It’s nearly impossible these days to attend a credit union conference or read a trade publication without hearing about the urgent need for credit unions to attract and retain Millennials. It’s a hot and important topic because, truly, they are our future.
By now, most of us would agree that Millennials want convenience and technology. They want easy access via ATM/branch networks and they want (nay, demand) technological conveniences that save them from making a trip to the credit union. It hasn’t taken long, but Mobile Remote Deposit Capture will soon be a “must-have” for all credit unions (my credit union has it and, believe me, if you haven’t tried it, it ROCKS). In our quest to win over the hearts and minds of Millennials, have we forgotten anything?
Millennials have migrated in large numbers to alternative financial services
Alternative Financial Services (AFS) include prepaid debit cards, check cashing and payday loans. Think Finance (http://thinkfinance.com/) recently completed a survey of under-banked Millennials (18-34 years old) who supplement their bank accounts with prepaid debit cards, check cashing and payday loans. The findings of the report challenge the stereotype of AFS users as lower-income consumers forced to turn to AFS. The survey found that under-banked Millennials with mid to high levels of income are using alternative financial services at rates similar to, and in some cases higher than, their lower-income peers. The survey also reported that Millennials were satisfied with their experience when using AFS and consider them important financial tools. Millennials want convenient access AND products that fit their lifestyle. Millennials believe that AFS fit their lifestyle.
The survey also revealed:
- Prepaid debit cards – 51 percent of those making less than $25,000 in annual income reported using prepaid debit cards within the last year. The percentage was the same for those who earned between $50,000 and$74,999.
- Check cashing services – 34 percent of respondents who earn less than $25,000 reported using check cashing services, while almost as many in the $50,000 to $74,999 range (29 percent) turned to check-cashers.
Here comes Goliath to leverage this millennial opportunity
Walmart and American Express, two unlikely partners, have rolled out Bluebird, a prepaid debit card. Opinions are mixed on Bluebird, but I think it’s a game-changer. Consider the following benefits and features and ask yourself if any of these might appeal to the millennial market:
- Direct deposits
- Add checks with the Bluebird mobile app
- Set up sub-accounts (Christmas Club?)
- No annual fees, no minimum balance requirements and, perhaps most importantly, no overdraft fees. NO hidden fees of any kind. There is a $2 card-load fee and a $2 ATM fee (without direct deposit).
- No-fee MoneyPass ATM withdrawals (22,000 ATMs and growing)
- Free bill-pay – on the go
- Transfer money: send money to and receive money from friends, family, anyone
- Add cash online or at any Walmart (4,200 U.S. locations)
- Easy to open, and there are no credit reviews
- E-mail alerts, including the ability to set daily spending limits
- Other benefits, including roadside assistance, discount entertainment tickets, and purchase protection. World-class American Express Customer Service, 24 hours a day, seven days a week.
Convenience, technology and rewards. Concerned about the $2 load fee? Don’t be; it beats an unexpected overdraft of $28 and a minimum balance fee of $5. Like it or not, Bluebird addresses Millennials’ need for convenience, technology and AFS.
What can we do to compete and increase our share of Millennial members?
- Certainly, we need to continue our pursuit of greater access and convenience.
- Consider AFS as potential products to attract and retain Millennials. As a group, they are clearly adopting pre-paid debit cards, check cashing and alternative to payday loans.
- Offer a pre-paid product. Although far more purchases are made on credit and debit cards, prepaid cards are growing more than twice as fast.
- Offer an affordable payday-loan alternative. Like their parents, Millennials are not adequately prepared for unexpected emergencies. Many who are managing high student-loan debt loads may find themselves in need of emergency cash solutions.
- Provide one-on-one financial education at each member-contact point. Check out CUNA’s certification program: http://training.cuna.org/self_study/cuficep.html. They don’t need to know its “financial education,” rather just good advice from a credit union advocate. Remember, the Millennials most likely received their financial education from their parents…and we all know how well that generation managed their money!
- Encourage thrift. The ultimate goal of any financial account or counseling is to build assets. They will never get there without learning how to save.
- Don’t judge. AFS may seem absurd to many of us in the older generation. But what we think doesn’t really matter to the Millennials (trust me, I am trying to raise five of them).
The Millennial generation is critically important for us. We can’t afford to skip a generation; we’re toast without them. Our strategies for attracting and retaining Millennials must include more than convenient access and technology. It should also include the products and services that are most likely to appeal to them. Once we’ve overcome these prerequisites, we can leverage our humanness and personal advocacy to demonstrate how credit unions can be clearly different and better.