Have you hugged a millennial today?

February 13, 2015 at 9:23 am 2 comments

Not too long ago I was at a party chatting with people in their 40’s and 50’s when someone mentioned that, outside of work, they had no friends in their twenty’s.  My first alcohol lubricated thought was to suggest that they had to be more outgoing. Then they challenged me to name a friend in his or her twenties…Oh well they don’t know what they are missing. Now pass the scotch.

The conversation has stuck with me for several  months now because I consistently argue that  credit unions are playing chicken with a demographic time bomb when it comes to wooing the next generation of members.

But just how different are these millennials-those born between 1980 and 1994-when it comes to banking? Oh their different alright.  In fact, if your credit union isn’t adjusting to the fact that these emerging consumers are fundamentally changing the way the consumer banking game is played it is destined for obsolescence.

Does this mean that all you have to do is update your apps and people in their twenty’s and thirty’s will flock to become members? If only was that easy.  A second report   released by the New York Fed provides further evidence that younger people are finding it harder than ever to get started on an independent financial life.

First the FICO survey: 54% of the surveyed millennials say are either using or likely to use non-traditional banking platforms such as PayPal in the next 12 months. In addition, an amazing 23%  of millennials plan to use peer-to peer lending over the next 12 months compared to only 2% of those 50 and over According to FICO    “For all age groups, customer satisfaction with a primary bank has no significant impact on consideration, with an equal number of satisfied and dissatisfied consumers now using non-traditional payment companies.”

And how are banks doing communicating with their members? Not very well for any age group according to the survey, 46% of consumers across all age groups said their bank does not send marketing material relevant to their future marketing plans and   nearly 75% of consumers said they don’t receive too many offers from their bank. Finally apps are helpful but these smartphone savvy users still expect a good website, the web is your new Conner branch.

My main takeaway: Marketing may help with your older members but it won’t keep you from losing out on the next generation of members unless you are wired up and quick to react to emerging payment trends like Apple Pay.

Here is another one: The growth of peer-to-peer lending poses unique challenges for credit unions.   If these statistics are accurate  the 30-year-old looking to start a small business is as likely to turn to a peer-to-peer lending sight as he is to the credit union for a loan.  My advice? If you can’t beat them join them. We may have to work with regulators,  but credit unions should develop CUSO driven  websites with the look and feel of peer-to-peer lending sights and that use analytics to expand the number of unsecured loans credit unions are willing to make.

These statistics also underscore for me that people  don’t dislike email, its irrelevant email that drives them nuts. (A dangerous admission for a guy who emails a blog every morning)  People expect you to be able to anticipate what it is they want and deliver solutions right to their smartphones. Everyone is going to have to use analytics.

Now for the caveat to my otherwise enthusiastic embrace of millennials.  In a recent report the New York Fed pointed out that “Young Americans’ living arrangements have changed strikingly over the past fifteen years.”  They aren’t entering the housing market at anywhere near the rates of their predecessors and are “lingering longer in their parents’ households.” It concludes that we are seeing more at work here than the impact of an economic downturn. Instead, “while local economic growth, reflected in rising youth employment and escalating house prices, has mixed consequences for youth independence, the increasing magnitude of student debt among college graduates appears to be driving young people home and keeping them there.”

It may take your credit union longer than you expect for it to see the full return on its millennial investment.

Here are links to the information used in today’s blog.   See you on Tuesday.





Entry filed under: General, technology. Tags: .

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2 Comments Add your own

  • 1. chenayay  |  February 17, 2015 at 6:51 am

    As a millennial who recognizes the increased need to save for retirement due to a decreasing chance of social security being around, the only thing I take into consideration when choosing banks is low fees and high interest. I generally don’t use a local bank branch and prefer to do things online. I agree with you that companies, even outside of the banking industry, who are neglecting the millennial mindset will have a very difficult time in the future. Great post!

  • 2. Henry Meier  |  February 17, 2015 at 2:38 pm

    Thanks for the comment


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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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