Gen Y consumers will earn 46% of the income in the United States by 2025, but they’re often misunderstood or ignored by banks and credit unions. And, if banks and credit unions want to survive, they need to change their approach to reaching this valuable demographic.
In a report published by Javelin Strategy & Research along with Comrade Agency, we learn that although Gen Y is thought of as one group, there are actually two distinct subgroups making up Gen Y:
Gen Y.1 – Made up of 31 million individuals 18–24 years old. They are financially inexperienced college kids, and many still have someone else managing their money. This group is financially uncommitted to any one service provider and are great targets for prepaid cards and basic checking accounts.
Gen Y.2 – Made up of 42 million individuals 25-34 years old. They are educated, employed, and manage their own money. This subgroup is highly engaged in financial services and are tech-savvy with an appetite for financial products. Generally experienced when it comes to banking, but still in need of help with financial planning, retirement planning, home loans and auto loans.
To reach both subgroups, you must first be certain that you are up to speed digitally speaking. Is your virtual branch (website) responsive, tech-savvy, user-friendly, and does it offer online account opening/loan application? If your answer is no, start here. Make plans to redesign your website today. The second step to acquiring and retaining Gen Y is to create a program (or partner with a vendor who provides one) designed to meet the specific needs of Gen Y.
According to Bryce Roth, co-founder and President of Chatter Yak, the NextGen Outreach program offered by their company provides the formula and tools to help reach younger consumers. Chatter Yak has proven their holistic approach capitalizes on the power of personal finance education, the cooperative movement, community outreach, and social media. “Unlike any generation before, young adults today want to have a voice and be a part of something larger than themselves. By their cooperative nature, credit unions and community banks are perfectly positioned to serve young adults while simultaneously allowing them to put the values and beliefs they hold dear into action.” says, Roth.
With Chatter Yak’s NextGen Outreach program, financial institutions get a fully customized financial literacy program, a custom website, training on how to get this program up and running along with how to create an advisory board of Gen Y members and how to choose their very own spokesperson. Verve, a Credit Union has increased membership among individuals under 35 years of age by 6% each of the last two years. Now, with their new Champion (spokesperson) in place, they hope to see an even bigger percentage this year. Verve ACU’s CMO, Karrie Drobnick explained, “As a financial cooperative focused on putting the cooperative principles into action and dedicated to preparing young adults for financially secure futures, the Next Gen program has allowed us to meet our strategic goals and fulfill responsibilities to the communities that we serve.”
If you’ve been looking for a way to acquire and retain Gen Y and want to secure the future of your financial institution, know that there are programs available to you that can easily make that happen. Stop talking about it in your board rooms and start doing….today.
Keep it Chatty!
Deb Schaffer, Director of Business Development