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Connexus : Issue 37
Generational divide Social demographer Mark McCrindle says that, while gen Y and Z are not a totally separate species, they are doing things at different stages to their parents and have a distinctive attitude to money. They are far more comfortable accessing credit and are content to delay their earning years, marriage and having a family to pursue personal interests first. "It definitely changes the financial products and services they look for," says McCrindle, the founder of McCrindle Research. Even if these generations don't presently represent great monetary value to financial institutions, it is important that mutuals "start the conversation" with them now and build a rapport. "The lifetime value of these customers could be greater than ever because they are going to live longer, work later, spend more money and require more financial products in their portfolio lifestyles than we have ever seen before." There are some positives for mutuals as they compete with the banks for fresh members, says McCrindle. Firstly, gen Y and Z show loyalty to people -- not companies -- which plays into the community focused model of mutuals. Secondly, he doesn't think the big banks are doing much to engage with younger people because they don't expect to generate significant short-term returns. CBA is a possible exception, courtesy of its long-running 'Dollarmites' campaign to connect with schoolchildren. FEATURE www.abacus.org.au 26 Connexus GEN NEXT "You'd be amazed at the number of mutuals that don't have the top listing on Google for their own brand." Taking the lead Servus Credit Union, in Canada, is at the forefront of initiatives to connect with younger bankers. The Alberta group has embraced a program called Young & Free to target generation Y in particular. It offers financial literacy advice and a forum through blogs that gives young people a voice in what they need financially. Users also get a free cheque account with full internet banking and teleservices. Chief marketing officer Gail Stepanik-Keber explains what her group is doing to woo younger members: How important is it for mutuals to tap into a younger customer base, and which demographic is the key to win over? At Servus, our member base tends to mirror that of our market and is not skewed to the older demographic. One of our key aspirations is to continue to provide the credit union way of banking to future generations of Alberta. Therefore, it is very important for us to appeal to a younger demographic. Even though we have programs and products for the under-18 age group, we feel the 18 to 25-year- olds are at the prime lifecycle in terms of making financial choices. What is the first step to convince younger customers to switch to credit unions or building societies? Getting to know what younger customers want from their credit union is key. What specific things are Servus doing to help capture market share with younger generations? YoungandFreeAlberta.com is our key program to capture the attention of the 18 to 25-year-old market. We launched it to the full province of Alberta in February 2010 and have since attracted about 9,000 new members. The program has about 19,000 members to date. Some are existing members who have switched over to the Young & Free product, as it's an opt-in approach. We also focus on education as an area for community investment. Gen Y and Z are different to their parents. How should financial institutions be communicating with younger customers, and are credit unions well placed to meet those needs? A variety of channels need to be used with this audience because they want face- to-face in some instances, such as buying their first car or house, or they want to speak to a live person at a call centre, or go online to get financial information, or they just want to view their account history online. It takes a multichannel communication strategy to appeal to this group. Is the product and services mix likely to be different for younger customers than for previous generations? There's definitely a trend towards mobile banking, and mobile applications are key to this group. Products need to be simple and easy to understand. Financial literacy is a big component that will help this target group.