The must-have products and services your credit union needs to attract and retain younger members.
Gen Y, Millennials, Net Generation, Echo Boomers, Generation Next—no matter what label you give them, the fact is credit unions are failing to attract the next generation of members.
There is a decade-plus age gap in the credit union industry. While the average age of a North American is 37 years old, the average age of a credit union member is almost 50. Credit unions are not replacing maturing depositors with young borrowers fast enough. In previous articles, I’ve given you tips on how to speak to Gen Y and how your credit union can act and appear more youthful, but it’s your products and services that have the greatest potential to attract and retain young adult credit union members. Brett King, author of the best-selling book on the future of banking, BANK 2.0, advises credit union leaders to think about member needs in terms of life stages: “The top three journeys that credit unions should look at are account opening, fixed or term deposits and credit cards.”
The Starting Gate
Your credit union needs to first concentrate on creating a compelling day-to-day checking account bundle that is easy to open and easy to access. Once you have young members conducting their day-to-day banking with your credit union, you will have the best chance to sell deposit, loan and credit card products to these new young members as they move through key life stages.
Start by finding out what all your competitors are offering young people, and then develop the best possible bundle of products and services in your marketplace.
Next remove all possible barriers to entry. Members of Gen Y are used to the instant gratification of social networking and online shopping—unless your offerings are truly fantastic, coming in to open an account at a branch may be a chore they are unwilling to do. For this reason, I would highly recommend concentrating on the online account opening process.
Work with your online banking provider or a dedicated third-party vendor to integrate fully online account opening into your website. Vendors to consider are Andera, Cash Edge and Opening Act Express among others.
You should also ensure your branch staff are fully trained and equipped to open accounts on the spot in your branches. Expecting members of Gen Y to book an appointment is a mistake that will cost you new members.
Free Checking at a Minimum
Free checking is now more important than ever. With the big banks re-instituting fees, credit unions have a great opportunity to stand out if they can continue to offer free checking and other free services.
Eric Acree, executive vice president of $630 million/110,000-member Vantage Credit Union, St. Louis, offers this advice: “Before launching our Young & Free St. Louis program, we interviewed numerous young adult members and learned what they wanted at their credit union. “We designed our ‘Not Your Mama’s Account’ around their requests. Our members enjoy having a microsite and an account bundle designed exclusively for them.”
Acree and the Vantage CU team didn’t stop there: “Our young adult members tell us that they really like the customized online banking system we created which integrates social media feeds and provides other unique features that are not available on our other, more traditional, online banking service for the rest of the membership. They also like the ‘Oops’ NSF fee rebates and our Swipe2Save feature on our debit card.”
The Swipe2Save feature allows members to choose to save automatically per debit transaction. They specify what amount they’d like to save per transaction, and that amount is automatically transferred to a savings account from checking every time a debit transaction clears the account. Members can set a maximum and minimum dollar-amount threshold to save per month.
Alex Oliver, the 21-year-old Young & Free Tennessee Spokesperson for $1.2 billion/161,000-member ORNL Federal Credit Union, Oak Ridge, Tenn., warns: “If it ain’t free, we don’t want it!” He continues: “Along with tons of free features, Gen Y really appreciates antifee services like ATM fee forgiveness and overdraft refunds. I find it amazing that the credit union that I work for is willing to refund money into my account from a bank who tries to charge me $3 just to use its ATM.”
The key to making free work is having a sales culture that encourages your frontline staff and your marketing team to constantly look for opportunities to sell loans, credit cards and deposit products to these very satisfied young members. And since your young adult members are far less likely to be regular branch visitors, it is important to develop other ways to keep in contact, including e-mail, targeted communications and marketing messages, and online personal financial management tools.
Bryan Clagett, chief marketing officer for Geezeo, Tolland, Ct., an online PFM provider to banks and credit unions, has this sage advice: “Credit unions need to find ways to empower Gen Y and build long-term trust. Online banking, PFM and community site tools are well suited to this market segment. It’s time we do less ‘marketing’ to Gen Y and, instead, find ways to engage them in a relative manner.”
“As much as I wish we could all be responsible enough to not need it, overdraft protection is huge,” says Rob Cartwright, Vantage CU’s 25-year-old Young & Free St. Louis spokesperson. “In the past few months, I
have been active in many ‘banking days’ at local colleges. Nearly every student that approaches me asks about overdraft protection.”
