Credit unions are in an enviable position to be of service to the largest generation in U.S. history. This group of 80 million strong is estimated to have an annual $200 billion spending habit forecasted to reach over $1 trillion during their lifetime. The buying power is impressive and every business on the planet wants to get in front of them. A good first step is to gain a better understanding of what shaped them during the years of 1980 and 1999.
Millennials possess some very interesting views on the world, starting with being full of contradiction and are regarded as digital natives. The U.S. Census Bureau found, “A wired connected world is all that a Millennial has ever known.” Considered very optimistic about the future, they grew up witnessing terrorist attacks, school shootings, hurricane Katrina, impeachment of a president, Enron scandal, Starbucks, and are shaped by helicopter parents, video games and reality TV. As masters of self-expression, 75% of them have social media profiles and their main sources of information according to the U.S. Chamber of Commerce Foundation is through television and the Internet. Up to 80% report they sleep with their cell phones next to the bed. In order to reach this age group, credit unions will need a thorough understanding of what motivates them in order to create a positive member experience.
Don’t wait too long. The Millennial is already having its impact on car buying. According to the Los Angeles Times, approximately 35 percent (ages 18-34) intend to purchase a new or used vehicle in the next 12 months, exceeding the national average of 24 percent of all consumers. Mobile commerce will be a huge contributing factor according to Aabaco Small Business, as 41 percent of Millennials complete purchases on their smartphones and up to 86 percent will use multiple mobile devices and a desktop, to car shop. Car sales and leased vehicles are surging, as they move back to the suburbs to get married, purchase homes and raise families.
Considered to be one of the most educated generations in American history, 63 percent possess a Bachelor’s Degree, they also have the distinction of having more student loan debt than credit card debt. Despite being cash strapped and slow to adopt credit, according to Money.com leasing accounted for almost 29 percent of all new car purchases by millennials in 2015. One of the main reasons behind this popular choice is leasing provides access to more expensive options. Being able to get a luxury vehicle under $400 a month, when purchased would be over $600, makes leasing an attractive choice for this group who have yet to enter their peak earning years. Technology also factors into leasing’s popularity, driving off in a vehicle with the latest gadgetry, every three years, really appeals to this tech-savvy group.
Because of their relationship with technology, influencing them will involve multiple channels, they enjoy social networking and are not shy about sharing their opinions. Some of the most preferred ways of being reached— word-of-mouth and brand building through social channels. Having a presence on social media will be key to reaching this hurried group who like to spend time building relationships with brands and are willing to share their experiences with peers.
Credit unions can and should be active in bridging the gap to greet, with open arms, this emerging member to secure future growth. The sooner the better. The average age of the credit union member in the U.S. is 47, in order to grow, that number needs to come down. Millennials make up a third of the nation’s population, studies have shown they are less likely to use conventional banking and prefer instead to use online financial services. This has given rise to their reputation as being “un-banked.” They are also very skeptical of big banks according Forbes, rating the four biggest bank brands among the “least loved.” As a group, they demand authenticity and transparency when it comes to financing, an example of this is the Occupy Wall Street movement in 2011 which credits people in their 20s hitting the streets to protest income disparity and economic inequality.
The good news, they are group oriented. Isn’t this what credit unions are all about? Serving groups? It’s time to tap into this energy. The mere definition of a credit union fits the millennial business handbook: a nonprofit-making money cooperative whose members can save or borrow from pooled deposits and loans at competitive rates with no gimmicks. It is imperative to seek out new and forward-thinking ways to welcome Millennials and educate them on why credit unions are a perfect fit when matching their needs and wants. The ability to connect and expand with Millennials as that segment matures is one of the leading factors that will determine which credit unions will expand or cease to exist in 20-30 years. Now is the time to focus on this demographic if you have not done so already. Time’s a wastin’!