BROOKFIELD, Wis.-Fiserv has uncovered what it believes to be some key behavioral patterns around Gen Y.
Daniel Steere, Fiserv's director of product management, mobile payments, refers to Gen Y'ers as "the high maintenance generation" because they are just as likely to use high-cost channels such as branches and call centers as they are low-cost channels such as mobile. Gen Y'ers have eschewed cash and checks and are quick to pull out the plastic-specifically debit cards.
"It could be because of creditworthiness," said Steere, noting that many in the younger Millennial segment may not yet have built up enough credit for a credit card. "Some of it could also be real-time financial management, and they want to know when they swipe the card that the money is actally gone, rather than having to make a payment 30 days later."
Steere hypothesizes that the debit preference may be a reaction to the financial crisis. "Maybe their parents got themselves into a lot of debt, and this younger generation now says 'I want to be better with my finances than my parents were, and I'm only going to spend what I have.'"
Fiserv's research has not yet delved into mortgage patterns-Steere said the company hopes to do so in future surveys-but he does not believe that Gen Y will forego homeownership.
"Eventually, this generation will want to have a family," said Steere. "Whether or not they get married before they start having kids, whether or not they cohabitate over long periods of time, who knows? But families of some interpretation are going to exist, and more than likely mortgages as a financial vehicle are going to exist. They're going to want to own homes."
Steere added that as the generation becomes more affluent, they are also likely to move further away from debit and embrace credit cards.
Career Expectations
Gen Y also has different expectations about careers-not surprising, given that the generation is expected to have as many as eight different "careers" during their lives. Steere noted a study from Employers Insurance that found that 46% of Gen Y consumers hope to start a business in the next five years-a finding that could be a huge opportunity for CUs looking to expand their business lending portfolio.
Additionally, Fiserv's data from 2012 shows that 41% of Gen Y consumers own a tablet, compared with 37% of Gen X and 23% of Baby Boomers, indicating that the tablet channel can be a big opportunity for CUs to reach out to Millennials and grow their lending via mobile channels.
But in order to do that, noted Steere, more FIs are going to need to figure out how to offer online account opening, including funding the account. Until that happens, he said, this cohort of CU members is "going to want to do their homework on a tablet, do their research, and then when they're comfortable moving forward, you'll most likely see them move into a branch-at least until we solve for pure online account opening."