Mobility is King
In addition to a compelling free day-to-day checking account and overdraft protection, mobile accessibility has become more and more critical to young people.
Josh Garrett, the 22-year-old Young & Free Texas spokesperson for $1.5 billion/132,000-member TDECU, Lake Jackson, Texas, says: “I want to be able to do everything on my phone that I can do on my computer. If I can avoid having to drive anywhere, I can save valuable time and effort. Being a college student, I am either really busy or really lazy—and it’s nice to be able to work around both! “My credit union must have a mobile app or program to access accounts on the go. A nice graphical user interface is essential. Most credit union Web sites are extremely chaotic on a small screen,” he says.
“One of the biggest upcoming ‘musthave’ features for credit unions has got to be fully functional, well-designed mobile platforms,” agrees Oliver. “Heck, I can talk, tweet, text and e-mail all while editing a video on my iPhone—why can’t I easily check and transfer money in my account?”
“Remember that making your credit union invaluable is not simply about advertising your products and services to young adults; it’s about creating compelling journeys,” says King. “Usability, user interface design, and ease-of-use in the application phase are really, super critical here.”
Accessibility is Important
Local is great, but don’t lose sight of the bigger picture.
While young adults cite high fees and impersonal service from giants like Chase and Bank of America as things they despise, they will put up with the discomfort because of the perceived accessibly and ubiquity of these financial institutions from coast to coast. Garrett cautions: “I know that credit unions cling to the fact that they are so closely tied to the community, but Gen Y is a generation of big dreams, and being chained down to anything scares us.
“Credit unions should emphasize how they can help young adults pursue those dreams and goals, both locally and through other credit unions around the country. If we think your credit union is too small for our big plans, we won’t consider you.”
As your credit union becomes more and more high tech, make sure you don’t forget about the human side of personal finance.
“I know it’s a cliché, but it’s hard to find good help these days,” says Garrett. “We all have to work, we all have bad days, but when it all comes down to it, I just want someone to treat me like another human. Talk to me. Respond to me. Don’t let your bad day ruin my good one—it’s this mentality that attracted me to my credit union.”
Acree adds, “In addition to our selfserve access, how-to knowledge and personalized advice and recommendations about how to save money are always popular with our young adult members. They also like anything free. Furthermore, while they appreciate discounts on fees or services, they are looking for local deals that are exclusive just for them.”
“Personally, I would like to see (or hear) phone centers return to a non-automated system,” says Cartwright. “It’s fine to have an initial ‘push one for this, or push two for that,’ but when it takes me five minutes to ask a simple question to someone directly, we’ve lost sight of a relationship with a member.”
Keep an Eye to the Future
Your credit union must keep up. It will become even more critical in the future to stay current with technology to remain relevant to young people.
The banks are charging ahead and there are new competitors entering the traditional banking and payment space. Tech heavyweights like Apple, with its iPhone, and Google, with its Android phones, both have their sights set on the payment industry, not to mention PayPal and other non-traditional players. It is a critical time for credit unions to attract and cement their relationships with young adults.
“I believe the more relevance, convenience and value that we can provide on mobile devices such as smart phones and tablets, the more young adult members we will attract, grow and retain,” says Acree. “These members are asking for more mobile services, so going forward, we will put more energy and resources into developing innovative mobile solutions that resonate with this audience,” he adds.
Bill Clancy, director of retail strategy with $2 billion/170,000-member Lake Michigan Credit Union, Grand Rapids, Mich., sees the future this way: “I see a mash-up of geo-location and merchant debit rewards being a home run for Gen Y—think Cardlytics based off your mobile phone’s GPS. Imagine driving within five miles of a merchant, then receiving a text-message offer based on your personal spending habits.
“You then activate that offer by swiping your debit card at the merchant and instantly get 10 percent off or credited back to your checking account as a cash reward. No coupon needed!”
Now You Are Ready to Market
While I can only speculate on what’s coming next, it’s clear that credit unions need to get with the times and update their products and services to appeal to the younger generation.
Once you’ve done that, it’s time to let Generation Y know that you exist and that you are open for their business.
Tim McAlpine lives in Chilliwack, British Columbia, Canada. He is the President and Creative Director of Currency Marketing, an integrated marketing agency specializing in helping credit unions attract the next generation of members. Tim is best known as the creator of Young & Free and CUES Next Top Credit Union Exec, and co-creator of the CU Water Cooler.