In our early October 2018 newsletter, we shared with readers that nearly 75% of millennials (also known as Generation Y) are unaware that credit unions are not-for-profit, member-owned financial institutions. According to the US Census Bureau, there are more than 83.1 million millennials in the US – who are comprised of those born between the years of 1982 and 2000. Armed with this information and a handy calculator, we can determine that there are roughly 63 million young adults in the United States who don’t understand what a credit union is – meaning they don’t understand the benefits and upsides of conducting their financial business with one.
Understanding the “Why?” Behind the “Who?”
Before credit unions can connect with the millennial demographic, time and consideration must be placed on the expectations – and behaviors – of this particular generation. Gallup released an analytical report specifically geared towards the relationship between millennials and banks. There are a few facts that stand out in the report.
- Millennials in the US have the lowest percentage of customer engagement with their primary retail banking institution – roughly only 30%.
- Gen Y consumers are the least likely demographic to physically visit a branch, mot the most likely to utilize online and mobile banking.
- Millennials are the most likely to experience a problem or have a bad experience, but the least likely to actually report the issue.
- In fact, millennials are the most likely demographic to switch banking institutions, at a rate of 8.4%, compared to second-place baby boomers at 3.6%.
Getting Ahead of the Game
There are some credit unions, however, that have recognized the opportunity to connect with this particular generation, and they have done their homework on what turns a millennial prospect into a loyal and long-term credit union member.
There are three major components that these forward-thinking credit unions all took time to understand, in order to be able to attract the attention of millennial consumers and lure them away from the big banks. Instead of painting with a broad stroke, some credit unions focused on what was most important to the millennial generation.
Trust and Relationship Building
The results from the Millennial Disruption Study (MDI) revealed that 71% of millennials would “rather go to the dentist than listen to what their banks are saying”. It’s estimated that 92% of this generation have no trust in banks or financial institutions, and that the financial well-being of customers is not a priority to banking institutions.
While millennials are the first true digital generation, they feel the need to work with businesses who share the same values that they do. The challenge here is creating a meaningful and honest dialogue with a customer base that prefers mobile interaction and accessibility.
The millennial generation isn’t overly concerned with “things”. Rather, this particular generation is focused on experiences; concerts, sporting events, getaways, or two weeks traveling by train instead of buying a car. In a nutshell, millennials are interested in making memories and not acquiring “things”. Touting the benefits – and dividends – offered by niche-specific savings accounts, such as vacation clubs.
Using incentives that will help millennial members participate in experiences, as opposed to tangible gifts and giveaways, can show potential members that your credit union understands the needs and wants of this particular generation, and are working to offer services and products that cater to their specific needs.
Transparency and Genuine Concern
Millennial consumers are inherently suspicious of the motives and “fine print” associated with larger corporations and financial institutions. 53% don’t feel that their bank offers anything different or better than any other bank. Credit Unions need to change this misconception through open, honest communication and a genuine concern for the well-being and personal data protection and safety of the membership.
Offering and marketing your member-facing applications and services is paramount in attracting and retaining a millennial membership. IMS is proud to specialize in providing these solutions to credit unions, and include the following customized and scalable solutions for credit unions nationwide:
Not only does digital communication reinforce a commitment to the environment, it saves money in costs associated with paper, printing and postage.
IMS can assist your credit union in creating easily accessible online applications that offer immediate answers for members.
Allow users the ability to instantly and easily open an account online, continuing the simple process into online account management, loan applications, and more; seamlessly, across all devices.
Maximizing the Millennial Market Potential
While credit unions are working daily to attract, retain, and build relationships with millennial members, there are some basic features being seen across that board that are of particular interest to the millennial generation, including:
- free classes and workshops designed to target millennial homebuyers, entrepreneurs, and young adults interesting in building or repairing credit;
- reliable and intuitive tech options for members, including online banking, remote deposits, and paperless statements; and
- eliminating fees, or providing a set number of instances per year when fees won’t be charged.
Let your potential members know that by joining, they are part of the ownership. Decisions made by credit unions are in the best interests of the owners, and the owners are the members. Eliminate fine print, and be open and forthcoming. In turn, you will build trust that can turn into long-term loyalty.
The Bottom Line
Offering products, services, and relationships that are important to the millennial generation will create a strong and loyal membership. Find out what those products, services, and relationships need to consist of, and your millennial membership will thrive! Contact IMS today to discuss the customized solutions that we offer to credit unions, and the ways in which we can help your institution!
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