Insights for Tapping into the Millennial Generation in Latin America

Insights for Tapping into the Millennial Generation of
Latin America and the Caribbean
The
Millennial
Movement

In an industry that has been mainly focused on the predictable
Baby Boomers and on Generation X, there seems to be a major
untapped opportunity amongst the millennial generation—
those born approximately between 1980 and 2000 —that
certainly cannot be ignored. In today’s rapidly evolving and
growing environment it is becoming strikingly important for
financial institutions to identify and capture such available
pockets of growth.
In comparison to their U.S. contemporaries who were greatly
impacted by the recession, millennials in Latin America and
the Caribbean (LAC) seem to have found a more predictable
path. Although they have lower levels of spending than older
generations and engage in lower ticket expenditures, LAC’s
millennials simply appear to be going through a generational
life cycle. However, at the same time they are being propelled
by unique characteristics that shape who they are. It is
these two ideas that together reveal the importance of the
successful engagement of such a major customer segment.
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Opportunity
Making up one-quarter of today’s world population and a
predicted three-quarters of the global workforce by 2025[1]
,
the millennial generation certainly holds a very important
position throughout the globe.
2

Now is the time for the opportunities presented by this generation to be
captured. Millennials have yet to reach their peak spend years, meaning
that an early successful retention of this customer segment will generate
high“stickiness factors”that may lead to strong, and lifelong banking
relationships.
In North America (the U.S. and Canada), the approximately 100 million
millennials make up over one-quarter of the region’s total population. LAC’s
217 million millennials comprise more than one-third of its population, as
shown. In fact, nearly 60% of LAC’s total population has less than 34 years
of age, making it even more important for financial institutions to establish
early ties with this generation.
Figure 1: Population Distribution in LAC across Generations, 2014
Source: U.S. Census Bureau International Database, 2014

[1]
The Deloitte Millennial Survey, 2014
5%Silent (70-89)
Boomer (54-69)
Gen X (35-53)
Millennials (14-34)
New Gen (0-13)
11%
24%
36%
24%
3

LAC’s Payment Landscape
In LAC, cash continues to be the main means of payment,
with approximately 60% penetration in private consumer
purchases. However, the amount of card payments has
greatly increased and is predicted to continue to do so.
Regional Trends
In fact, card payment volume in LAC over 2012-2017 has been estimated to
grow at a CAGR of 10%, making it the second fastest growing region behind
Eastern Europe.[2]
Consumer expenditure has grown immensely in the region, with LAC having
one of the highest growth rates in the world. This has been driven in part by
an increase in disposable income per capita. Although the U.S. has an annual
disposable income on a per capita basis of nearly 5 times that of countries
in LAC, growth rates in LAC exceed those in the U.S. Increases in disposable
income will generate demand for goods of higher quality as well as greater
leisure spending, which in turn will help to boost card payments in the near
future.
Figure 2: Consumer Payment Volume in Latin America
Source: Euromonitor International, Assessing the Payment Landscape in Latin America, 2012
Electronic Direct / ACH
Card (Excluding Commercial)
Other Paper Payment
Cash
2002 2007 2012 2017
0%
100%
50%
4

[2]
Euromonitor International, Assessing the Payment Landscape in Latin America, 2012

Figure 3: Growth in Annual Disposable Income 2011-2016
Source: Euromonitor International, Assessing the Payment Landscape in Latin America, 2012
5
0 0%
40 6%
20 3%
4%
30
5%
10
2%
1%
2016AnnualDisposableIncomeper
Capita(US$billion)
%CAGR2011-2016
USA Chile Brazil Mexico Argentina Venezuela Colombia

The Challenge of Financial Inclusion
Card penetration is also correlated with banking relationships.
And although it has recently revealed signs of growth, financial
inclusion still continues to be a major challenge that very much
includes the millennial generation.
In fact, approximately one-quarter
of LAC’s young adults between the
ages of 15 and 24 have an account at
a formal financial institution.[3]
So, if
financial institutions begin to better
understand and develop specific
strategies to reach this segment,
they will enhance their chances of
breaking the history of low financial
product penetration in the region.
6

