X Marks the Spot for Loan Growth: Executive Editor's Column
More loans. It’s the battle cry of almost every credit union in America, if not all of them.
Thankfully, loan growth is the strongest it’s been since the financial crisis. Equifax announced Aug. 29 that credit card balances increased year-over-year for the first time in five years. Auto financing, student loans and purchase mortgages are showing promise.
And the NCUA reported Aug. 29 that loans were up 2.3% in the second quarter. Outstanding loan balances have increased by 5.5% during the past four quarters, the strongest 12-month growth since the start of 2009.
It’s great news, but I’m concerned credit unions aren’t marketing to the right demographics to leverage the economic recovery. The entire credit union industry continues to focus on two generations that have little lending potential: boomers and Gen Y.
We’re even guilty of it here at Credit Union Times—although, under my watch, that will change. Our 2013 editorial calendar includes an Oct. 9 feature section on boomer services, and a Nov. 13 issue that will focus on Gen Y.
But we’re doing nothing about Gen X this year.
Don’t be fooled by all the talk about Gen X being small and I guess by extension, not worthy of a strategic marketing effort. True, fewer babies were born between 1965 and 1981 than the 20 years before and after that period. However, a big reason why Gen X has drastically fewer numbers is because the dates that define the generation are usually shorted.
In theory, generations are supposed to span 20 years. The boomer generation decidedly began when WWII ended, so boomers are thought to have been born between 1946 and 1965. Likewise, Millennials are often defined as being born between 1981 and 2000.
That leaves only 1966 to 1980 for Gen X. That’s a 25% reduction in the years that span the other generations.
I get emails all the time that pitch Gen Y stories and claim the generation includes young adults from age 18 to as old as 40. Now, if you’re about to retire, 40 may seem young in comparison. But when you’re talking about lifecycle marketing, 40 is not a young adult. And certainly, marketing aimed at a 20-year-old is not going to make much of an impression on a 40-year-old.
And then there’s Generation Jones, who were born between the late 50s and 1965, and are considered by many to be boomers. Granted, most folks that age didn’t cuddle Cabbage Patch dolls or watch He-Man cartoons. However, they also don’t have a lot in common with Vietnam War vets, and they barely remember such iconic boomer events such as the death of John F. Kennedy or the moon landing.
But they do remember the launch of MTV.
Consider these celebrities and their birthdates: Judd Nelson (1959), Scott Baio (1960), Emilio Estevez (1961), Jon Bon Jovi (1962), Brad Pitt (1962), Michael Jordan (1963), Melissa Gilbert (1964) and Shania Twain (1965). Those ain’t boomers, folks. Even President Obama, born in 1961, said he identifies with Gen X.
I write this knowing that many will simply shake their heads and think to themselves, here we go again—another Gen Xer desperate for attention.
To that I say: like, whatever.
I don’t care what you think about Gen X. As a conference speaker said earlier this year, Gen X has issues. I’ll own that. I mean, if you have to tie your house key around a little kid’s neck because he or she might lose it, maybe that kid is too young to be home alone.
But that’s not the point.
I care that credit unions increase their lending market share as the economy recovers, and so should you. Without loans, credit unions will have to resort to fees to pay operating expenses. Not only does this conflict with the credit union philosophy, but with the industry tax status potentially under attack and the CFPB scrutinizing payday loans and overdrafts, fee income carries a lot more risk than reputation.
Consider that most Gen Xers are going to move into senior management in the next five to 10 years, which means they’ll be earning more money. Here at Credit Union Times, Gen X already runs the show. True, many Gen Xers have poor financial habits, but plenty more are responsible. Even the ones who found themselves underwater on their mortgages or up to their triple-pierced ears in credit card debt have resolved those situations, and may have learned a little personal responsibility along the way.
With Boomers retiring and Gen Y’s underemployed status and distaste for debt, if you want loans, you have little choice but to pay more attention to Gen X.