit unions will also require an agile infrastructure to rapidly respond to their customers' needs and future market directions. Today's complex, legacy systems are proving to be an encumbrance for credit unions looking to revolutionize their service delivery. It is time to seriously consider modernizing aging ecosystems to support new communication channels that are de rigueur with Gen Y.
David Bomser is senior director in Oracle's financial services industry business unit.
Contact 800-633-0738 or david.bomser@?oracle.com