the “why” behind gen y financial decisions daniel penrod ccul/ncul ari
TRANSCRIPT
The “Why” Behind Gen Y Financial Decisions
Daniel PenrodCCUL/NCUL ARI
Applied Research Institute (ARI)
Focus Groups:
Los Angeles and San Francisco
Attendees: 38
Ages: 16-25
Survey: Nationwide
Respondents: 1292
CA: 440
NV: 100
Other: 752
Characteristics of Generation Y
• Adaptable: Comfortable in various situations.
• Gadget savvy: Grew up with technology.
• Ability to grasp new concepts: Learning-
oriented generation.
• Efficient multi-taskers: Do it faster and better.
• Tolerant: Feel at home in diverse workforce.
Characteristics of Generation Y
• Impatient: Technology and instant gratification.
• Skeptical: Public scams, cheating, lying and exploitation.
• Blunt and expressive: Self expression is favored over self control.
• Image-driven: Personal statements with their image is very important.
• Strong sense of self: Overindulgent parents, strong sense of entitlement, the “Mr. Rogers” effect.
• They are still young: Lack life experience; ask questions rather than waste time trying to figure it out.
Some Numbers…
• Teens alone had an aggregate income of $80 billion in 2006.
• An additional $110 billion in parent-subsidized spending in 2006.
• Gen Y is expected to account for 39% of households with online bill payment by 2010.
Belonging or Individuality?
Do they want to be part of something
or to be seen as an individual?
BOTH!
• Belonging– Social networking– Volunteerism– Instant Messaging– Cell phone “faves”
• Individuality– Personal web pages– Personalized credit/debit cards– iPod songs– Cell phone skin or configuration
Gen Y: Financial Education
Where Respondents Learned the Most About Personal Finances
12%
4%1% 1%
3%6%
1% 1%3%
8% 9%
2% 2%3%1%
3%
53%
3%5%7%
12%
54%
14%
6%
2%1%
12%
8% 5%4%
52%
10%
0.1%
53%
5% 5%7%
11%13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
From myparents
Fromschool/teacher
From Internet From f riends From otherfamily members
Personalexperience(s)
From books From church From magazinearticles
Other
Total CA NV Other States
Amount Parents Taught About Personal Finances
38%
16%
26%
17%19%
26% 23% 18%
34%41%
26%
17%
26%
16%17%
41%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
A lot, we talked aboutbudgeting, saving, etc.
A little, we talked about itand they helped me open
an account
Not a whole lot, theyhelped me open anaccount but that's it
Not at all
Total CA NV Other States
Interest in Personal Finance Education Classes
8%
25%
9%
17%12%
34%
22% 20%
7%
36%
13%19%
28% 32%
9%
17%
37%
13%
20%23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Very interested Somewhatinterested
Neither interestednor uninterested
Somewhatuninterested
Not at all interested
Total CA NV Other States
Where Respondents Would Take a Personal Finance Education Class
38%
13%
2%
17% 18%18%14% 12%
3%
57%
13%
18%
26%28%
56%
28% 27%
14%
1%
41%41%
16%24%
59%
20%
58%
19%
10%
25%29%
37%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
At a localcollege
Onlinethrough mybank/credit
union
At mybank/credit
union
As part ofmy highschool
curriculum
As aninteractive
onlinediscussion
Via podcast At anybank/credit
union
Other
Total CA NV Other States
Likelihood to Consider Attending Class if Offered by Bank/Credit Union
3.43.3 3.3
3.2
3.0
2.8
3.4 3.43.3 3.3
3.1
2.9
3.43.3
3.2 3.2
2.9
2.7
3.43.3 3.3
3.2
3.0
2.8
1.0
2.0
3.0
4.0
5.0
Saving for thefuture
Making goodfinancial
investments
Saving to buy ahouse
Establishing andmaintaining credit
Paying off studentloans
Obtaining a carloan
Total CA NV Other States
Gen Y: Credit Union Awareness
Top 7 Descriptions of a Credit Union
9%
12%
13%
7%
10%
5%
8%
4%
11%
4%
15%
18%
8%
23%
7%
8%
12%
7%
7%
8%
25%
14%
6%
26%
25%
6%
10%
13%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Is owned/controlled/operatedby its members
Has better rates
Gives you/helps youbuild/establish credit
Has restricted membership
A bank
Offers loans/lends money
Don't know
Top 7 Descriptions of a Credit Union
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Is owned/controlled/operatedby its members
Has better rates
Gives you/helps youbuild/establish credit
Has restricted membership
A bank
Offers loans/lends money
Don't know
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Is owned/controlled/operatedby its members
Has better rates
Gives you/helps youbuild/establish credit
Has restricted membership
A bank
Offers loans/lends money
Don't know
Total CA NV Other States
42%
4%
1%
14%
37%
5%
19%
40%
5%
5%
18%
32%
5%
7%
17%
33%
44%
6%
39%
32%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Don't know
Other
Don't qualify to become amember
Not aware of any
Don't see the need