[3]
World Bank, 2011; Demirguc-Kunt and Klapper, 2012
Regional Trends

Thus, the successful engagement of the millennial generation coupled with
the opportunity to address the challenge of financial inclusion serve as the
leverage needed to boost electronic payments in LAC.
Figure 4: Percent of
Young Adults (15-
24) with an Account
at a Formal Financial
Institution
Source: The World Bank Group, 2011
Figure 5: Percent of
Adults (25+) with an
Account at a Formal
Financial Institution
Source: The World Bank Group, 2011
7
25+
15/24
no data 0-8.68
8.68-20.7
20.7-36.3 36.3-73.7 73.7-100

Target Segments
The millennial generation should certainly not be viewed
as a homogenous segment. Much of the differences that
emerge seem to be tied to stage of life, so it is important to
understand the composition of the millennial audience and
the considerations in targeting them.
Older Millennials
Born between 1980 and 1990
Nearly 109.2 million in LAC[4]
They have the highest spending power among
the generation and have rapidly evolving needs, as
many quickly transition into full-time jobs, a family
life, and into the life of a home owner.
Younger Millenials
Born between 1991 and 2000
Nearly 108.4 million in LAC [5]
They are extremely“connected”to technology,
more likely to use it for leisure rather than for
business purposes; they are highly influenced by
the people they surround themselves with; and
they tend to be early adopters of products.
8

[4]
, [5]
U.S. Census Bureau International Database, 2014
The Millennial Consumer Landscape

Attitudes & Behaviors
Millennials are in a period of transition, many
seeking financial independence and wanting
to be at the center of life’s decisions.
With technology enabling rather than defining who they are, millennials
are regarded as the“Connected Generation,”driven by technology in their
various day-to-day activities. In both North America and LAC, millennials
spend the most amount of time online, dedicating a daily average of 7
hours to Internet-related activities.[6]
This implies a constant connection to
their various digital devices, peers via real-time interactions, social network
associations, and to the numerous brands that engage with them, among
others.
A very important online connection and a great differentiating factor
distinguishing this generation from all others is their particularly high
engagement in social media, with Facebook,[7]
YouTube, and Twitter among
the most popular networks in LAC.
Social media use and penetration is on the rise; in fact, Brazil is currently the
fastest growing country on Facebook and is amongst the top five of the
fastest growing countries for Twitter, along with Argentina and Mexico.[8]
Also, of the top ten countries around the world with the greatest amount of
time spent on social media sites, five of them are in LAC.[9]
9

[6]
Telefonica Global Millennial Survey, 2013
[7]
Socialbakers.com, 2012
[8]
eMarketer, Latin American Countries Among Fastest-Growing Twitter Markets Worldwide, 2014
[9]
eMarketer, Brazil Digital, 2014
7 hours
Millennials spend a
daily average of
to Internet-related
activities.

Figure 6: Benchmarks for Millennials[10]
Source: eMarketer, The Global Media Intelligence Report, 2013
What this reveals is LAC’s wide technology adoption gap across
generations, which translates into an engaged young base of online
users who are laying the groundwork for e-commerce in LAC to flourish,
particularly in a region where there is a cultural tendency of mistrust
in e-commerce transactions. That is not to say, however, that older
generations aren’t spending digitally—they are. However, that is not to say
that LAC is unique in that, compared to the U.S., it has a younger base of
online shoppers. In Mexico, for instance, the median age of online shoppers
is only 30; in Brazil it is 32, whereas in the U.S. it is 43.[11]
This creates a
huge opportunity for financial institutions in LAC, for they can utilize these
online channels for the purpose of solely targeting these young individuals;
because in the end, it is this particular segment who is the primary
audience of these digital channels.
The region also boasts a predominantly distinctive young base of digital
technology users, as shown below.
10
Argentina 64% 70% 60% 74%
Brazil 64% 73% 63% 72%
Chile 51% 70% 58% 72%
Colombia 64% 67% 67% 69%
Mexico 73% 78% 68% 68%
Peru 71% 76% 62% 70%
Venezuela 64% 60% 65% 53%
% of Total
Internet Users
Who are Millennials
% of Total
Social Network Users
Who are Millennials
% of Total
Smartphone Owners
Who are Millennials
% of Total
Mobile Internet Users
Who are Millennials

[10]
Data gathered from individuals between the ages of 12 and 34
[11]
Forrester Latin America Online Retail 2013-2018, 2013
;)

