Posts

/by

Are Today’s Borrowers Finding Your Credit Union?

,

Today’s buyers shop differently than in the past. As the first generation of digital natives comes of age and begins to seek loans in earnest, research shows that they go about the buying process differently than previous generations, doing more research and getting more recommendations before interacting with sales people. The Zillow Group Report on Consumer Housing Trends (2016) provides the following insights into the home buying process specifically, but it seems likely that many of the conclusions from the home buying research could be applied to consumer borrowing, as well.

Half of home buyers in the US are under 36 years of age. Half. 42% are Millennials, age 18-34.

In many ways, younger people’s borrowing behaviors don’t vary much from previous generations. They still want to work with agents and value private home tours. But some of the areas where they differ can be useful when rethinking how to reach them. It’s interesting to compare the two biggest generational groups by population—Millennials and Baby Boomers—to highlight how things are changing. When it comes to finding a lender, it’s no surprise that Millennials use online resources more heavily than Baby Boomers, but some of the other areas of resource usage may be more unexpected:

The Zillow Group Report on Consumer Housing Trends

How visible is your credit union to Millennials when they are tapping into these resources?

Millennials use more resources to educate themselves and do more research on agents and lending professionals than any other generation. They make more use of interest rate and affordability tools and mortgage calculators. Are your tools easy to use? Are Millennials finding good content from your credit union as they do their research?

The sheer number of Millennials makes this group hard to ignore, but there are surprising statistics from the study that relate to loyalty—the thing that Millennials “just don’t have” according to some.

Important attributes when selecting a lender:

Important attributes when borrowers select a lender

Before you can build loyalty, you have to be seen. Remember that research is key for Millennials, so making sure that your credit union is visible, provides useful content, and offers easy-to-use tools is important. At the same time, they’ll be looking for positive online reviews as well as referrals from people they know—so fast, friendly, and effective processes are required. Doing an outstanding job for this group might not only help profitability today, but could serve to build member loyalty for years to come.

/by

Are Millennials Finding You Attractive ?

,

As time marches on, we find Millennials coming into their most financially productive years, and they need financial services. In 2010, Gen Y made up only 17% of vehicle sales. Five years later, that number has grown to 28% of sales, while Baby Boomers and Gen X have flatlined or fallen back (according to J.D. Power and Associates). Many credit unions are considering process improvement in order to refine their processes to better appeal to Millennials but, believe it or not, easy appeals to any generation!

Consider the lending process from a Millennial’s perspective:

  • How long will I have to wait for an answer? (Most things in my life so far have been instantaneous. I have never had to wait for the annual TV broadcast of “The Wizard of Oz” or for the radio station to play my favorite song, or sit through boring commercials)
  • How many hoops do I have to jump through? (I have to drive somewhere to sign something? On paper? I have to gather a bunch of documents?)
  • How many stipulations are on the deal? (Are all of these questions necessary? Why is this application so long? How does the other online place I found do it without all this? Why can’t this be easy like Amazon?)

Are you getting your fair share of Millennials’ business? Can you be found where they are looking? Are you offering the type of experience they value and expect? Have you considered that making things easy will appeal to other generations – not just Millennials?

Facebook recently published a white paper on Millennials and Money that uncovered some key findings. The Millennials on Facebook are turning out to be financially conservative, with a focus on paying off debt and saving. Unlike previous generations, Millennials talk openly about money matters and they talk about them online, crowdsourcing for their financial advice – the modern-day version of word of mouth. Who better to dispense financial advice than credit unions? The question is, are you part of that online conversation?

Even if you are, is the experience you’re providing relevant to this generation? It’s well known that Millennials “live” on mobile, and while they are often multichannel users, they typically start their journeys on mobile. How do you show up? People expect things to be easy and convenient. If you need inspirational ideas for how fast, easy, and convenient the financial experience can be, look no further than the internet for non-traditional competitors like Lending Club or Quicken’s Rocket Mortgage. How does your experience compare? It is commonly said that this generation isn’t loyal. Why should they be if others are offering a far superior experience?

Have you fully revamped your lending and account opening processes – often the first exposure your potential member has to your credit union – with the Millennial in mind? This takes a hard, honest look, which isn’t easy, but keep in mind that some of your toughest competitors have already done it. Don’t forget this benefits other generations. How many Baby Boomers miss going to Blockbuster to rent a movie?

Process improvement is typically conducted with a goal of eliminating waste, which is critical, but tying in the strategic goal of providing a rewarding experience across generations is key to remaining relevant as a financial institution into the future.

/by

Strategic Planning for Mobile Users

It is a safe bet to assume that many credit union strategic plans include a focus on engaging mobile users. One of the first steps in engaging a consumer is to better understand them.

The Federal Reserve’s report, Consumers and Mobile Financial Services 2015, is nothing short of a treasure trove of data that has been reformulated into potential decision information. We’ll explore data about the various ages in which consumers use mobile banking.

Excerpt from Consumers and Mobile Financial Services 2015 Report

Mobile banking users by age
Table provided by Board of Governors of the Federal Reserve System

 

At first blush it may seem to confirm what we hear far too often – that Millennials should get the biggest allocation of marketing dollars – but it is important to not just view usage in absolute numbers. Understanding trends, including the rate of growth, can be eye opening. Viewing data from various perspectives can open doors for new opportunities.

If you take the data from the table above and dig deeper, you will see that, while one year does not make a trend, it should not be ignored that the youngest group had a decline in usage (see below). Meanwhile, the age groups that tend to have deeper relationships with their credit union show a healthy rate of growth.

Growth rate of mobile banking users by age group

 

Take Advantage of the Treasure Trove of Data

If you haven’t started already, dig into the data your credit union has for your members. As we’ve seen with so many strategic planning clients, once you have reliable data about what your members are doing with your credit union, you can easily start asking more of the right questions. Answering these types of questions, based on relevant data, will likely result in actionable decision information.

Keep in mind the more questions you answer, the more questions you will have!

Just a few questions to ask when strategically planning for mobile banking:

  • What are the behaviors of our members who are using our mobile banking at least 4 times per month for the last year?
  • What trends can be turned into strategic opportunities?
  • Do they have deeper, more productive, relationships than those who are not actively using mobile banking? If not, what can we do to deepen these relationships? For example, do mobile banking users tend to have more or less loans with us?
  • What other delivery channels do our mobile banking users tend to use, and for what?
  • If our mobile banking users are also consistently doing routine transactions in a branch or through the call center, why? Are there roadblocks that can be removed to make members’ lives easier that can also help us control costs?
  • What is our NSF/ODP income average per member for mobile banking users versus non-mobile banking users?
    • Some credit unions find that the average is lower for mobile banking users. If that is the case, then what does the credit union need to do to replace the inevitable decline in this type of revenue?
  • What age groups are using mobile banking to transfer funds to another financial entity?
    • Can we use this information to send targeted, relevant marketing messages to these members?
  • If we offer the likes of Apple Pay and Samsung Pay, how can we determine if our cards are top of their mobile wallet?

Many credit unions have access to this type of invaluable data, without significant hard costs to access it. The biggest investment is the time to ask and answer the thought-provoking questions. However, investing time to tap into member data and turn it into relevant decision information to drive strategic discussions, decisions, and planning is no longer optional.