US Banker  |  June 2008

By Anthony Malakian

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As the demographics of college students continues to change, so do the ways banks are trying to market to this potentially valuable segment. Still, it can be daunting to reach out to this group because college students are so varied in their attitudes and spending behaviors.

For one, the group’s demographics keep evolving. According to U.S. Department of Education estimates, 18.3 million students are enrolled in postsecondary degree-granting institutions in 2008, an increase of 21 percent from 1998. According to the American Council on Education’s most recent data, college minority enrollment increased 49 percent from 1994 to 2004, with Hispanic enrollment alone growing 67 percent.

The face of the college student is changing and, so too, must banks’ ways of thinking, says Michael Daum, head of consumer marketing for Cleveland-based KeyCorp., which has $101 billion in total assets. “There doesn’t seem to be a traditional student anymore,” he says. “So our mindset has been more of a holistic view that is needs-based, focused [on] life events. We don’t look at the student as many people would’ve thought of 10 or 15 years ago.”

The bank uses direct mail to present offers throughout the year, and in the fall it uses field-branch managers on campus, where they get involved in enrollment and open houses. He declined to release figures on whether the programs are successful in recruiting new customers. He says that it is important, especially because of how tech-savvy today’s college student is, to have online banking and bill-pay, resources for problem solving and decision-making, as well as online money-transfer capabilities.

“There was a time when it was, ‘Mom, can you send money,’ and now it’s, ‘Mom, can you transfer money from your account to my account,’ through online banking,” Daum says.

Boston-based research firm Celent says that the best way to reach college students is still through the good-old Internet. According to a recent survey of college students, 71 percent said they go online to view a bank’s services and only 21 percent went to the branch itself. Of online advertising, 40 percent preferred to simply customize their own “organic” search, while 38 percent found an ad on the bank’s Web site to be appealing.

Ashley Evans, an analyst with Celent, says that two-thirds of respondents were very favorable toward rewards programs, especially ones that gave straight cash-back rewards. The worst thing that a bank can do is try unsolicited attempts to catch their attention, Evans says.

“This group is really not very receptive to people, unannounced, trying to sell them on some product,” she says, but adds that students do want more sophisticated services and products. “Students are going to be willing to talk to on-campus representatives on their own and will go up and talk to them when they are interested in acquiring these products.”

In an attempt to get on campus, Citigroup has tried marketing to college kids by providing on-campus educational programs. Through Drexel University’s LeBow College of Business in Philadelphia, the bank offers its Credit-ED[ucation] Challenge workshop as a curriculum course option for the college’s freshmen. The program uses workshops and online self-tutorials to look at spending habits, budgeting and financial goals, the importance of credit history, and the rewards and responsibilities of credit-card use.

“We believe it is important to provide college students with ongoing credit education that meets and exceeds their needs,” says Anthony Merola, who manages the bank’s college marketing initiatives. “As their life stage evolves, it’s our hope that they’ll look to Citi for other financial services needs, such as a car loan, mortgage or investments.” Merola says the bank also goes to college campuses on an informal basis to give an overview on credit-education products within the marketplace.

Ron Shevlin, a senior analyst at Boston-based research firm Aite Group, says that all banks should be getting into the practice of on-campus education because it is a great affinity builder. “Clearly, if you were running an education session and had 10, 50 students sitting there,” Shevlin says, “the goodwill you get by providing the education would sway their decision to apply with you rather than somebody else.” (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.us-banker.com http://www.sourcemedia.com

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