Furthermore, finding themselves in a path to self-discovery, millennials tend
to be highly motivated. They have a strong desire to see and experience
the world— in traveling for a purpose. With that, their travel experiences
are aligned with their life objectives and interests: whether it be their civic-
minded goals, cultural interests, or adventurous hobbies.[12]
They are also
motivated to make a global difference. 82% of LAC’s millennials (compared
to 62% of global contemporaries) believe they can make a difference in their
local communities. They feel optimistic that both technology and education
will lead to personal success as well as a positive change for society.[13]
Additionally, the innovative, supportive, and engaged nature of millennials
makes them decidedly entrepreneurial. Despite the challenge of finding
access to capital, 52% of millennials in LAC consider being an entrepreneur
a very important life accomplishment[14]
—they are looking to do something
different, something impactful and something that will make them unique.
It is also to no surprise that millennials like to have fun. They are particularly
social beings, always fostering a collaborative environment and having
a desire to share experiences with groups of people. In LAC, especially,
millennials seem to spend the majority of their leisure time in diverse social
activities, such as pub and party-going, and exercise and sports; essentially,
in activities that foster well-being, group interaction, and a relaxed
environment.[15]
11

[12]
Boston Consulting Group: Traveling with Millennials, 2013
[13]
[14]
[15]
Euromonitor International Global Youth Study, 2011

12

The question that financial institutions pose, then, involves how these
different behaviors and attitudes of LAC’s millennials impact the relationship
that they have with their financial products; and it is what Visa Performance
Solutions LAC explores next.
Figure 7: Millennial Attitudes:“I believe my financial situation will be better a year from now.”
Source: Millennials, Who, What, Why They Matter, Visa Inc., 2014
U.S. Millennials’Signs of
Accomplishment
Brazil Millennials’Signs of
Accomplishment
In the United States, millennials are distinct from those in LAC, as they
have experienced what can be seen as a different path due to the
recent recession. Many find themselves in a poor financial situation;
underemployment is common; they are burdened by debt and have low
home ownership numbers when compared to Generation X; and due to
these pressures, are witnessing postponements in marriage.[16]
Although
these burdens have signaled a delay in adulthood for millennials in the
U.S., they feel positive about their futures. However, when compared to the
millennial outlook in LAC, the U.S. demonstrates less optimism, higher debt
aversion and different life priorities.

[16]
Millennials, Who, What, Why They Matter, Visa Inc., 2014
US Brazil
47%
18-34
31%
35+
76%
18-34
64%
35+
69% 53% 49%
Being Debt
Free
Being a Dutiful
Member of your
Family
Being Fit and in
Good Health
75% 69% 69%
Being a Dutiful
Member of
your Family
Having a High-
Status Job
Being Fit and in
Good Health
13

In order to observe transactional data of millennials in LAC, Visa
Performance Solutions LAC looked at a recent study of spending patterns
in 2013 of more than two million cardholders in Brazil. These spending
patterns were comprised of both credit and debit transactions. It is
important to note that the following data should not be viewed in absolute
terms; but rather to consider it relatively, and look at the bigger picture of
what all of this implies. In such a diverse market as that of LAC, data may
vary depending on methodology, data quality, market conditions and
execution, among other factors. But, nonetheless, it provides a relative
understanding that can lay the groundwork for identifying the spending
behaviors of millennial individuals.
The data reveals that millennials do seem to have found a predictable path.
They appear to be going through a normal generational life cycle, but have
some of their unique qualities propelling them.
Younger millennials spend the least amount of money. This is expected,
as many in this younger segment are still heavily reliant on their parents
for money and find themselves in the early stages of gaining financial
independence. Older millennials spend more, many now having steady
jobs and life priorities and responsibilities that require greater spending.
However, millennials’lower levels of spending should certainly not be
underestimated. As shown on Figure 8, their annual spending is on
a gradual incline. They are increasingly gaining spending power and
momentum, so capturing this early pocket of growth will generate a strong
and developing cardholder base even before peak spend years have been
reached.
Spending Patterns
It is clear that millennials are driven by their own motivations,
values, and behaviors—many of which make them unique in
comparison to other generations and that are shaped by the
life stage that they find themselves in. However, they very
much desire and are willing to spend their money, meaning
that their behaviors as cardholders aren’t too far off from
those of members of older generations.
14

