MADISON, Wis. (8/18/08)--Young adult households frequent credit unions at roughly the same levels as do all U.S. households. However, credit unions lag behind commercial banks, three to one, according to a new Filene Research Institute report.
As credit unions seek to better serve the next generation of consumers, it becomes essential to understand how young adults are creating their financial lives, said the institute. Its report, Attracting Young Adults: What Do We Know About Their Use of Financial Institutions and Payment Behaviors?, looks at the financial behaviors of young adults and compares these behaviors to all households.
Author Jinkook Lee, a professor of consumer sciences at Ohio State University (OSU) and a Filene Research Fellow, used the Consumer Finance Monthly, a nationally representative sample of U.S. households from a monthly survey conducted by OSU, to conduct the research.
The study found that young adults rank convenience, product features, and service as the top three reasons, respectively, for choosing their primary financial institution. Young adults use a variety of payment instruments to manage their funds, the study found. Which type of instrument an individual uses depends upon the type of transaction and the socio-demographic characteristics of the payer.
"Today's 18- to 34-year-old population represents the next generation of credit union borrowers and savers," says George Hofheimer, Filene chief research officer.
"The Credit Union National Association reports that since the mid-1980s credit unions have struggled to convert this demographic into full-service members. Careful study of how this new generation is different from past generations could help reverse this long-term trend," Hofheimer said.
"More important than careful study, though, is action," he said. "Every day that credit unions delay a young-adult strategy is another day their competitors gain in cementing a relationship with this demographic."
Hofheimer proposes three activities credit unions can perform to effectively reach out to the 18-34 year-old market:
When describing your value proposition to a young adult market, study the top reasons this segment chooses their primary financial institution;
Understand what elements of convenience matter most to young adults; and
Use data on specific payment choices to understand how young consumers are creating their financial relationship.
Copies of Attracting Young Adults: What Do We Know About Their Use of Financial Institutions and Payment Behaviors? are available free to institute members; $125 to non-members. For more information call 608-231-8550 or use the resource link.
courtesy of cuna.org