Young & Free targets Gen Y in Texas, but they're not alone

After reading so much about the successes of Young & Free Alberta in targeting Generation Y, we knew it was only a matter of time before a similar concept would be introduced in the United States. And this week it was; Young & Free Texas was launched by Texas Dow Employees Credit Union.

In reading the news and visiting the site, I initially thought the Texas initiative would generate the same kind of buzz and success, if not more, that it did for Commonwealth Credit Union in Alberta. This is especially true as we havn't seen other institutions going to equal lengths to target Gen Y.

But it looks like Texas-based Resource One Credit Union is launching an extremely similar initiative this week: my life, my money. Not only are these initiatives both targeting members of Generation Y in Texas - but also use social media in their marketing, are offering a similar checking/savings account, and are intending to hire a spokesperson - with nearly identical perks.

It will be interesting to see how both are received and talked about during their respective searches for spokespeople - and in the months that follow.

Update: there are a couple great discussions discussing both of these accounts/initiatives in depth, one on Everything CU and another on The Financial Brand.

What kind of financial guidance are you offering Gen Y?

Yesterday’s Marketing Daily featured the article “Gen Y is Going to Need Financial Guidance More Than Most.” Citing outstanding student loans, credit card debt and lack of savings, it’s easy to see why Generation Y may need some guidance to navigate these challenges.

So, what kind of financial guidance are you offering Gen Y?

The article makes a good point about life-stage goals – with Susan Menke, senior financial services analyst at Mintel giving the example that “Many Gen Y consumers have a picture of where they’d like to be financially by the time they’re 35. Often, that picture includes owning a house, having children and being free of student loan debt.” She goes on to say “They key is to build your model so that you’re targeting both short-term profit and log-term profit potential.”

Looking at Generation Y’s current life-stage (many are high school or college students, or recent graduates starting careers), and the challenges many are currently facing – like the student loans, credit card debt and lack of savings, as mentioned in the article – gives us some direction as to what kind of financial guidance Gen Y needs now, in the short-term. Gen Y needs a plan to pay off their debts; and many need a reason to start saving their money. This is where life-stage goals like buying a car or home, or saving for a vacation or retirement can become part of the financial guidance your institution offers.

And, depending on your market, offering financial guidance to Gen Y may also require that you think beyond the traditional in-branch meeting with a personal banker. As an example, how will your institution offer financial guidance to Gen Y through your website or other venues?

If you aren’t currently offering any overt financial guidance, education or planning tools for Generation Y, it may be time to start thinking about doing so. With Gen Y expected to become more lucrative in the coming years, the relationships established with them now – especially during important life-stage events, like buying a first home, should be looked at relative to both short-term and long-term opportunities.

Online Account Applications

I was recently asked if, as a member of Generation Y, I would be discouraged from opening an account online because of the series of steps needed to verify my identity. This came in response to a comment I made about Generation Y wanting ease, speed and sophistication from their online interactions.

I think that, if presented as a security measure, members of any generation can understand the need to verify their identity – and will make the choice to either complete the necessary steps online, or opt to visit the branch instead and open the account there.

For me personally, I would rather go through the extra steps online to open the account (if I know exactly which account I want to open) than go to the branch and fill out paperwork.

And, I think there’s quite a bit of room for improvement for the online application process at today’s banks and credit unions.

To illustrate, I want to share a story that recently happened to me.

I was interested in opening an additional checking account at my bank, so I found and completed the application online. Because I submitted the application online, I expected to receive approval online; and, because it was a simple checking account - with an institution where I already have a banking relationship, I expected the approval to be fast – if not immediate.

Then, after ten days with no email and no phone call, I received a letter in the mail. And the letter was far from what I expected. Sure, it thanked me for my online application – but invited me to visit my nearest branch to complete the application process. You’ve got to be kidding me, right?

Everyone wants the application process to be as fast and easy as possible. While there are requirements with indentity verification, why not try to streamline the process and make it as user friendly as possible?

