NCUA Report - April 2012

Office of Public and Congressional Affairs Report
PROFILING A GENERATION: WHO IS GEN Y?

Many financial institutions are competing for the attention of that elusive generation, Gen Y. For credit unions, there is probably no better time to capture Gen Y members than now. However, in order for credit unions to successfully market to and retain Gen Y members, credit unions must first understand who Gen Y is, their importance to the industry, how they communicate, and the products they want.

This generation—roughly encompassing people born between 1979 and 1999 and currently ages 13 to 33—makes up more than 70 million people in the United States, according to research by the First Data Corporation. This group is about 20 percent of today’s population. They are considered the largest generation since the Baby Boomers born between 1946 and 1964, and to ensure a successful future, Gen Y may well be the credit union industry’s most important audience today.

With the average age of credit union members already past
the prime borrowing years, Gen Y represents an enormous
potential market for the credit union industry. The loans
made to Gen Y will become assets on a credit union’s books
and help fund the interest paid by credit unions on the
deposits of older members. NCUA Board Chairman Debbie
Matz has long noted that in order for credit unions to
“…survive in the future; they must attract more members
who are younger than the peak borrowers.”
To drive home this point, a recent study from the Intuit 2020
Report, predicts that in the next 10 years Gen Y will
transition from young, carefree spenders to young adults
starting to manage their money with families and mortgages.
Additionally, research from the Center for Financial Services
Innovation anticipates Gen Y collective annual income to
reach $3.4 trillion by 2018. At this time, however, Gen Y
makes up a very small portion of credit union membership.

In order for the industry to capture a share of the next generation of consumers, credit unions must adopt new technologies used by this group—like smart phones and tablets—and communicate using social media channels, like Facebook, Twitter, and You Tube. From an early age, Gen Y has used computers, cell phones, email, video games, and the internet to communicate and gather information. So it is only natural to assume that at a minimum, they expect services like mobile banking, remote check cashing, online bill-paying, digital wallets, and round-the-clock service. This expectation is something for which the credit union industry must prepare. As Chairman Matz recently said, “If you don’t offer what they expect, they’re going to take their business elsewhere. That’s why it’s absolutely essential that you use all the tools at your disposal to win over today’s consumers— especially the next generation.” So who is Gen Y? To sum it up, Gen Y are the credit union members of the future. Gen Y is the group on which credit unions need to focus in their marketing and lending programs.

Look for a follow-up column in future NCUA Report issues addressing Gen Y and the technology landscape. For questions about this article or general feedback, email socialmedia@ncua.gov.