CU Tomorrow Blog

I agree with your observation that for Gen Y, emphasis on member ownership, not-for-profit status and other, movement-rhetoric-based “benefits” are likely to be off target.

I’d further suggest that for consumers/members of almost any age, for similar reasons to the ones you highlight, traditional CU movement language simply doesn’t resonate. It’s just not important to most people.

The sooner the CU business space realizes this, the better off it’ll be.

Great observations, Christopher. I’d suggest that over the years the credit union movement has conflated language that wins points with politicians (member-ownership, democratically elected boards, etc.) with language that wins points in the marketplace.

“In 1980, 17% of Americans lived in solo households, and today that number is more than 1 in 4 Americans. Does that make this generation more independent in thought and relationships? Maybe.”

Chris, I love this quote/example. It goes a long way in explaining and giving an example as to why Gen Y is less prone to relationships and the typical credit union message. Now, it is up to us to come up with a new way to reach them.

Really nice work Chris. Ben made a really good obvervation about CU rhetoric and where it was actually resonating that I hadn’t really thought about.

I guess the CU message still has its niche, specifically in smaller markets that have lagged in adopting new technology, but it certainly will not be THE selling point when it comes to attracting young members in the future.

If you’re like most people, then you probably want “a relationship” with a financial institution about as much as you want “a relationship” with the company that makes your toilet paper. That’s not just true for Gen Y; we’re talking about ALL people of ALL ages.

Banking serves a purely functional purpose, like toilet paper. It’s nothing like the emotionally-charged relationships people have with brands for things like their cars and sports teams. Banking is simply something most people will never ever be very passionate about.

I agree with the notion that people don’t really give a (for lack of a better word) crap that credit unions are member-owned. How many members actual show up at the annual meetings anyway?

On a brighter note, when people hear that CUs are not-for-profit that generally strikes at least something in their psyche. They associate not-for-profit organizations as those that look out for the best interest of their clients/ members/ consumers (which is essentially the advantage of being member-owned, but is relayed in different terms).

I think the CU movement has to refocus on how we are ‘attracting’ this market. We will always have the core CU philosophy to fall back on, but why not spice it up a bit.. play on what they understand and what will grab their attention in this very GEN Y focused economic market.

In 2002 Filene published a report titled Member Satisfaction Levels: National Norms for Comparing Local Survey Results, Second Edition, and one of their survey questions was:

Credit unions are member owned cooperatives. How important is that to you in deciding where to do business?

80% of Gen Y said either “Important” or “Very Important”. I’m attaching a screenshot of those results below. Do you think those numbers hold true today?

My personal belief is that while most Gen Yers won’t pay much attention to the member-owned nature of credit unions (even if they say it’s important), there are evangelists out there for whom it does matter and who are quick to recommend credit unions because they believe in the value and advocacy they can provide by being member-owned. This goes beyond reporters (and in this financial crunch there have been quite a few articles lauding credit unions – just subscribe to CUNA News Now and pay attention to the national news stories they reference) and extends into bloggers with thousands of readers (e.g. http://www.iwillteachyoutoberich.com/ and http://www.getrichslowly.org/ – don’t let the titles fool you, these are blogs promoting thrift).

As long as credit unions behave as though they’re member-owned and use the lack of shareholder pressure in order to serve as advocates for those members, it will matter. Especially during the times when the “buy-now-pay-later” bills start piling up.

Matt, I think surveying existing Gen Y members of credit unions (title of the Filene report seems to indicate it was measuring member satisfaction) will net a different result when surveying Gen Y that is not affiliated with credit unions. If you are already a member of a credit union you come to realize the benefits of a member-owned organization through that relationship and I think that is what this report is illustrating. I don’t think the offering of a relationship in a member-owned organization is the best selling point for the non-credit union Gen Y audience. It’s something you realize and appreciate over time, but won’t be enough for most to make a change.

If you want to attract Gen-Y you also need to be offering and creating new value around the relevant financial products and services they are seeking. How many CUs have a gen-y initiative but no student loan product (the most significant financial need for this demographic)? And, for those CUs supposedly offering student loans, are they creating differentiating value versus what the prospective member can find in the general marketplace (or simply providing a federal loan or referring the private loan to a bank)? This is an opportunity for CUs to demonstrate the bottom line difference to Gen-Y. Ownership structures are great…but are meaningless if no new value is actually created by the institution.