And, I suppose in typical Gen Y fashion, I never opened the checking account – not because I don’t want the account, but because I was frustrated with waiting so long for the letter they ended up sending me. If I wanted to open the account at the branch, I would have gone there first.

Getting Ready for Generation Y

Recently, we have been talking quite a bit about targeting members of Gen Y as customers and employees. This is certainly an important issue facing financial institutions today, and will only continue to create more pressing challenges as we move forward.

A couple months ago, we were approached by Community Banker Magazine to write an article on the topic. The article Getting Ready for Generation Y appeared in the October issue of the magazine, and can also be found on our website.

Some of our more recent presentations on the topic have followed the general main points of this article. These presentations have emphasized the fact that targeting Gen Y is an involved long-term process; that it involves, but is not limited to the Internet; and that hiring and listening to younger employees can help institutions target this group as customers.

There's also a good Gen Y article in this month's issue of BAI's Banking Strategies titled Banking on the Future with Generation Y.

The Millennials Are Coming. Are You Ready?

As I mentioned in my previous post, we gave a presentation to members of America’s Community Bankers last Thursday during the association’s Annual Convention. The session titled: “The Great Demographic Divide” discussed the impact Generation Y is having, and will continue to have on the financial services industry.

During the session, a banker asked “When is all of this going to happen?” He was referring to the influence Gen Y will have on the industry, and the changes that will be required of institutions to attract Gen Y as customers and employees.

It’s already happening. Gen Y certainly presents a unique set of challenges to financial services executives and marketers – but this simply is not an issue that can be ignored or put on the back burner for later discussion. This is an issue that management teams need to address now, especially given an aging customer and employee base at institutions across the country, and that Gen Y has very different expectations of the consumer and employee experience.

The impact from Generation Y can be seen at companies and in industries across the country. In fact, last night’s episode of 60 Minutes featured a segment titled “The Millennials Are Coming” which discussed many of the same points we made during our presentation to the group of bankers last week. If you missed the segment, I recommend that you check it out.

The Millennials are coming (many are already here). Are you ready?

The Great Demographic Divide - Or Disconnect

Yesterday, Joe and I gave a presentation to members of America's Community Bankers in Las Vegas about the divide that exists between Baby Boomers and Generation Y. The presentation discussed the differences in the needs, values and preferences of both generational segments - and framed up ways for the bank executives to think about attracting Gen Y customers and employees.

During the presentation, I realized that with this audience, there may be more than a demographic divide between them and the younger generations - instead, it's more like a complete disconnect. The audience was composed largely of Boomers who are directors, executives and senior managers at banks; and, most of them looked at me like I was speaking a foreign language when I made references to: blogs, podcasts, and social media websites. And, perhaps even more surprising was that not one person in the audience had heard of companies like Prosper, Mint or Virgin Money.

A friend of mine brought up a good point after I told him this: we're not talking about the future here - this is happening now. The divide (or disconnect) needs to be recognized, as it impacts us all.

A Win-Win Opportunity for Community Banks

Community banks across the country are challenged with attracting younger talent; and, at the same time, many community banks are looking to have a more meaningful impact in their communities. So, what if these institutions could tackle both at the same time?

It could be a win-win opportunity.

A recent Deloitte Insights podcast - The Authentic Edge: Getting it Right with Gen Y discusses the results of its 2007 Volunteer IMPACT Survey of 18-24 year olds. The survey revealed the importance of skills-based volunteerism opportunities in the workplace for Gen-Y. This kind of volunteerism is a departure from the typical volunteer opportunities we see at many community banks, which usually involve posting a sign-up sheet in the lunch room asking employees to spend their Saturday cleaning a local park wearing a bank t-shirt.

Certainly, the more traditional community involvement (i.e. cleaning the local park, planting trees, home building, etc.) is appreciated. But, as banks look to build stronger brands, community outreach needs to be looked at differently – as an opportunity to reinforce your message, to engage your employees and make a real, meaningful impact. Gen Y employees want their work to be worthwhile, and want to apply their skills in making a meaningful impact on their communities. There is a great opportunity here for community banks to both become more invested and involved in their communities and to attract younger talent along the way.

