'Y' CUs Need To Gear Up To Work With Millennials
MADISON, Wis.-Credit unions need to ask themselves "Y."
In this case, Generation Y, the nation's second-largest generation ever and one with tremendous lending potential according to Shelly Vils, senior manager-credit union training with CUNA Mutual.
"Credit unions face incredible marketplace uncertainties, but one thing is certain; members will grow older," Vils said during CUNA Mutual's online Discovery conference.
As tens of millions of aging Baby Boomers move toward retirement, CUs will see a significant decrease in their loan portfolio. The good news is Gen Y, a close second to boomers in numbers-roughly 76 million in Gen Y to 77 million boomers-is on the verge of their prime borrowing years, Vils said.
"Credit unions have done a good job of building trust and loyalty with boomers and Gen Xers, but not with Gen Y," said Vils. "The Gen Y opportunity is imminent and vital. The average credit union stands to lose millions of dollars in loans over the next decade if it does not increase penetration among young adult consumers."
Also called Millennials, Gen Y are those born 1982-2000. They made up 25% of the workforce in 2008 which will increase to 47% by 2015. Their annual spending is expected to be $2.45 trillion by 2015. The income of Gen Y is poised to outpace boomers' by about $500 billion in approximately eight years.
Gen Y is the most diverse and best educated generation in history. They are often saddled with heavy credit card and college debt and 56% plan to live with their parents after college. They rely on the advice of family and friends, Vils said, so relationships with parents play a key role in their financial decision making. This should stand CUs in good stead, as they have strong relationships with their boomer and Gen X parents. "Marketing the same products to Mom and Dad is effective because the Gen Y consumer listens to their parents about finances."
Other Gen Y traits of interest to CUs:
• They will change jobs approximately every five years, so CUs may need to rethink loan policies related to job stability.
• They are loyal. If you can attract them, they are twice as likely as boomers to purchase additional products.
• They are extremely tech savvy and constantly plugged in. Traditional marketing channels aren't very effective with Gen Y. They don't watch commercials, read newspapers or listen to the radio, nor do they want to come into the branch office as often as older consumers. Use Facebook, Twitter and virtual, online seminars to reach this demographic.