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Don't know
Other
Don't qualify to become amember
Not aware of any
Don't see the need
Total CA NV Other States
Why don't you belong to a credit union?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Don't know
Other
Don't qualify to become amember
Not aware of any
Don't see the need
Why Respondents Would Consider or Continue Banking with a Credit Union
6%
6%
12%
3%
2%
2%
4%
4%
5%
22%
11%
8%
7%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other
Other positive comments
Other negative comments
Recommendation/word of mouth
Convenience
Happy with current institution/will not change
Closer/more convenient locations/ATM's
Promotions/incentives/deals
Less/no fees/charges
Have the right service/product for me
Don't know enough about credit unions/ need more information
Better/good service
None/nothing
Best/good/great/competitive rates
Why Respondents Would Consider or Continue Banking with a Credit Union
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other
Other positive comments
Other negative comments
Recommendation/word of mouth
Convenience
Happy with current institution/will not change
Closer/more convenient locations/ATM's
Promotions/incentives/deals
Less/no fees/charges
Have the right service/product for me
Don't know enough about credit unions/ need more information
Better/good service
None/nothing
Best/good/great/competitive rates
Why Respondents Would Consider or Continue Banking with a Credit Union
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other
Other positive comments
Other negative comments
Recommendation/word of mouth
Convenience
Happy with current institution/will not change
Closer/more convenient locations/ATM's
Promotions/incentives/deals
Less/no fees/charges
Have the right service/product for me
Don't know enough about credit unions/ need more information
Better/good service
None/nothing
Best/good/great/competitive rates
Gen Y: Choosing a Financial Institution
Where Respondents Find Information about Banks & Credit Unions
17%
18%
31%
40%
4%
8%
50%
58%
4%
7%
24%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Radio
Other
Newspaper
Mailings
Television advertising
Co-workers
My financial institution
Other family members
Friends
Internet
Parents
Parents lead most financial decisionsWhere Respondents Find Information
about Banks & Credit Unions
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Radio
Other
Newspaper
Mailings
Television advertising
Co-workers
My financial institution
Other family members
Friends
Internet
Parents
Where Respondents Find Information about Banks & Credit Unions
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Radio
Other
Newspaper
Mailings
Television advertising
Co-workers
My financial institution
Other family members
Friends
Internet
Parents
Parents lead most financial decisions
• COO and co-founder of Brass Media? • Parents at job interviews?
How did you choose current financial institution?
14%
11%
11%
12%
25%
31%
40%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Don't know
Saw an ad in a newspaper
Products/services they had
Saw an ad on TV
Giveaway (promotional item given out)
Received information in the mail
It was recommended by a friend/co-worker
It was recommended by a family member (not parents)
Location is close to my work
They had the best rates
It was recommended by parents
Location is close to my home
It's the one my parents use
How did you choose current financial institution?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Don't know
Saw an ad in a newspaper
Products/services they had
Saw an ad on TV
Giveaway (promotional item given out)
Received information in the mail
It was recommended by a friend/co-worker
It was recommended by a family member (not parents)
Location is close to my work
They had the best rates
It was recommended by parents
Location is close to my home
It's the one my parents use
38% 39%33%
44%
55%51%
17%22%
17%
31%
21% 22%23%
11%
23%
10% 10%10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Open aninvestment
account
Take out a carloan
Open/obtain acredit card
Open/obtain acheck/debit card
Open a savingsaccount
Open acheckingaccount
Parents My Financial Institution Internet
Where did you Primarily go for Recommendations or Information on ...?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Open aninvestment
account
Take out a carloan
Open/obtain acredit card
Open/obtain acheck/debit card
Open a savingsaccount
Open acheckingaccount
N=168 (investment), 199 (Auto), 558 (Credit card), 733 (Debit card ), 833 (Savings), 848 (Checking)
How did you Decide Which Financial Institution to use to . . . ?
