Why Gen Y? A slightly scary introduction for credit unions

I am speaking a number of times this year on the need for credit unions to attract new Generation Y members. I will be presenting it in Florida and Las Vegas in the next few weeks.

Sure, we have a number of programs that we are licensing, but my primary goal with these presentations is to raise awareness of the issues, talk about solutions and inspire credit unions to take action, regardless of whether it is with our assistance.

Clicking through a slide presentation doesn't really give you the full story. And even when presenting, I can only deliver a sentence or two with each slide, so what I thought I would do is discuss some of my thinking around a few of the key slides in longer-form blog posts. The bold text is what I say in my talks. The text following is what I would say if I had a lot more time!

Here is the all-too-real issue: there is a huge 12-year age gap in the world of credit unions.

I've heard this issue being talked about quite a bit over the past two years, but I have not seen much action. Especially this year, as the industry is paralyzed with the state of the economy and the corporate credit union nightmare.

There are a few good industry resources that have popped up including PSCU's Project New Age, Callahan's CYouth, CUNA's YES CU Community. and Filene's CU Tomorrow. Outside of our three live Young & Free programs, there are a few full-on Gen Y initiatives including Tinker FCU's Buck The Norm, Addison Avenue's The Addison Cafe, UTFCU Rocks and Shell FCU's iLife. There are also a few youth-centered blogs that are quite well done.

However, there are more than 9,000 natural-person credit unions in North America. How is it that I can only count up a dozen or so credit unions that are actually reaching out to Generation Y? Credit unions need to start chipping away at this huge gap now—it will not narrow with inaction, it will only widen.

Gen Y is 15 to 29 in 2009. They are socially conscious, they distrust companies and media and they could care less about credit unions!

These are sweeping generalizations and I know that everyone is an individual, but there are a number of common traits that connect members of Gen Y. They are confident and they believe they will change the course of history. They are tech savvy and authenticity and autonomy are extremely important. They are entering middle and high school and finishing college and university. They are planning five years ahead and looking forward to long-term relationships.

Members of Gen Y have a practical world view and are very goal oriented. They respect their parents and education. They are not health obsessive since they have their whole lives ahead of them. They are extremely social. Shopping is an event, not a chore. They have been raised in an instant-message-email-social-networked global community. They are open to spirituality but indifferent to Christianity.

Quality is cool and they spend to have fun. They heavily influence family purchases and they respond to truthful advertising. They are extremely aware of image and celebrity hype.

The cooperative, not-for-profit structure of credit unions should align perfectly with Gen Y's values and concerns, the problem is that members of Gen Y are unaware of what credit unions are all about and what they have to offer. If credit unions can connect and tell their story and compel members of Gen Y to join before the age of 25, these members are far more likely to stay than members who join later in life.

Just look at this graph. Only 4% of U.S. credit union members are between the age of 18 and 24 while the 18 to 24 crowd represents 17% of the total population.

This chart is based on information that I found from CUNA Market Research. It should scare the hell out of you! Generation Y as a whole is 34% of the population and will surpass the Baby Boomers very soon. To put it bluntly, if nothing is done about this downward trend, credit unions will cease to be relevant in the next 20 years.

I have also seen numbers from creditunions.com that peg the current percentage of 18- to 24-year-old members at about 6%. This is slightly rosier, but if this number does not move north soon, we might as well turn out the lights and call it a day!

I have heard the argument all too often, "Why would we target young people, they don't have any money?"

Oh, but they will! Seniors and Boomers will die and in the next 10 years Gen X and Gen Y will inherit over $40 trillion dollars. This will be the largest transfer of wealth in history and money will be transferring from credit unions to banks by the truckload.

This is really just simple math. If the bulk of credit union members are Seniors and Boomers and there are very few Gen Y members, this willed money will automatically be transferred to banks because that is where young people have their accounts.

I'll stop at four slides! Hopefully, I've fired you up and you will begin to think more seriously about Gen Y and the impact that this generational cohort is about to have on the credit union movement. On the bright side, I believe the future does not need to be this bleak. In my next post on the subject, I will offer some ideas on how and where to connect.

Tim