Next week, we will be speaking to the members of America’s Community Bankers at the association’s Annual Convention about target Generation Y as employees and as customers. Let me know if you’ll be attending.

And, I’m always looking for solid examples of community banks and credit unions targeting Gen Y - let me know what you've seen.

Brass Magazine’s Bryan Simms Gives Us 5 Gen-Y Characteristics to Think About

On Wednesday afternoon, I attended an excellent presentation given by Bryan Simms, CEO of Brass Magazine about Generation Y. The presentation “Generation Y Revealed” included five different characteristics that financial institutions may consider tapping into as means to target this young segment. And while this set of characteristics doesn’t apply to every member of Generation Y, it does provide a starting point for financial institutions to consider when marketing to this group.

First of all, and not surprisingly, this group tends to be tech-savvy. Generation Y uses all sorts of technology – everything from social networking online to text messaging with their friends, Simms highlighted the fact that today’s youth is able to do 44 hours worth of tasks in a 24 hour day because of their ability to multi-task. This is certainly an issue for financial institutions to address as this group demands sophistication, speed, ease of use and fun.

Secondly, Generation Y is very entrepreneurial, and this group is not likely to work for the same company for the duration of their career. Therefore, financial institutions must address both the personal side of this trend (i.e. making it easy to transfer accounts during job transitions) and the business side (i.e. offering small business loans to start-up companies).

In addition, Simms suggested that financial institutions consider the large number of New Americans that are a part of this age group. The average age of many immigrant groups tends to be younger than the average age of the American population; therefore many can be considered part of Generation X and Y. Financial institutions should consider how they target New Americans when they are looking to attract a younger demographic.

Also, this segment tends to be socially conscious. Financial institutions can attract the socially conscious members of Generation Y by taking an active role in areas of interest to this group – this could be anything from Habitat for Humanity home building to participating in community green initiatives. Or, institutions may support the socially conscious efforts of local groups through donations and/or fundraising for the efforts.

And, many members of Generation Y are considered to be underserved. While underserved segments exist across the age spectrum, Simms emphasized the importance of not necessarily associating “no credit” with “bad credit”. One approach to this market for financial institutions could be hosting financial education programs and offering services that are designed to help the underserved build a better financial future.

Overall, the presentation brought out some great points about attracting Generation Y to today’s financial institutions. I would also encourage you to take a look at Brass Magazine’s website for more about how financial issues impact young people. And, if you have the opportunity to see Bryan Simms speak, don’t miss it – he was excellent.

Change Your Mindset #5: Who's Teaching Whom?

We all know the exercise. For some, we first saw it when it came time to program the VCR (remember them?) For others, it was using the cell phone. And for still others, it was loading and using the iPod they got for their birthday. To whom did we turn to help us (or better yet, do it for us?)

The younger generations have long been helping and teaching their elders when it comes to using the latest electronic and technological devices. And that practice continues to this day in very basic ways. For example, few days go by when I don’t ask my Gen X and Y colleagues about how to use some program or network we use in our daily business life. And I am sure I am not alone. So learning from our younger colleagues is hardly a new or novel phenomenon.

However, I am convinced those of us further along the demographic curve can do much, much more when it comes to hiring and developing new employees. Of course we should continue to incorporate the usual cultural assimilation activities and provide the necessary industry and product information to newly hired employees. But we should also make a concerted, formalized effort to learn as much as we can from them.

The obvious input they can have regards technology. Specifically, learn how responsive your web site is to their needs. What are their opinions for improvements? But that is not all. If you are not taking advantage of and using social networking media and/or other newer outlets to talk about your institution you are missing opportunities. Tapping your younger employees for information can support your institution in staying relevant to today’s younger market segments.

Your younger employees can be valuable resources to help you reach out and attract their peers. These are tomorrow’s customers. Find out what their outside/community interests are and how your institution can participate and align with these organizations/causes. Put them in positions of visibility where their peers may be able to relate to them. Most of all, listen to them. You’ll be surprised what you will learn.