There seems to be more parity, however, across the average annual
transactions per client (Figure 9), especially amongst those of older
millennials, members of Generation X, and Baby Boomers. The“jump”that is
seen between the number of transactions of younger and older millennials
simply reveals the differences in life stage and income, as well as the lack of
credit card ownership amongst younger millennials.
Figure 8: Total Annual
Spending per Card, by
Generation
Source: Visa Performance Solutions LAC, 2014
Figure 9: Average Annual
Transaction per Client, by
Generation
$919
$1,773
$2,674
$2,489
$2,793
$2,493
Great Gen.
Silent Gen.
Baby Boomers
Gen. X
Older Millennials
17.80
21.68
22.51
21.17
23.28
23.52
Great Gen.
Silent Gen.
Baby Boomers
Gen. X
Older Millennials
Younger Millennials
Younger Millennials
15

The Figure 9 implies that millennials are clearly not an inferior generation
when it comes to how they behave as cardholders. They are willing to
spend money, and do so almost as frequently as older generations; but,
because they have less money to spend and lack a need for high-ticket
items, they simply engage in smaller-ticket transactions. Over time, as
millennials begin to earn more and move into the more mature stages
of life, they will gain greater responsibilities and begin to see the need
for larger-ticket purchases (Figure 10); and thus, they will become more
powerful spenders as they progress along the generational life cycle.
Ticket size is also reflected when looking at where millennials spend
significant fractions of their total wallets (Figure 11). They buy in merchant
categories (MCGs) that do not require such high-ticket purchases. They
buy less luxurious clothing; have fewer products to buy and less people to
buy for; and they don’t have restaurant preferences that are too specific,
preferring to go to a casual pub with a large group of friends as opposed
to a high-end, more expensive restaurant. They are choosing to spend
significant proportions of their total expenses on these MCGs, meaning
that these are things that are important to them. For example, millennials
will not refrain from buying the clothing they like, for they value comfort,
style, and appearance. Clothing and other similar retail expenditures have
also been highly facilitated by the rise in e-commerce, highly adopted by
millennials. Additionally, department stores are the perfect places to not
only shop for a wide array of needs, but to also shop with groups of friends.
And restaurants serve as places where millennials can connect, relax, and
enjoy good company.
Figure 10: Average
Ticket Size per Client,
by Generation
Source: Visa Performance Solutions
LAC, 2014
$52
$82
$119
$118
$120
$106
Great Gen.
Silent Gen.
Baby Boomers
Gen. X
Older Millennials
Younger Millennials
16

On the other hand, the above figure also reveals that
millennials are less engaged in MCGs that require
higher average tickets, and which aren’t especially
aligned to their life needs and objectives. For example,
whereas older generations may be purchasing
medical supplies and services because they have to
and due to their growing age, millennials may simply
be engaging in necessary and more basic medical
expenditures. The same holds true in the supermarket
category, where spend also declines throughout the
generations. Members of older generations buy a
wider variety of products and for more people, such
as their families. They may also prefer more expensive
brands, so they engage in higher-ticket purchases.
For millennials, this is different. Many in the younger
segment may be still living at home and relying on
their parents. For older millennials who have started
lives of their own, their preferences aren’t as clearly
defined; and they are also buying for less people.
So millennials currently spend less and engage in
lower-ticket purchases. However, such information
should not be misleading because, in fact, a significant
number of them exhibit affluent behavior. Based on
the data, approximately 30% of the older millennials
and 10% of the younger millennials in the sample
displayed what could be considered affluent behavior.
Members of Generation X and Baby Boomers do have
higher spending power, but based on these insights,
millennials yield a huge opportunity that certainly
cannot be underestimated.
Another reason why the current spending power of
this generation should not be undervalued involves
the fact that, as was previously acknowledged, tech-
savvy, connected millennials have also demonstrated
increasing online purchasing behaviors. As shown
below, when compared to the other generations,
millennials spent the greatest proportion of their total
spending in e-commerce. With the wide technology
adoption gap in LAC, as was mentioned previously,
as e-commerce continues to gain momentum,
millennials will be the key drivers behind it.
Figure 11: Percent of Total Spending across Significant Merchant Categories (MCGs)
17
6%
10%
7%
5%
8%
6%
7%
9%
7%
5%
8%
6%
8%
10%
8%
7%
10%
7%
12%
5%
6%
11%
5%
7%
19%
12%
14%
19%
11%
16%
Great Generation
Silent Generation
Baby Boomers
Generation X
Older Millennials
Younger Millennials
Clothing Department
Store
Restaurants Medical Supermarkets

