There is a perception in the financial services arena that Gen Y consumers are predominantly digital bankers, whipping out their mobile phone or grabbing their tablet whenever they need to access their accounts or make a transaction. In reality, this is only part of the picture.

While Gen Y consumers, ages 21 to 34, are leading the digital revolution with mobile and tablet usage, they are not abandoning the traditional, higher-cost channels such as branches and call centers. In fact, they continue to be the highest users of high cost channels.

This simultaneous desire for both digital and traditional channels frustrates credit unions and paints Gen Y consumers as “high maintenance.”

The 2012 Fiserv Consumer Trends survey investigated what might be behind this heavy use of traditional channels by seemingly digitally savvy Gen Y consumers.

When asked why they visited a branch, the overwhelming majority of the respondents – across all ages and income levels – said that making a deposit or depositing cash was the primary reason for their branch visit. However, significant generational differences emerged in other areas. When compared to Boomers and Seniors, Gen Y consumers were:

300% more likely to have gone to a branch to obtain a cashier's check or money order
270% more likely to have gone to a branch to open or close an account
233% more likely to have gone to a branch to change account information (like their name) or to have gone to a branch to sign paperwork
200% more likely to have gone to a branch use a notary

So are Gen Y consumers really high maintenance? Or are they simply in a season of life in which they are far more likely to make major financial purchases and decisions, get their first job, start managing their money more seriously, move and get married, occasions that prompt branch visits to obtain cashier's checks, open or close accounts, or access notaries.

The answer is probably a mix of both.

Gen Y consumers span a wide range of life stages. According to the U.S. Census Bureau, the average age at the time of first marriage for women is 27 and for men is 29. So, while the youngest Gen Y consumers may still be in college or living with mom and dad, many others are now employed and living on their own, or getting married and starting families. This range of potential life stages has many implications for financial habits.

Gen Y consumers do have high expectations, a more fluid lifestyle, and the full spectrum of financial needs that can make them difficult and less profitable to serve. But as their income grows, their lifestyle stabilizes, and their financial literacy matures, expect to see them outgrow some of their high cost behaviors and move the majority of their financial management habits to digital channels such as mobile.

So what can credit unions do about their high maintenance Gen Y members today? Here are three recommendations:

Next Page: Technology, Education, Awareness

1) Invest in technology. Note that many of the activities listed above currently cannot be completed online or through a mobile device, which Gen Y consumers report as their preferred methods of financial management. More robust mobile and tablet banking solutions, online account opening tools, the option to electronically sign loan documents, targeted offers, robust alert capabilities, and electronic bills and statement histories – are all important components of the digital banking experience that will enable credit unions to better service Gen Y, and all of their other members as well.

2) Awareness. “If you build it, they will come” was a great line in the movie “Field of Dreams” but in the real world credit unions need to make members aware of their products and services, how they work, and why they should care. Credit unions that offer compelling digital experiences that are too good to pass up, and let consumers know about them, will drive usage. Gen Y consumers are very vocal about their experiences, both positive and negative. A great experience is likely to motivate them to share a recommendation of their credit union and the products they use.

3) Education. Given the broad range of life stages within Gen Y, there is an incredible opportunity to help educate these consumers – not only about banking products and services – but also generally about good financial habits and behaviors. Social media provides a great platform for educational (not sales) conversations with potential members.

The 2012 Fiserv Consumer Trends survey suggests that while Gen Y consumers are indeed high maintenance, they are likely to outgrow some of their high-cost behaviors as their life stages and financial maturity evolves.

As Gen Y consumers start transitioning into a middle-aged lifestyle – the oldest Gen Y consumers are now 35 – credit unions should expect to see high-cost channel behavior transition to a primarily digital-centered banking relationship.

Leading credit unions are preparing for this shift today by investing in the technology and marketing to create compelling digital experiences for their members.

Daniel Steere is director, Consumer and Market Intelligence, for Fiserv Inc. in Brookfield, Wis.

Instant Insights /

Gen Y: 'High Maintenance' or 'Going Through a Phase'?

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