All credit unions know their futures depend on connecting withGen Y, but it still seems they're having a tough time doing so.

According to a recent Filene Research Institute report, “CreditUnion Market Niches: Social and Demographic Opportunities,”challenges such as closed fields of membership, weak technology andeven a misunderstanding of the term “credit union” stand in the wayof nudging the average CU member age down from 47.

Some credit unions, however, are using creative marketingprograms to build young membership and have been reporting positiveresults. The $668 million Vantage Credit Union of Bridgeton, Mo.,for example, is making a splash with young consumers in the St.Louis area through its Gen Y outreach program, Young &Free.

Vantage CU's Young & Free spokesperson, 25-year-old JennCloud, acts as a liaison between the young St. Louis community andthe credit union. She hosts events, makes appearances and postsblogs and videos to the Young & Free St. Louis website, all with the goal ofpromoting Vantage CU and the credit union movement to the 18 to 25age bracket.

Cloud said she helps snag new young members by marketing NotYour Mama's Account, Vantage CU's flagship Gen Y product. Not YourMama's Account is a free checking account that promotes savingthrough its Swipe2Save feature, an automatic transfer activated bydebit transactions, and allows mistakes with the Oops NSF Feerebate, which allows account holders one penalty-free overdraftevery six months.

An online personal financial management tool helps Not YourMama's Account holders keep their spending in check.

“The goal is to get members in when they're young and make surethey're satisfied with the two most basic products – checking andsavings accounts,” Cloud said. “Then, through continued education,we can be there when they're ready for, say, a mortgage.”

Since beginning her position about six months ago, Cloud hasraised awareness about Vantage's products by hosting an uglysweater Christmas party and a wine bar “tweet-up” for Twitterfollowers, just to name a few. The publicity has been positive:currently, 18- to 25-year-olds comprise 12.5% of Vantage CU'smembership and 37% of those members are Not Your Mama's Accountholders.

Cloud lists mobile banking access, social media participationand giveaway programs as three other vehicles for attracting Gen Y.Vantage CU is currently developing a mobile banking app and offersTweetMyMoney, which gives members limited mobile banking access viaTwitter. It also has an active Facebook account and offers localmerchant coupons to members.

She also pointed out that credit unions should keep in mind theneeds of young folks in their geographical area. In St. Louis, forexample, getting married and buying a home is common for25-year-olds, which makes mortgages key products for local GenY-ers, she said.

The Young & Free program is currently in place at 10 creditunions in eight states and two Canadian provinces and employs 10full-time spokespeople.

Check out Jenn Cloud's “Young &Free St. Louis” videos.
Checkout former St. Louis spokester RobCartwright's videos.

Small credit unions, such as the $73 millionSan Diego Medical FCU, recognize the importance of attracting youngmembers but may not have the resources to implement full-fledgedGen Y marketing programs. San Diego Medical FCU president/CEO Paul Lewis said hismembership, comprised of medical field employees and servicemen andwomen, is aging.

“As a general rule, we need to attract younger members for ourlong-term success, so it's a concern,” Lewis said. “Thelong-term
success of any credit union is dependent on accessing young membersand bringing them on as full members, so we recognize theimportance of that.”

Lewis said his CU actively recruits young members at new hireorientation events in hospitals, where CU representatives shareinformation about services such as mobile and text banking anddirect deposit.

The CU's two-year-old mobile and text banking services are atthe top of Gen Y's financial institution requirement list, but wereimplemented to satisfy members of all ages, Lewis said.

The credit union also markets its student loans and studentpackages, which include a credit card and checking account, to theyounger demographic.

The two biggest challenges for small credit unions looking toattract young members, Lewis said, are a lack of resources andincreasing competition.

Especially with rising compliance costs, excess time and fundsare a luxury for small CUs, and potential members have many choiceswhen it comes to selecting an institution, the San Diego MedicalFCU CEO said.

“Telling our story in the face of all the competition out thereis a major challenge,” Lewis said.

To take the first step toward overcoming the challenges ofattracting Gen Y, credit unions might take a cue from Filene'sreport, which lists the top right and wrong moves credit unionsmake in their quest to reach young consumers.

Filene recommends CUs recognize the value of their physicalbranches, focus on delivering their promises, emphasize theircommunity involvement, allow young member involvement and developand nurture a network for young employees.

The research organization also advises credit unions to avoidcreating a disconnect between their marketing andproducts/services, producing unwieldy product or service offerings,overinvesting in branches at the expense of a strong onlinepresence and assuming that by just talking to their youngemployees, they'll successfully market to young consumers.

What's at stake if credit unions don't invest in the youngcrowd? Everything, says Filene Research Director Ben Rogers.

“I'm not overstating the case in saying that if you miss theyoung member, you will be out of business,” Rogers said. “It mighttake a few years, but it will be inevitable.”

Rogers added that the best way for a credit union to measure theprofitability of a young member is to count the number of paymentcards in his or her wallet.

“Debit, credit, prepaid – these are the best ways to link youngadults to you and the best chance to remain in their considerationset when it's time for a loan,” he said. “If you can get plasticinto members' wallets and then get them to use it regularly, you'reon the right track.”

Cloud concluded that while credit unions are headed in the rightdirection with the under 25 demographic, they still have plenty ofwork to do.

“Credit unions are out there fighting a good fight right now,”the St. Louis credit union marketer said. “But we know that peoplethink it's a hassle to switch institutions, and that the pain hasto reach a certain caliber before they're willing to make theswitch. So we have to make sure we're really out there pounding thepavement.”

Next Steps:

More on a Young & Free program in New Mexico.
Credit unions soughtfor another Filene program aimed at young adults.

Here are a few more images from the St. Louis Young &Free Program.

Jenn Cloud and her entry in the ugly Christmas sweatercontest.

Jenn Cloud, center, and fellow Young & Free spokesters fromAlberta and Michigan dressed up as Lady Gaga for spoof music videosthey were working on at the their annual conference.

This is LeKea, a Vantage Credit Union colleague, helping Jennwith a fashion show at the Grove Fest event in the fall.

Here's Jenn and the winners of the “Breaking Dawn” midnightpremiere tickets from a contest she ran at the movie's St. Louisopening.

This shot was taken at the pumpkin carving contest at theMoonrise Hotel in St. Louis' University City where Jenn was ajudge.

Here's some swag the spokesters get to keep as payment for theirefforts.

And here's the Nissan Cube they tool around town in to promotetheir credit union and the Young & Free program.

And lastly, here's a collage that Jenn Cloud made for aninteractive marketing conference, showing the integration of theYoung & Free St. Louis all the way down to her nail polish.