That means credit unions and banks will be working harder to attract and keep these groups.
Maritz, a marketing services company based in St. Louis, surveyed 1,008 people and found that 53% of those in Gen X (30-42 years old) and 61% of Gen Y (18-29 years old) had either changed their PFI or considered doing so in the past two years. That compares with 20% of the Silent Generation and 37% of Baby Boomers surveyed.
"The current customer experience model at banks caters to the Silent Generation and the Boomers, who more frequently bank in person at branches," said Thad Peterson, division vice president, sector strategy and solutions of Maritz's financial services sector. "But younger generation customers are much more mobile and rely more heavily on online interactions," he said.
Financial institutions' "most unstable relationships exist with younger customers, because younger people often haven't settled into a stable financial pattern yet," he said. Institutions hoping to build long-term relationships with Gen Y and Gen X need to think about three basic steps, Peterson said:
- Attracting Gen Y and Gen X as customers/members in the first place. Locational convenience has been the primary tool for attracting new members/customers. That's still the case with the younger generations, but their definition of "locational convenience" is changing. Now it includes online and mobile transactions, and they expect anytime anywhere banking. Banks (and credit unions) need a strategy to attract and retain prospective customers who rarely step into a banking office, he said.
- Identifying and offering products that give young people "roots" at the bank or credit union. Example: provide incentives for online bill paying services and debit rewards programs.
- Treating the younger generations the way they want to be treated. Ensure that their member/customer experience is appropriate for Gen X and Gen Y, and consistent at all major banking touch points.
The survey indicates that young people can be more impatient, less tolerant and harder to please than their cohorts in the older generations. It also found that younger customers are more likely than older customers to find fault or have problems with their primary financial institutions. For example:
- 37% of Gen Y and 36% of Gen X believe they would get better customer service at a different bank;
- 22% of Gen Y and 21% of Gen X reported being upset in the past year about high fees, compared with 14% of Boomer and 6% of Silent Generation respondents; and
- 18% of Gen Y and 17% of Gen X reported being upset about a lack of ATM locations, compared with 11% of Boomers and 3% of the Silent Generation.
So how does a credit union reach Gen X and Y members? Businesses are beginning to reach out via social media such as Facebook, but Peterson warns against relying too heavily on social media to initially reach these groups.
"Using Facebook to attract new customers is like standing in a corner passing out business cards at a cocktail party," Peterson says. "If you don't have a genuine relationship with them, all you are going to accomplish is to diminish the value of your brand to that individual."
He suggests that financial institutions:
- Be the source or their primary debit card--Gen X and Y comprise the debit card generation;
- Highly "incent" them to migrate to online banking with a significant reward for paying bills online;
- Make sure front-line employees are treating Gen X and Y the way they want to be treated and can solve problems on the spot--a key to securing lifelong patrons; and
- Stay in tune with how younger customers want to connect--online banking, bill pay and mobile banking are three touchpoints that must be state-of-the-art and part of the overall customer experience.
courtesy of cuna.org