Poor job prospects, excessive debt, and the failure (or inability) to save and invest have, in the eyes of some observers, put the American dream beyond the reach of millennials.
On the other hand, this largest generational segment in American history will benefit from one of the largest wealth transfers in history over the coming years.
The impact of millennials on the U.S. economy and the credit union industry is only beginning to be felt.
The most recent Raddon Research Insights survey explored the new face of the American dream, examining the attitudes and behaviors of millennials in relation to financial services.
The survey also compared millennial behavior and attitudes with those of older generations.
Technology and changing consumer expectations are driving forces behind the evolving American dream. Younger consumers have many of the same personal and financial goals as their precursors, but they value different experiences, and many don’t know how to make those goals a reality.
Millennials place more importance on convenience, including access to branches, ATMs, and online and mobile banking, than older generations do.
In addition, 51% of millennials Raddon surveyed say they are “extremely” or “very likely” to use a newer financial institution where they can receive the services they demand. You could make the argument that technology is the underlying force triggering younger consumers’ loyalty vulnerabilities.
There is also a distinct appreciation for financial literacy and education among millennials, as 37% say they would value a one-on-one credit counseling session, and more than half find email alerts on credit score changes and simulator tools to manage credit profiles extremely or very valuable.
How CUs can help
Based on the insight provided by millennials, Raddon believes financial services providers, especially credit unions, can serve younger consumers’ evolving needs in a variety of strategic and tactical ways:
• Give them the “branch of the future.” Brick-and-mortar branches are evolving from transactional centers to sales and service centers.
Transition your branches to focus on advisory and financial planning services, financial literacy programs, and other initiatives that deliver enhanced value to the lives of younger members.
• Get serious about money and debt management. Young Americans have traditionally struggled with effectively managing their money and debt loads.
This creates an opportunity for credit unions to help them while generating long-term loyalty through important services like free credit counseling and money management seminars.
• Offer special savings programs for younger members. Many credit unions have higher-interest savings accounts for members under age 18, but don’t forget about young adults too.
Offer these members savings programs that combine attractive interest rates with financial literacy advice and assistance in determining and achieving long-term personal financial goals.
• Help them with savings and investment planning. Raddon research shows that 48% of millennials are uncomfortable with their level of savings, and 49% do not have a financial plan.
Coupled with this generation’s heightened awareness of the need to build personal assets, credit unions have an opportunity to fill a service gap by providing investment and retirement services that are targeted to younger members.
• Feature millennials in marketing campaigns for digital and mobile services. Tapping into the increasing role of technology is vital. Market digital and mobile services using language and imagery that resonate with younger members.
It’s also important to highlight the convenience of an on-demand digital and mobile banking experience that is available 24/7.
• Adopt a multi-channel approach for member service excellence. Whether they visit a branch, go to your website, open a mobile banking app, or use a call center, millennials expect a highly personalized and seamless experience across all channels.
This comes on the heels of predictive algorithms from Amazon, Facebook, and Google which are, in fact, setting the new normal for service excellence.
The American dream will live on
The American dream is being redefined, shaped by the ongoing expectations of millennials and future generations. Many will rely primarily upon digital and mobile engagement, but a healthy portion will also find value in traditional channels, such as the branch.
Credit unions need a robust and holistic approach to member relationships to connect with millennials. The on-demand economy is just getting started, and credit unions need to offer a strong menu of high-quality services that cater to the broader needs of younger members.
They need help with saving, planning for the future, purchasing homes, investing wisely—and let’s not forget lending.
Looking forward to the future, Raddon believes the definition of the American dream will continue to evolve, and this will create a plethora of new opportunities for credit unions to engage members.
BILL HANDEL is vice president of research for Raddon Financial Group.