Payment Preferences for the Ages
All generations have preferences, but they all want options and efficient delivery.
In general, the younger the member, the more willing he or she is to try new technology and want 24/7 account access. Older members are more patient and more likely to visit branches. But all members want options.
Moving in the right direction
Terry Brahm, president/CEO of $446 million asset DHCU Community Credit Union, Moline, Ill., is a little concerned about his credit union’s average member age of 53. “One thing that’s encouraging is that the average age of new members is 47, so we’re moving in the right direction,” he says.
The credit union performs member surveys through an outside firm every three years. The 2010 survey shows 17% of members are ages 18 to 34, 36% are 35 to 54, 20% are 55 to 64, and 26% are 65-plus. “Gen Y members want online banking, bill pay, and mobile banking services via smart phones,” Brahm says. “They do call our phone center a lot, but over 60% of their transactions are electronic: credit cards, debit cards, ATMs, or online banking.”
Generation X is next in wanting online banking and bill pay, and a smaller percentage is also looking for mobile banking. “It’s about half as important as for gen Y,” says Brahm.
Fewer boomers want online banking and bill-pay, he notes. “It’s still a strong number, though. The lowest demand is among traditionalists (age 65-plus); they want to come into a branch.”
DHCU Community offers an Easy Access checking account designed to attract more young members. “It includes free credit and debit cards and five free ATM withdrawals a month,” Brahm explains. “When they go off to college they can easily access their funds.
“We ask them to come into the credit union to open their accounts,” he adds. “We talk about what we have to offer them now, and the benefits of credit union membership long term, after they graduate. They want the convenience of 24/7 access, but we try to show them the value of a relationship, as well.”
The credit union is piloting a mobile banking product. “We see it as an opportunity to attract new, younger members, and possibly additional transaction penetration,” he says. “We’re finding you need all the delivery channels. Just because gen X and gen Y prefer electronic convenience doesn’t mean brick and mortar will go away.”
The power of tweeting
The average age of members at $123 million asset Right Choice Credit Union, Houston, has been dropping. During the last month, members ages 25 to 34 opened most of the credit union’s new accounts. Just under half of the credit union’s members are age 44 or younger.
“The bulk of our deposits are from members in the 45-to-65 age group, but loans are a bit better with younger members,” says David Bleazard, president/CEO. The credit union incorporates social media and was an early adopter of mobile banking. It has “apps” for smart phones and is rolling out an iPad app. Bleazard and other senior managers are active Twitter and Facebook users.
“Young people know they have our executives’ ears and they like it,” he says. “They’ll request things they think we should have via Facebook or Twitter. It’s an immediacy I haven’t experienced before.”
To reach young people, you have to be where they are, and that’s the electronic realm, he says. “With indirect lending, for instance, we call our (mostly young) borrowers and ask if they’d like to receive e-notices from us. Then we have their permission to talk with them electronically.”
With traditional marketing, less than 1% of indirect borrowers became members. With this new outreach, it’s more like 3% to 4%.
Young people don’t like to use cash, notes Bleazard. “They don’t have much money and they want tools to help them manage it, like reloadable cards, so they can spend only what’s on the cards. We’re researching how to implement those.”
While most young members use electronic delivery channels—home banking, bill pay, mobile banking—a small percentage prefer to transact in person. “But they’re not patient,” he says. “They won’t stand in line, and if they have to, they’ll tweet you about it. The more things you can automate, such as letting them set up their own certificates, the better.”
If you can’t deliver immediately to young people, you’ll lose them, he says. People in their 50s will generally wait a few seconds. For older members, coming into the branch is often a social visit.
‘Not Your Mama’s Account’
The average age of members at $638 million asset Vantage Credit Union, Bridgeton, Mo., is 41, and 46% of its membership is under age 40. “There’s no silver bullet answer, but I’d like to attribute our younger demographic to some of the programs we have in place for that age group,” says Hubert Hoosman, president/CEO. “People love to open accounts for their kids here because there are no fees.”
In June, the credit union launched the Young & Free St. Louis program, targeting consumers ages 18 to 25. Offered through Currency Marketing, the program has a young spokesperson who attends community events, and blogs, tweets, and posts videos online.
Vantage also developed a separate online banking system for young people called “Not Your Mama’s Account.”
“We held informal meetings with people in that age group and asked what they’d like to see,” says Eric Acree, executive vice president. “They wanted to save time and money, and we came up with a system that contains all the traditional things, but took it a lot further.”
When members log in to the system, they see their social media feeds: Facebook, Twitter, and soon foursquare. “The real power is we’ve partnered with local merchants that provide money-saving coupons to these members,” Acree says. “We mine their debit card (and eventually credit card) data and they see coupons for places they actually shop.”
It’s easy to assume Young & Free is only for younger people, Acree notes. “We knew it would resonate with that audience and we packaged our effort that way, but we’ll track the interest levels of people outside that audience and see if we want to adjust our products.” Some older members have indicated they’d like similar services.
Acree says all generations use all delivery channels. Senior members use traditional channels—branches, ATMs, phone, sometimes mail—for most of their business, but some use online banking and other electronic channels, too.
Overall, Vantage is seeing relatively flat volumes in teller, ATM, and phone teller transactions, but faster growth in e-channels (online and mobile banking).
“Gen Y is more comfortable with technology and trying new things in our e-channel, but those members also want traditional channels, even if they don’t use them as frequently as older generations do.”