Guest Opinion: The Option-Fueled Generation
By the year 2020, the population segment we all refer to as Gen Y could reach upwards of 95 million and make up 36% of the adult population in the U.S. There is no doubt that this consumer group is becoming more relevant than ever.
And with that, financial institutions are competing for their business. Young adults are transitioning through college, entering the workforce, starting families and making large purchases such as homes and automobiles.
While studies attempt to decipher what drives Gen Y’s decisions – including that of their primary financial institution – credit unions must realize these individuals expect more than just sound business practices, environmentally friendly operations, philanthropic generosity and ethical performance. Rather, they expect to be serviced through multiple channels; it is all about choices.
Bank Transfer Day reportedly brought tens of thousands of new members into credit unions. I have not seen any firm statistics stating what percentage of these new members were the vaunted and sought after Gen Y, though I am guessing it was the vast majority.
Credit unions should understand how to support the unique transactional and spending behaviors of Gen Y if they want to retain this business. After all, the median age in this country is already more than 10 years younger than that of credit unions’ overall membership. Not capturing this group now will certainly threaten credit unions’ market share in the not so distant future.
Gen Y has shown to be willing to pay for the flexibility it wants. That means not being serviced solely by the confines of traditional operating hours and brick and mortar facilities, especially having grown up in an era of emerging self-service channels. Gen Y, instead, is more concerned with achieving its personal preferred way of doing business.
Gen Y's 'now' mentality – wanting what it wants, when and how it wants – truly drives its decision making. This younger, working generation typically likes to fulfill its needs whenever and wherever it wants, even at an added cost. It often thinks little about paying upwards of a $3 fee for cash at an out-of-network ATM. For this reason, the same Gen Y consumers will jump at the opportunity to sign membership or lending paperwork electronically via the Web on a weekend or at 2 a.m. And why? Because they can and they will if they choose.
Yes, these folks are more technologically savvy than most; however, that does not result in a complete allegiance to electronic processes. Instead of focusing their attention on replacing traditional business methods altogether, credit unions need to look for opportunities to expand their services to include multiple options to transact away from a branch and via multiple platforms. Gen Y simply requires the availability of options so that the choice is there should they want to take part. Here’s what credit unions must consider:
Branch – Yes, we have all heard that branch traffic is declining and that it is less favored than the assumed more convenient online service alternative. However, leveraging paperless technologies in-branch at the teller line or with loan officers via signature pads and tablet devices, for example, can entirely transform the branch atmosphere. They remove employees’ restrictions to their desks, enabling a more personal, attentive member experience. They offer members the option of a tablet, kiosk, teller interaction or ATM over in-branch should they choose.
Web – Online banking and bill pay services are far past expected norms by now, but remote digital signature technology, online enrollment and other payments mechanisms remain as differentiators. Enabling members to interact with the credit union and conduct transactions online, wherever they choose and at whatever time is most preferred, are huge value adds. Members are not restricted by branch hours and locations, meaning the institution can have a far greater reach and retain members who relocate outside the area.
Mobile – Smartphone adoption is expected to rise exponentially for the next several years. Additionally, the top two generational segments participating in mobile banking are 25 to 34 years at 48%, followed by the 18 to 24 bracket at 42%. Furthermore, Javelin reported in December 2011 that 34% of tablet owners used mobile banking on that device in the previous week. As mobile devices and their uses increase, credit unions should seize the opportunity to take things such as enrollment outside of the branch and allow members to bank from any location.
Gen Y is well read, and will take the time to become familiar with their options before making a major decision including the choice of their primary financial institution. The longer credit unions wait to adopt the innovative and convenient banking options, the more of a competitive edge is lost. In the absence of convenient options, this vital market share will certainly go elsewhere. What are your plans to retain it?
John Levy is executive vice president of Integrated Media Management.
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