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Are Millennials Finding You Attractive ?

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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.

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Mobile Banking, Evolving Member Behavior and Your Bottom Line

Logically, providing members with on-demand information at their fingertips will influence their decisions and behavior.  Consider these insights on mobile usage reported by the Federal Reserve in a 2012 study:
  • 87% of the U.S. adult population has a mobile phone
  • 64% of mobile banking users have checked their account balance before making a large purchase in the past 12 months, and half of them decided not to purchase as a result of their account balance
  • 42% of smartphone users comparison shop using their phones at retail stores; 64% have changed where they purchased the product as a result
The moral of the story is that more informed consumers will be able to make decisions in their best interest more easily.  For some credit unions that have seen increased usage of mobile services, there has also been an inverse trend in courtesy pay income and late fees. Coincidental or not, the potential relationship is noteworthy.  Nobody will argue that helping members make more informed decisions is a good objective.  However, decision-makers should consider the impact mobile services can have on their institution.

 

Consider the following:
  • If you have members who spend less on courtesy pay or postpone purchases because they are more informed, how will your credit union’s revenue be affected?
  • Will the convenience of offering mobile services attract enough new members to offset the potential loss in the credit union’s revenue?
  • If you attract enough new members to offset revenue loss, will operating expenses increase materially to support the higher volume of members and accounts?
Source:  Consumers and Mobile Financial Services 2013, Board of Governors of the Federal Reserve System, March 2013
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Mobile Banking And Strategic Resource Allocation

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The Credit Union Times recently released an article titled Mobile Banking Report: Credit Unions Lagging Banks.  In the article, Mary Monahan of Javelin Strategy & Research cautions that institutions that lack mobile banking risk losing valuable customers to those that offer it.  She enforces that many credit unions still do not offer mobile banking apps and that is what users want with a particular emphasis on the younger generation.

There is certainly an argument to be made that the younger generation is faster (not necessarily more prone) to adopt new technologies.  Consider that 45% of those ages 64 to 72 use home banking, compared to 57% of those 18-32 according to a 2009 Pew study; the margin is pretty slim.  The “Silent Generation” may not have been the first to adopt home banking, but technology often catches up with all generations.  Beyond age, a number of other demographic and behavioral factors will play a role in usage and adoption rate within your credit union’s unique market.

The question remains, however, are most credit unions positioned to compete with the technology of the nation’s largest financial institutions? And the more important questions:  Is mobile banking necessary for your unique credit union right now?  If not, when?

A credit union will benefit tremendously by having a deep understanding of its business model (including target market(s), value propositions, core competencies and sources of profitability) when contemplating any new product or service.  In our strategic planning work with credit unions, we encourage credit union leaders to create Decision Filters focused on the credit union’s unique business model to help allocate finite resources.  Few if any businesses can afford to be all things to all people—and with margins that continue to be squeezed by sluggish loan demand and extended low interest rates—strategic allocation of resources is critical.

Source:  Mobile Banking Report:  Credit Unions Lagging Banks, CU Times, 2/7/12