The blunt-talking Ho, a junior business major at the University of Southern California who has been serving on the board of the California CU for two years and now finds himself preaching to CU groups on Gen Y, faults CUs for operating stodgy, "unworkable Web sites that often are unprofessional and a turnoff to young people."

Addressing a throng of volunteers and CEOs at the annual National Directors' Convention here, Ho said banks seem to have caught on quicker than CUs in attracting young people because, for one thing, their online sites are more attractive and utilitarian. He pointed to Wells Fargo as an example.

As often mentioned in CU groups, perhaps it is simply the graying of CU boards that remain a continuing hindrance in CU youth marketing, maintained Ho, who at the directors convention was introduced by his boss, Gary Perez, president/CEO of the $346 million USC.

Ho has filled the so-called student seat, part of the USC board structure for years. But Ho, as acknowledged by Perez, has been far more forthcoming in expressing his opinions and helping guide new policies designed to draw more college business. "He's really a phenomenon," said Perez.

In his remarks to the directors convention, Ho said CUs in their online marketing fail to emphasize specific rewards and paybacks for students on particular products that might catch their attention.

There is one under 30 group of students who he defined as "rate and reward mongers," a segment that has very simple needs on money transfers and other services. But there is a second group "that is oblivious to financial institutions" and must be reached through word of mouth. And still a third group is strictly service and relationship oriented. The key, said Ho, is for CUs to learn the techniques and approach to identify which group is most workable.

"The first group is perhaps the most elusive, as they are the ones that are extremely financially savvy and transfer their money around every time there is a new CD out with a higher interest rate," said Ho. "The second group are the ones that get their financial advice from their parents or friends."

The best way to attain their business, he said, is through relatives or word of mouth. "Finally, the third group are those that still look to their financial institutions for solid advice, and perhaps the group with the most potential to use more products and services."

The ideal way to approach this group, he advised, "is still with superior customer support."

Ho, who three months ago joined Glatt Consulting of Washington to provide advice on Gen Y marketing, said CUs have "generally been a bit stagnant by nature," with average age of a CU member underscoring that lack of change. Moreover, the problem is compounded with CU boards having the average director over 50 "and probably increasing every year."

In hooking up with the Glatt firm, headed by Tom Glatt Jr., whose father is president/CEO of Continental FCU of Tempe, Ariz., Ho said his title of Gen Y strategy consultant includes working with CUs on online marketing, including blogs, Facebook, YouTube, in addition to recruiting younger board members.

In his remarks to the directors' convention, Perez, the CEO, stressed the continuing Gen Y product development work of USC over the years, advocating more CUs enter the student loan market "and start competing with ING, HSBC and other institutions." In addition, CUs have to investigate the social lending phenomenon of peer-to-peer transactions ala Zopa, the British firm that has sought to sign up U.S. CUs.

As for Ho, Perez said he found his youthful director "refreshing because of his excitement and enthusiasm." On several occasions, USC has had to change the graphics or the operation of online systems as a result of Ho's suggestions.

Discussing the economic plight of peer CUs in Southern California, Perez said his CU is hardly immune from the negative forces brought on by foreclosures but has managed to retain a profit because of conservative policies and is well positioned should there be any further erosion of asset quality. Still, USC's ROA "is at 0.4 or 0.5, below the 1.25% of a decade ago."

--jrubenstein@cutimes.com

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CUs Still Behind on Youth Marketing, Charges USC's 21-Year-Old Director

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