To build further, millennials dedicate a greater proportion of their total wallet
shares to computer goods and services than do older generations. 3% of the
total annual spending of the younger millennials in the sample, for instance,
was directed towards this merchant category; for older millennials it was 2%,
and for all older generations it was a mere 1%. So, millennials’wallet share in this
MCG was up to three times greater than that of older generations, meaning that
they spend more in categories that further align with their desire to always stay
connected.
Common intuition may also lead to the generalization that those who spend
less also spend less, if any money at all, cross-border. That is not the case for
millennials, whose cross-border profiles are very similar to those of other
generations, and, in particular, to that of the more powerful spenders. In fact,
based on the sample, the average millennial cross-border wallet share was up to
25% greater than the corresponding average of the older generations (Figure 13).
Millennials will continue to move uphill in the generational life cycle; therefore,
future spending cross-border will become increasingly significant and a major
pocket of opportunity for financial institutions.
Figure 12: eCommerce Spending (as % of Total Spending), by Generation
Younger
Millennials
Older
Millennials
Gen. X
Baby
Boomers
Silent
Gen.
14.1% 14.5%
11.9%
10.5%
8.6%
18

These cross border trends are in-line with millennials’high-motivation and desire
to see the world, as was previously mentioned. They may have less money to
spend, but because travel experiences are so meaningful and inspiring to them,
they are willing to spend more in this category.
So, when it comes to how they behave as cardholders, millennials demonstrate
a close proximity to other generations: they are willing to spend. They simply
spend less because of the stage of life that they find themselves in. When
they become the new“Generation X,”they will spend just as much as today’s
Generation X and engage in higher-ticket transactions. What is different,
however, are the motivations behind the purchases millennials make, and
how these are shaped by their specific attitudes and behaviors. For instance,
they spend cross border because they want to explore the world, they spend
in e-commerce because of their proximity to technology, and they spend in
categories and seek offers that they find meaningful and that are aligned to their
life objectives.
This is an important aspect to consider for financial institutions who wish to
capture the opportunities presented by this generation. As life stage plays a
pivotal role in the behavior and needs of millennials, and as financial inclusion
continues to serve as one of the biggest challenges in LAC, financial institutions
should explore the wide array of solutions across millennial segments.
Figure 13: Cross-border Spending (as % of Total Spending), by Generation
Younger
Millennials
Average for
Millennials
Older
Millennials
Average for
the other Gen.
Gen. X
Baby
Boomers
Silent
Gen.
Great
Gen.
4.2%
5.3% 4.8%
4.1%
3.4%
2.6%
4.8%
3.7%
19

So, when it comes to how they behave
as cardholders, millennials demonstrate
a close proximity to other generations:
THEY ARE
WILLING TO
SPEND.

Implications
For example, some have millions of Facebook“likes”on their pages,
thousands of followers on twitter, and already have products or services
that are specifically geared towards young adults and students. However,
it is highly likely that their current strategies and approaches only
comprise a mere piece of the pie and not the entire whole. To achieve
that entire whole, Visa Performance Solutions LAC has developed
recommendations and will support its current and prospective clients
who are looking to optimize millennial opportunities and who want to
reach, attract, and build long-lasting, influential ties with this generation.
The first step is to recognize that millennials are not a homogenous
segment; so, one general, mass solution that doesn’t differ much from
what has already been used with previous generations will not truly
optimize the opportunities that come with this generation. Just as
banks have witnessed the need to identify niche markets when dealing
with certain segments such as high net-worth individuals, unbanked
consumers, and co-branded programs, they will realize that millennials,
too, are a niche market that should be approached in a unique manner.
What is distinct about millennials is that their behaviors and needs are
rapidly evolving and models should accurately predict that in order to
ensure that banks always stay ahead of the curve. Usually, segments tend
to have slightly bent spending curves, not having such a rapid increase in
spend growth. As was evidenced by Figure 8, increases in spending seem
to plateau for members of Generation X, Baby Boomers and the older
generations. So, with millennials it is crucial to try a different approach—to
predict and anticipate changes in spending behavior before applying
strategies to reach them.
Visa Performance Solutions LAC’s portfolio offers customized solutions
for issuers, acquirers, and merchants—several of which can effectively be
adapted and fine-tuned to serve the niche millennial market.
Because millennials are such an immense segment,
many of LAC’s leading banks are already aware of the
opportunities presented by this generation. Many have
already developed initiatives to engage millennials.
22

