Bernadette Starzee, The Daily Record Newswire
A young credit union member is likely to borrow close to a million dollars in his lifetime, according to the Credit Union National Association. This, coupled with the millennial generation’s current direct-spending power of $200 billion — not to mention the $40 trillion this group stands to inherit — makes it vital that credit unions position themselves as the go-to financial institution for young people.
In a new white paper entitled “Retail Strategies to Attract Youth,” CUNA examines ways credit unions can engage the millennial generation, which is roughly defined as individuals born between 1981 and 2000.
Young adults are most likely to recommend a credit union based on ease, convenience, service and respect, and financial assistance with an emphasis on credit issues, said the CUNA report, citing a recent Filene Research Institute report.
“Millennials love ease of use,” said Lynne O’Leary, vice president of marketing for Hauppauge-based Teachers Federal Credit Union.
According to CUNA, credit unions should look at themselves from a user’s perspective — for instance, how easy is it to become a member, apply for a loan or move accounts from one financial institution to another?
Further, as the first generation to grow up with the Internet and other modern technologies, millennials expect current and reliable online and mobile services, including online account opening, mobile check deposits, external account transfers, pending transaction viewing and budgeting tools.
“Credit unions have to think big, but for many, their scale is small,” said Steve Langley, chairman of the executive committee of CUNA’s Operations, Sales and Services Council, noting the challenges of keeping up with changes in technology.
“CUNA has several programs in the cooker to develop technology cooperatively from an economy-of-scale point of view,” he said.
As the CUNA report stated, “Youth are certainly shopping around for those financial institutions with the most robust apps.” Based on that thinking, Bethpage Federal Credit Union, which offers online and mobile banking options for the iPhone and Android platforms, will roll out apps for tablets in 2014, said Jerry Schmitt, vice president of marketing.
Sought-after banking services among young adults include peer-to-peer payment solutions, which, among other uses, provide a tool for roommates to pay for shared expenses.
Card-centric accounts, rather than checking accounts, and prepaid cards are particularly popular among millennials. And though many in this age group don’t use checks themselves, services like mobile check deposit are useful “if they get a check from Grandma,” Schmitt said. “It’s a way for them to deal with people who are still more comfortable writing hard checks.”
Young adults also value alerts that tell them a bill is due or has been paid, while older millennials are seeking out personal financial management platforms, which help them create budgets and aggregate account balances from multiple financial institutions, the CUNA report said.
While technology is an important part of customer service, credit unions must also offer branches and call centers with staff trained to act in a consultative manner, rather than simply a transactional one.
“Millennials want to be educated in their banking relationship, not sold to,” said William O’Brien, president and CEO of Suffolk Federal Credit Union. “We need to provide them with the tools that will help them better manage both debt and assets. The Great Recession had a great and lasting impact on how they view the world in general, and finance in particular.”
NEFCU strengthens its relationships with millennials through CUShine.org, an interactive website it developed with the help of 30 Hofstra University students.
“We asked the students what was important to them and what financial questions they had,” said Valerie Garguilo, vice president of marketing and community relations for the credit union.
The site features 50 different blogs geared to 18-to-26-year-olds, with topics such as the merits of leasing versus buying a car, education financing and various lifestyle issues.
When its young members turn 21, Bethpage Federal introduces a full spectrum of adult accounts. Two products aimed at helping people with no credit history build a credit rating are particularly popular: One is a secured credit card, which requires the member to have the funds on deposit, and the other is a first-time auto loan, for which limits apply and the member must demonstrate a certain level of income, Schmitt said.
With millennials facing high unemployment rates and staggering student loan debt, credit unions must communicate that they provide value in the form of low or no fees and favorable interest rates.
In addition to value, a credit union’s values are particularly important to this generation. Consumers of all ages, but especially millennials, want to see that a business stands for something more than just profits, the CUNA report said. Credit unions’ status as nonprofit cooperatives serving their members, rather than shareholders, resonates with younger people, as does the support many credit unions provide to community organizations.
“This generation grew up doing community service in high school,” Garguilo said.
