Banks and credit unions are sometimes a bit hesitant to implement initiatives aimed at attracting younger account holders. In particular, many resist efforts to reach out to Gen Y… that segment of the population born between 1977 and 2000.
If you are dragging your feet about prospecting to this demographic segment, you may want to reconsider for a couple of very basic reasons.
First, consider income.
Sure … Gen Y does not have a whole lot of money behind them. Many banks and credit unions struggle with the concept of spending precious marketing dollars to attract a population that for the next several years likely will have little if any reason to have anything more than a checking account with their financial provider. Certainly, there is a lot of credence to that concern. As the U.S. economy continues its slow recovery, Gen Y is among the population’s segment most impacted by higher than normal unemployment levels.
However, things are going to change and change quickly. By 2015, Gen Y’s income will surpass that of Baby Boomers. By 2020, Gen Y will see its overall income exceed Gen X1. No matter how you look at, that’s a car loan away. It is definitely not too soon to start those acquisition efforts.
Second, look at the channels through which Gen Y will access their accounts. A recent study found that transaction costs diminish dramatically as account holders gravitate toward digital channels. Check out these numbers from a Javelin Strategy and Research study:
|In person at branch||$4.25|
|Call into contact center||$1.29|
To no one’s surprise, Gen Y is by far the fastest adopter of mobile banking. As the demographic segment establishes relationships with your bank or credit union, opportunities abound for you to encourage a channel behavior that Gen Y prefers and you desire. While Gen Y may come into a branch office to open its first account, after that, you will be hard pressed ever to see them again. They will access their accounts on the go and consider a trip to the branch nothing but a nuisance.
On top of all this comes the advantage of dealing with a segment of the population that is reaching those life stages when the need for financial products and services is pronounced. The demand for credit and the need for savings assistance is just around the corner from a group that numbers better than 70 million strong, rivaling the Baby Boomer generation in pure numbers and dwarfing Gen X.
As you consider acquisition campaigns for 2014 and beyond, make sure your marketing dollars are focused on Gen Y. While you may not reap the benefits today, in a short period of time your investment will reap dividends in more ways than one.
1. Source: Javelin Strategy and Research – How To Engage And Service The New Mobile Generation – 2011