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Before you even read this article, take a few minutes and search online for “Millennials” and “credit unions.” Then come back. I’ll wait.
OK, you done?
You found a treasure trove, didn’t you? Articles and blog posts like “Seven Reasons Millennials are Turning to Credit Unions,” or “How Credit Unions are Winning Over Millennials.” Maybe you found the Millennial initiative by the Word Council of Credit Unions called weCU2.org. Or the Millennial-targeting effort from a consortium of CUs and PSCU called make yourmoneymatter.org (more on this later).
The point is this: Millennials are your future and you better get on the bandwagon.
Let’s help you start by reviewing a few of the staggering figures that demonstrate the importance of this large and emerging generation. Then we’ll help you understand how Millennials are similar to and different from prior generations. We’ll wrap up with some thoughts on how to effectively market to Millennials and win their business.
When we’re done, you’ll not only be on the bandwagon, you’ll be ready to lead.
The Millennials are Coming!
About half of the Millennial generation has already come of age, with over 40 million of them older than 21. The rest are arriving in adulthood at the rate of over 10,000 a day for the next 10 years. Before we know it, there will be over 82 million of them—one of every four Americans.
By 2025 they will dominate society, culture and the workplace. Along the way, they will transform the banking and financial services industry. How do we know? They said so. Last year in a national study, Millennials said the next industry due for a significant transformation is banking.
A third of young adults also said they are ready to switch banks in the next 90 days; 53 percent said all banks are the same. Even better, they said visiting a branch is like getting a root canal: 71 percent of Millennials would rather go to the dentist than listen to a bank’s message.
Further, 68 percent said that in five years, the way they access their money will be totally different. And one in three don’t think they’ll even need a bank then. Welcome to the future. Buckle up.
The good news: Millennials are coming into their own, and they don’t like banks.
Even better, those who already use CUs really like them. Eight in 10 Millennial CU members said that their institution provides an “outstanding customer experience” compared to 59 percent of bank customers, according to a 2014 study commissioned by CO-OP Financial Services (a CUES Supplier member based in Rancho Cucamonga, Calif.)
Now the bad news: CUs have dropped the ball with Millennials, at least so far. According to CUNA Market Research, there are now 100 million CU members nationwide. Only 4 million are ages 18-24. But 18- to 24-year-olds comprise 17 percent of the U.S. population. Shouldn’t credit unions have 17 million members that age, then?
The problem is three-fold: 1) Millennials don’t know about CUs; 2) they don’t understand CUs’ social value, community focus and non-profit structure; and 3) it’s easy to use the same bank account their parents set up for them earlier in life.
These are fixable problems, provided you understand this generation.
Generational Dynamics
For over a dozen years, we have been studying generational dynamics in the workplace and marketplace in America. We have conducted our own national studies and invested over 20,000 hours analyzing everything we can get our hands on to understand what really matters between generations.
To begin, you need to understand that generational cohort effects are sociological, not psychological. Knowing someone is a member of one generation or another only enables us to understand external factors that influenced and shaped their worldview. It doesn’t reveal who they are as a person. That means the most effective way to use generational distinctions is by applying them to better understand how each behaves and the dynamics between and across generations.
The Millennial generation, those born from 1983 through 2001, began coming of age during the late 1990s. They have been shaped and influenced by things like: growth of the Internet and explosion of social media; school violence; over-involved parents; multi-culturalism and diversity; the 9/11 attacks and Gulf War(s); the “Fame-ification” of America, aka an overdose of self-esteem; the Great Recession; environmental responsibility; and fast-evolving technology and digital tools.
Those events and shifts have shaped this generation’s worldview. Three aspects of Millennials’ upbringing and the timing of their passage into adulthood are the keys to understanding the opportunity they present to CUs.
First, the financial services meltdown—especially national banks—before, during and after the Great Recession has forever jaded how Millennials view big banks. From bailouts to the Troubled Asset Relief Program to the Dodd-Frank consumer protection legislation to stress tests and now ongoing billion dollar fines for past misdeeds, it’s likely Millennials will never be fans of big banks. Banks cannot be trusted (but Apple Pay and PayPal can).
Second, Millennials have a generational desire to “make a difference,” especially in their communities. This came about in part because many high schools required community service hours to graduate. As a result, Millennials developed a keen sense of civic duty. Compared to prior generations at the same age, more Millennials volunteer and put in more hours, studies show. They care about where they live and want to make it better for all.
That mindset is behind the “Make Your Money Matter” initiative by a consortium of CUs and PSCU, a CUES Supplier member based in St. Petersburg, Fla. Through a modern and engaging website, they explain to Millennials that the money deposited in their local CU stays in their community and makes a difference in someone’s life or business.
Related to that mindset is the third key Millennial characteristic that benefits CUs: their orientation toward what we call the “collective self.” While many articles these days describe this generation as “entitled” or “narcissistic,” those are not accurate descriptions of the overarching mindset of most Millennials. Instead, those are traits often found in people around age 25, no matter the generation (remember, we called Gen Xers “slackers” and Boomers “hippies” when each were 25).
The more permanent characteristic we see in our research among Millennials is a belief in the collective over the individual. It isn’t about “me,” but “we.” Millennials think the wisdom of many is better than the thoughts of a few.
That’s why they trust anonymous posts and ratings on Yelp when deciding on which restaurant to choose. Or which book to buy on Amazon. And why they constantly ask their friends via Facebook, Instagram, Twitter or Snapchat to weigh in on a decision. This crowd-sourcing approach to decision-making has become their model because, well, they have the tools—literally in their hands by way of smartphones—that allow them to tap into the collective knowledge of the whole world, any time of day or night.
These three generational traits—banks are not trustworthy, Millennials want to make a difference in their community, and the collective self dominates—are why so many folks have woken up to the Millennial opportunity for credit unions. Now let’s focus on how to pursue them.
Connecting With Millennials
As we said, the problems CUs have with Millennials are simple. They don’t know you. They don’t know what you do, how you do it, or why you do it. They have no idea you are non-profit, member-owned, or local. Plus, it is easier to do nothing than to change from the banking relationship mom or dad established.
On the local front, ironically, CUs have some work to do. Despite most still having a local charter and ownership, the trend embraced by many CUs over the last two decades was to drop their location- or affiliation-specific name for something broader to attract more members. New names serve that purpose, but may make it more difficult to communicate the local, community nature of the CU to Millennials.
So job one is for your CU to get its story out in your community in a way that Millennials will see and understand (yes, that means using digital and mobile platforms) that you are the one-and-only truly local financial services resource. Your CU will need to be clear and consistent in its messaging to reinforce its important differences. You have the same services as a big bank, offer better products and rates, and you fully support the local community.
You don’t have to go off and hire an expensive ad agency or copywriter to tell your story. For inspiration, tap into the smart messaging on the makeyourmoney matter.org site, or read about the “Credit Union on Purpose” an imaginary concept from an enlightened industry observer.
Winning Millennials also means you have to be fully evolved from the old way of providing services: talking about your branches, ATMs, credit cards, free checking, and loans. Millennials require you to offer online banking, self-service, mobile, telebanking, and payment options like Apple Pay. These are now just the table stakes that get you their consideration.
Then you have to share the rest of the key differences in a meaningful—and authentic—way.
The Millennial opportunity is just beginning for credit unions. If you haven’t started, you haven’t lost out yet. But now is the time to get going.
Matt Thornhill is founder and president of the renowned think tank, GenerationsMatter, Richmond, Va. Past clients include the Florida Credit Union League, Virginia Credit Union, Wells Fargo, Lincoln Financial, Fidelity, Google and Walmart.
