Millennials: Financial Thinking

Millennials: Financial Thinking
March 7, 2017 Marketing GrafWebCUSO

How do credit unions engage with millennials as potential members? That is the $64,000 question. As we know, our membership is the generation that precedes the millennials (age range 18 to 30), which has a different outlook. From the traditionalists born between 1900 and 1945, baby boomers born from 1946 to 1964 and Generation X born from 1965 to 1980, they’re known for being suspicious coming from the age that experienced the Cold War, Vietnam, economic crises and health epidemics. “For the first time in history, four generations are working side by side. Different values, experiences, styles and activities create misunderstandings and frustrations,” wrote Lynne Lancaster and David Stillman in When Generations Collide.

Millennials have surpassed baby boomers as the nation’s largest living generation at 76 million, according to population estimates by the U.S. Census Bureau. Millennials are far less likely to be married than earlier generations were when they were young. Presently, 23% of 18- to 30-year-olds are married, Pew Research reports. Millennials are more highly educated than earlier generations and are viewing the inclination to major in high-demand subjects, i.e. business and health professions. Millennials will relocate after college to where the jobs are in order to pay for their student loan debt. Preceding generations would stay within the area they grew up in and would take a second, maybe a third, job to pay for college, a house and a family.

Millennials will comprise of 75% of the workforce, and they also don’t stay in one position long. This will be a hardship for many businesses. Also, there will be generational differences with managers on how to perform an employer’s task. The older generation is set in their way of doingtheir function. Millennials have grown up with information being available instantly. They can reach in their pocket, punch in some letters/numbers and get an answer to a problem faster than a computer. Millennials want faster recognition for their performance. That instrument in their pocket can get them faster results in many personal areas too, such as contacting any financial institution for a loan, making a deposit or paying a bill. They see their phone as a problem solver.

How does a credit union engage the millennials? First, it is the management’s responsibility to enlighten the board and employees as to the direction that needs to happen to bring in this population for membership. The millennials are not like older generations of members; they want performance and on a micro scale. Millennials live their lives on a micro scale movement that no other generation has experienced. PricewaterhouseCoopers conducted a survey of its millennial employees, more than 80% of its workforce, to stem a discouraging rate of turnover. PwC’s findings led them to adopt more flexible, millennial-friendly working arrangements. This procedure can be used to attract millennial credit union members. 

Millennials would never think of ducking into a bank branch to take care of their financial needs, or even writing out a check. More than a fifth of all millennials have never even written a physical check to pay a bill. Sixty-three percent of adult millennials don’t even have a credit card. By comparison, only 35% of consumers over 30 don’t have credit cards. It’s no surprise that 94% of consumers under 35 years old are active users of online banking. Another 27% would consider a branchless digital bank. So, many things that are considered part of a traditional banking relationship, millennials are now doing on their smartphones.

Credit unions should look at their charter to see what restrictions there are that would impede millennials to bank with them. “The fact that as many as 46% of millennials who attempt to open bank accounts have been denied,” J. Ayers of Crunch Network said.Not having these accounts could mean loss in revenue from mortgages, credit cards and auto loans. Regulators frown on credit unions carrying mortgages outside of their area when they can’t check on the property. Millennials realize there are many financial opportunities for them to get services that are secure. They just don’t want to waste a lot time and energy.

Norman Halls is former chairman of the board for Arrha Credit Union and president of Madsen Group, LLC. He can be reached at nhalls@madsengroup.net.