4 minutes
The exceptionally large millennial group coming of age marks a key moment, as companies scramble to serve them—and get their business. In this environment, credit unions are truly poised to thrive. Here are four key things to consider.
Millennials seek counsel. Even more than previous generations, millennial consumers ask for advice when considering options, especially major decisions like getting a car or buying a home. Generally, they approach their parents first, then managers at work or friends, and even strangers. Comparative websites such as Yelp! and reviews on Google have empowered consumers more than ever. You need to know what’s out there about your CU.
In addition, CUs need to gain credibility as advocates for millennials. This is accomplished by how you communicate (and don’t communicate), how you build and present your products, and how you perform. Each millennial you serve is a resource for the next one, so keep your promises!
Review your lending program. Even though millennials don’t eagerly take on debt, they understand it’s sometimes the only way for them to progress in life. They are younger by definition, so many of them have limited or poor credit histories, and they have incomes lower than you’re used to seeing. The average deposit and loan balance of millennial members is only 60 percent of the average member, based on my experience working with credit unions, and as a credit union CEO.
The average initial car loan balance at a typical credit union might be about $18,000, but for millennial members only $12,000. The average deposit balance for credit union members (industry-wide) is about $8,000, but for millennials, it’s around $4,000. Most likely, this is not because of some generational preference, but a result of the economics. Millennials are young, and don’t make as much money. Do your own research into the practices of your millennial members; I expect you’ll find very similar results.
It’s important to remember that credit unions were originally formed to provide access to low-cost financial products and services to those who weren’t being served by traditional banks. These are the consumers who need your help the most. Review your underwriting guidelines to ensure you aren’t unnecessarily excluding them by virtue of your stipulations and requirements.
Rather than saying no, can you raise the interest rate to mitigate the risk? Even our highest loan rates are considerably lower than what these members find elsewhere in the market. Judge your loan portfolio by your net yield and not your delinquency rate.
Review your website. Millennials ask for the opinions of others, but they rely mostly on their own research. The first place they will approach your credit union is online. Invest substantially to present yourself as well as possible. The first impression you present online may be the only opportunity you have. If your website looks like you designed it on PowerPoint this morning, you have no chance with millennials. Be sure your site is using responsive design so it formats automatically to the user’s device. Design your website for the 25-year-old. Trust me, no 55-year-old member will complain that your website is too clean and easy to use.
Take a thoughtful approach to your mobile applications. Make sure your app is dynamic and comprehensive, so the member doesn’t have to access different apps for different credit union services. GPS location services for your branches, ATMs, and any shared branching locations; credit and debit card management; and personal financial tools should all live within a single app.
If you want to attract young, hire young. Chris Anderson, marketing director for $687 million Listerhill Credit Union in Muscle Shoals, Ala., encourages credit union CEOs to get younger in their professional ranks while they are attempting to get younger in their membership base. “We have a young marketing team,” he adds. “Even our vice president is younger than 30. It’s important to bring a young perspective to the table, especially when it comes to attracting younger members.”
Use your resources. Credit unions are cooperatives and have resources available to help. You can look to various associations including your local league. My firm is working with the Michigan Credit Union League to create a day-long workshop that will help credit unions learn specific strategies and tactics to improve performance in working with millennials.
Jim Kasch is the founder of Member Intelligence Group, which helps credit unions gain actionable insights from their members through surveys.