Mindset #12- Rethink stereotypes of demographic segments (Hispanic, Younger, Women, etc.)

As I was sifting through various common stereotypes, I came across an Article with this description of Gen Y: “while not roundly criticized as slackers, "Y" kids are nonetheless characterized as apathetic, lazy and spoiled.” As a member of Gen Y, I would adamantly deny that I fit into this reoccurring stereotype.

The common problem with all stereotypes is that they are based on general perceptions of a segmented group of people and serve to undermine the uniqueness of an individual by classifying people into a specific group.

And there is ALWAYS an exception, and most likely numerous exceptions, to any stereotype.

The Merriam-Webster Dictionary defines a stereotype as “a standardized mental picture that is held in common by members of a group and that represents an oversimplified opinion, prejudiced attitude, or uncritical judgment.” Repeated stereotypes affect the way society views a group and in turn affects the way the group views itself. With enough re-enforcement and repetition, stereotypes can be seen as reality rather than a blanket generalization.

Stereotypes, especially generational ones, such as Gen X, Gen Y and Baby Boomers, often times eliminate certain segments of the population. For example, the media constructed description of the “baby boomer” represents white middle class members of the generation, and ignores the experiences and vastly different lives of other races and socio economic classes.

Many times, stereotypes go beyond classifications of generations and permeate into our perceptions of race. And in these cases the stereotypes can become much more offensive and over simplified.

The stereotypes associated with the Hispanic market, which represents one of the fastest growing segments of the population, greatly impact financial services. More than half of all growth in the financial services sector will come from the expanding Hispanic population. However, this segment of the population is misunderstood, due in large part to repetitive stereotypes. Most of the population growth (75%) will come from 2nd and 3rd generation Hispanics, not illegal immigrants as stereotypes portray. Another common misconception of the Hispanic population is that it is low income. In reality there is large economic diversity, with 32% earning incomes over $50,000 and 14% with incomes greater than $75,000.

It is important to remember that you never know what the person walking into your branch has to offer. A young 20 something, in a T-shirt and jeans, may have $100,000 to invest. And if they are not given the attention, it will turn into a missed opportunity. It is important to understand each individual and identify with their unique life-stage. Instead of viewing a Gen Y person as unmotivated and apathetic, view them as someone looking to eliminate debt, trying to save for a house or invest in a retirement plan. See people not how they look, but rather as an opportunity for you to gain a loyal customer.

Stereotypes simplify groups of people to fit into neat categories and in doing so they deprive everyone of their individuality. No matter the stereotype based on sex, age, or race, each customer is first and foremost an individual, with specific needs and a unique financial situation. The more you try to classify people into a specific group, the less you understand them as individuals.

Attracting the Younger Employee

We have been having quite a few conversations lately about attracting younger employees to work at financial institutions; and, as a member of Generation Y, I would suggest the following as a very simple way to think about attracting younger employees. This is suggested as a starting point and will hopefully challenge your thought process as it relates to hiring at your institution.

First of all, think about “coolness” – and I realize this is difficult for many of today’s financial institutions as most members of Generation Y wouldn’t consider many financial institutions to be cool (or attractive) places to work. For reference, think about today’s high profile companies like Google and Starbucks that are attractive and considered “cool” places to work by many younger people. Sure the perks are great at each of these employers, but perhaps more important is the environment that each has created for their employees. These environments are modern, sophisticated and fun places that are conducive to self-expression and creativity - characteristics that wouldn’t normally be associated with banks.

So take a look at this graph and think about the coolness that would be associated with your bank - by someone under the age of twenty-five. It’s probably fair to say that there is an inverse relationship between coolness and compensation required to attract the younger generations of employees; and that if you rank low on the coolness side, than your compensation offering would need to be higher to attract valuable employees in this age group. However, the flip side to this is more important. Banks need to shift focus to make the workplace more attractive to younger generations – this then has a rippling effect as a bank with younger employees becomes more easily marketable to younger generations as well.

This topic is deserving of more careful attention by banks around the country – and I plan to revisit this topic in future blog posts, articles and presentations.