I think student loans are one of the key missing links when we talk about the strategic challenge CUs face in recruiting gen-y.

Does relationship (cu membership) ever matter to Gen Y. For example who do they turn to when they are scammed in a deal gone bad on E bay. More relevant to this discussion, their credit card is stolen or worse their identity or they have a savings account with an exclusively on-line financial institution and they make too many inquiries (and become “too expensive” and so their money is sent back). Does relationship matter then when resolution is needed to an imperfect world’s problems?

Beyond caring about the member-owned aspect does anyone else fear that the words “credit union” are becoming unpopular with the next generation. The word ‘union’ to people of my age in my part of town musters up bad feelings because all of our parents are losing union jobs and our grandparents are losing their pensions from union jobs leaving them with no money and no insurance. Is our name creating separation?

As a CU movement advocate, let me attempt another perspective…

“Reached maturity watching 24/7 news coverage of corporate scandals, politics, economic issues, Baby Boomer retirement issues with pensions, etc.” ... This example is one reason why I would think more Gen Yers WOULD pay attention to the member-owned, not-for-profit structure of a credit union. Even if they never act upon their right to vote, they at least know that if something were important enough to them to change that they at least have a voice and a way to be heard. Can you say the same of a bank? I’m from St. Louis, while I don’t drink beer, the whole deal going on with Anheiser Busch burns me. If it were set up like a credit union, they wouldn’t be facing the same challenges. Member-ownership may not be the main focus of our marketing strategy, but I don’t think it should be placed out of sight. When your product and pricing is similar to everyone else, you have to highlight how you are different.

“Banking serves a purely functional purpose, like toilet paper.” ... Somewhat true, but, how many times has toilet paper led to stress, depression, or divorce? Money, and the management of it, is a top priority for people, they don’t want to have to worry about it. While a bank will take care of their needs, it is more concerned about profit and shareholders. This is one more reason to stress ownership differences. We are here for them and run by them – better stability and security. Consumers don’t have to worry about who is dipping into their pockets so stockholders can profit.

This is a very interesting topic. A topic that has been the core of my mission since joining the CU movement 5 years ago. I am part of this Gen Y demographic and have an affinity for CUs and advocate them at every possible interaction.

As it is true Gen Y may have some type of attention disorder, lack of interest or not akin to traditional CU message, we have to understand one concept that seems to be lost in conversation. Gen Y is a generation of “affinity” or “membership.” They join social networking groups, partake in blogs and are socially active. They do like to be part of a group where they can be educated by peers. CUs need to market the benefits of membership more so but with a unique twist that merges their needs and our ability to offer them solutions. It may be as easy as hiring a Gen Y employee who understands this unique group (although many organizations are having difficulties hiring Gen Y employees) or reevaluating how you are communicating to this group. Are you telling them what they need? Or are you educating them as peers on what options are available? If CUs can move to the area of becoming Mentors and Educators they will capture this demographic. Becoming the Gen Y financial mentors, this group will market you to others. Remember Gen Y shares information virally through blogs, social networking groups and yes, even via online and text messages.

@Carma

I definitely agree that the name “credit union” is one of the industry’s largest hurdles. We’re constantly having to educate on what a credit union is and why it’s a better choice, depsite containing two of the scariest words in the English language.

Chris,

Quick point – also from MicroTrends – that may slightly buck the ‘Gen Y isn’t interested in credit unions’ idea…from the “Non-Profiteers” chapter:

“Given both the idealism and business sense of today’s young people – is it any wonder that more and more of them are drawn to this [the non-profit] sector? The attitudinal data bear that out: according to a 2006 Harris poll, American adults 65 and older have only lukewarm feelings toward nonprofits – but the feelings of those aged 18-39 are wildly positive. Nonprofits are hot.”

Maybe that’s the key – leveraging the “non profit” aspect of the credit union difference?

@ Katie, I think you make a very valid point. The post was really written to question how we promote the credit union movement today and how it won’t work for Gen Y. Having said that, however, if the movement chose to emphasize other aspects of the credit union value proposition – like leveraging the ‘non profit’ aspect of the credit union difference as pointed out in your response, then you are speaking to something Gen Y sees value in.