38%
27%
10%16%
12%
19%
29%
42%36%
26% 27% 27%
15%
32%
13% 15%
23%21%17%
19%
16%23%
18%15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Open aninvestment
account
Take out a carloan
Open/obtain acredit card
Open/obtain acheck/debit card
Open a savingsaccount
Open a checkingaccount
Best Rates Parents Use Recommended by Parents Bank/Credit Union offered
N=168 (investment), 199 (Auto), 558 (Credit card), 733 (Debit card ), 833 (Savings), 848 (Checking)
How did you Decide Which Financial Institution to use to . . . ?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Open aninvestment
account
Take out a carloan
Open/obtain acredit card
Open/obtain acheck/debit card
Open a savingsaccount
Open a checkingaccount
• They are very sensitive to fees and fee structures.
• Help me get/build credit.
• They don’t know what they don’t know.
• Work Attire: They do not want you to be dressed like them.
Gen Y: Current Banking Experience
Type of Current Account
Bank account, 64%
Credit Union account, 9%
Both, 12%
Neither, 15%
Where is Their Money Now?
CUs are for savings – Banks are for transactional accounts & cards
76%
84%
64%
34%29%
7%12%
16%
2% 1% 0% 1%
93%
75%
58%
26%21%
8%13%
8%
1.0% 1.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Savings Checking Check/debit card
Credit Card Online billpay
Car loan Investmentaccount
School loan Other loan Other None ofthese
Bank Credit Union
Products at a Bank or Credit Union
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Savings Checking Check/debit card
Credit Card Online billpay
Car loan Investmentaccount
School loan Other loan Other None ofthese
Order in which products were obtained
67%
45%
5% 4% 3% 8%
18%
48%
33%
10%3%
15%
12%5%
55%
29%
14%
6%
7%
57%
80%71%
3% 2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Savings Checking Check/Debit card Credit card Money market CD/sharecertificate
1st 2nd 3rd 4th or later
• Overdrafting is not their fault – You are the culprit for charging fees for NSFs and account abuse.
• Very cynical – They do not trust you! They trust themselves, their parents and their friends/family.
• Stop me from spending! – They understand that they have a problem with finances.
Gen Y: Communication Methods
To Text or Not to Text?That is the question…
Interest in Receiving Account Updates via Cell Phone
Neither interested nor uninterested
11%
Not at all interested
63%
Somew hat uninterested
11%
Very interested
5%
Somew hat interested
10%
Special Offers
Account Balances
Updates
Low Balance
NSF’s
Account Alerts
Interest in Low Balance Text Message Alerts
Very interested24%
Neither interested nor uninterested
10%
Somewhat uninterested
8%
Not at all interested
28%
Somewhat interested
30%
• Messages and solicitations through the online banking portal are preferred.
• Give straight forward rate comparisons and information so they can decide what they want.
• Gen Y wants one-on-one.
• Tellers are NOT seen as credible to cross-sell products or recommend services…They are “just tellers.”
Gen Y: Marketing
Does your marketing look like this?
Or, this?
Does your website look like this?
Or, this?
Are You Branded?
• Utilize current members or employees for focus groups– Free, internal sources of feedback
• Tell! Do not sell!– Sell to the parents…inform Gen Y– Is your interaction sales-focused or knowledge-focused?
• Commercials that “sell” are disingenuous – funny gets my attention, but I ultimately want to be informed.
• In-branch marketing is successful: signage and posters catch their attention.
What Does This Mean For You?
• ARE NOT– Short-term Return
• 1 – 3 years– Return on Assets (ROA)– Return on Investment (ROI)
• ARE– Long-term Investment
• 3, 5 or 8-10 year time horizon
Balance Sheet View of Gen Y
Take-Home Message
• You have what they want, they just don’t know it yet!
• Parents can be an effective way to bring younger Gen Y’ers into the fold.
• “Field of Dreams” philosophy does not work.– Create reasons for them to come into the branch.
Take-Home Message• You are already viewed as “different” – utilize
this. (e.g. WAMU)
• They want knowledge from you – educate them.– Shift: product/service first to education first.– Likely a requirement for Gen Next also!
• Target your marketing to their tastes, needs and desires.
Thank You!