While millennials are usually defined as one large demographic with similar financial needs, these 75-plus million Americans are not a one-size-fits-all group, say industry insiders and experts.
"Millennials continue to grow in their diverse financial needs," said Susan Sachatello, senior vice president of TruStage, CUNA Mutual Group's consumer brand.
And the spending power of this demographic is growing too. Millennials, also known as Generation Y, have some $200 billion in direct purchasing power, according to a recent report by CUNA Mutual Group entitled "What Matters Now: Insight from Millennials."
The report found that while 69% of millennials would consider opening a credit union account, only 14% actually use a CU as their primary financial institution.
And the No. 1 reason millennials pick banks over CUs is that they "don't know much about them," according to CUNA Mutual.
So how can credit unions change that?
In the second and final part of this two-part series, Credit Union Journal spoke with Great Lakes Credit Union in Bannockburn, Ill., and Overland Park, Kan.-based Mazuma Credit Union about how they successfully attract and retain millennial members.
"While millennials can be grouped by age that is about where the similarities end," said Mazuma CU's Laura Eblen, whose title, director of awesomeness, speaks to the $575 million CU's approach to understanding a younger demographic. "There are really three subsets of millennials in this area that Mazuma focuses on when advertising and evaluating financial needs."
The three-tier breakdown includes the young and single, ages 18 to 24; members more established in their careers (ages 24 to 30); and millennials who are married, have one or more car loan, student loan debt and are focused on getting past living paycheck-to-paycheck.
While Eblen said the latter millennials may be in the age range of 27 to 34, she noted that this is not always the case. "There is bleed over into the late Gen X and even some very early millennials fall into this category."
To better understand how millennials approach banking, Great Lakes CU Community Relations Manager Donna Beltran said her team casts a wide member net in hopes of determining cross-demographic needs and potential overlaps.
"We appreciate the differences in all of our members and we understand that the millennial demographic is a tech-savvy group. To ensure we are appealing to all demographics and aren't excluding specific groups, we conduct various campaigns and initiatives using the appropriate outlets," said Beltran. "We recently launched our new 'Social Media Ambassador Club' and while most people would assume this new program is only for our younger members, we are encouraging people of all ages to participate."
One defining trait among millennials is the need for enhanced banking technologies. Credit unions executives are sensitive to this member want, but have to determine whether they "want" to be "leading" technologies or be on the bleeding edge.
"For millennials, it's about meeting their demand on the technology side and being able to compete with fintech startups," said Eblen. "Mazuma and all CUs must stay aware of the disruptive strategies of these companies and work to ensure that any changes do not radically deter from the strategic plan as they arise, but are carefully considered and evaluated to ensure they are right for the membership."
As an example, Eblen pointed to the initial quandary over adopting Apple Pay. While she said the CU wanted to "hop on the Apple Pay train right away," a careful evaluation of member online banking trends told a different story.
"While our mobile users were primarily Apple users, most were not considered early adopters," said Eblen. "Therefore, technology resources could be allocated towards other services and Apple Pay could be worked into the strategic plan based on member demand and internal resource allocation."
Remaining relevant and competitive, while keeping all members' interests in mind, can be a balancing act, according to Beltran.
"With technology evolving daily, we recognize the importance and urgency in staying up to date with new mobile applications and features, which is why we were thrilled to announce the recent roll out of Apple Pay as a free service for our members," said Beltran who added that in 2016 Great Lakes CU will also roll out Samsung Pay and Android Pay to its members.
A concerted effort to rebrand Mazuma CU in 2012, which included a culture shift toward millennials, has help increase millennial awareness. Among initiatives is "The Mazuma Blog", which Eblen said isn't the typical financial institution blog. Rather it directly focuses on issues happening in the Kansas City area that are relevant to those who live, work and bank there.
"The marketing photos used in the campaigns are not stock or purchased photos, instead local talent is hired and photographed across the city to reflect the membership," she said. "A new car promotion might show a young millennial family in the suburbs, while another might show a single millennial in the historic downtown area."
Mazuma CU's efforts have moved the millennial membership needle. For example, in 2012 15% of members were millennials. Today that number is 38%.
"We launched our e-branch in 2014, specifically designed to serve the e-member that will traditionally never step foot into the branch," said Eblen. "While online account opening and loan application have been on the market for years, Mazuma has enhanced the service with e-sign allowing members to close loans at times that are convenient for them even if that means 2 a.m. on a Saturday."
Understanding Demographical Differences
When it comes to understanding financial habits, understanding respective demographics is important, but equally important is understanding those individuals who make up the age group in question.
"There is a radical misconception in the marketplace that millennials are entitled and lazy with many living at home and relying on parental support," said Eblen. "The facts do not support this myth. In fact, only one in seven millennials are childless and living at home."
From Eblen's perspective, millennials are best defined as "rate shoppers." To this end, they want to see all possible options before making decisions. "Whenever possible, the credit union needs to put the member in charge of making every selection. Credit Unions that offer a 'build your own' style of account instead of the standard checking account will serve more millennials and keep them longer."
And while it is generally assumed that there is an ideological divide between millennials and baby boomers, Beltran noted that these subsets have a lot more in common than most people think.
"Millennials, who are generally keeping busy with school, family, and making memories, typically prefer using online and mobile banking. This is becoming more and more common for baby boomers who are reaching retirement and are focused on traveling and spending time with family," said Beltran. "Both demographics are focusing on enjoying life experiences and due to different life circumstances, both demographics are also focusing on minimizing debt and planning for the future."