However, banks not only have the chance to adapt current solutions to the
millennial segment, but to also seek new initiatives. Millennials are unique
and have characteristics about them that stand out; and that should highly
be taken advantage of.
Figure 14: Visa Performance Solutions LAC Portfolio
23
Strategic Cross-Sell
Commercial Migration
Private Label Migration
Non-DDA Acquisition
Business Diagnostic
Revenue Enhancement, Cost Efficiency, Rewards Optimization, Revolving Behavior
Acquiring Study
Credit Line Management
Predictive Segmentation - Customer Lifetime Value (CLTV)
Promotions
Debit Adoption Path
Campaign Management
Analytics Healthcheck
Loyalty Program Enhancement
Profitability - Issuer/Acquirer
Benchmarks
Co-Branding
Activation Diagnostic
Activation Strategy
Segmentation
Market Basket Analysis
Proactive Retention
Service Cross-Sell (Profitability)
Upgrade to Upscale
Sales
Product/
Portfolio
Acceptance
Risk
Finance
Acquisition Activation Use Retention
Application Scorecard Credit line Increase Collections
The chart below suggests top opportunities for issuers that want to
focus on millennial population and develop customized approach for the
segment.

Existing Cross-Sell practices, for example, may be
enhanced to address the needs presented by each
respective millennial life stage and also take into
account their preferred communication channels.
Projects like these could generate greater response
rates from even earlier ages, and can also help to lay
the groundwork for the development of an effective
acquisition strategy at a time when millennials have
yet to reach their peak spend years and are quickly
building their spending power.
What truly resonates about this generation, though,
is their high connectivity, and that is something that
should also be immediately taken advantage of.
Therefore, Visa Performance Solutions LAC will also
back its current and prospective clients with initiatives
that will leverage the power of such connectivity.
This, for example, involves the optimization of search
engines as effective channels of acquisition; or related
actions that will allow banks to analyze the acquisition
journey of a customer from every single touch point.
Financial institutions have an entire digital world
at their hands, and as revealed previously, in LAC,
millennials are the primary users of these digital
channels. So, banks must ensure that they acquire
those customers who are searching for and who are
interested in their products and services—and they
can do so by optimizing these exact primary channels
of acquisition.
Acquisition
The key to tapping into the potential of the millennial
market and to engage both new and existing
customers involves the rapid anticipation of millennial
life stage needs, since each new life stage brings forth
new opportunities and new means of engagement.
24
Implications

In many cases, millennial portfolio spending tends
to be concentrated in certain categories (as Figure 11
revealed). Thus, with the help of Visa Performance
Solutions LAC, issuers can take advantage of projects
such as Market Basket Analyses (MBAs)—association
analyses that identify average consumer behaviors by
using a combination of merchant categories (MCGs).
The opportunity presented here revolves around the
notion that millennials have a unique MCG dispersion,
one that is heavily guided by where they currently find
themselves in life. So from this, millennial consumer
behaviors will be identified as a niche, and specific
association rules for them will be developed, given
the fact that if the rules that are used for an average
consumer are also applied to millennials, the project
won’t truly cater to their exact needs. By applying
specific rules for this segment, therefore, greater use
Activation and Use
and a spending uplift will be achieved even before
these individuals have reached their peak spending
years.
Traditional categories like supermarkets and
drugstores are not expected to play an important role
in MBA campaigns for Millennials as this is not their
preferred spending behavior. In these case, issuers can
focus on department stores, clothing and restaurants.
E-commerce spending can also be an important
piece of the strategy as it is more appealing to these
cardholders.
As an example, traditional association rules may not
be as strong for millennials as they are for the general
population. In those cases, new rules would provide
a higher return and may be prioritized. Below an
illustrative example:
Traditional Rule General Population
New Rule Millennial Population
New Rule Millennial Population
Traditional Rule Millennial Population
Figure 15: Rules of Association
ConsequenceCause
ConsequenceCause
Support (%) Confidence (%) Exp. Conf (%) Lift
7 31 15 2.0
3 21 19 1.1
Support (%) Confidence (%) Exp. Conf (%) Lift
9 34 18 1.9
6 50 27 1.8
Supermarket GAS
Clothing
Clothing Dept. Stores
Restaurant
25

26
In addition, Visa Performance Solutions LAC currently
works with clients in the region to strengthen
customer loyalty. Often times an Upgrade to Upscale
project is implemented in order to optimize high-
value cardholders by offering them upscale products.
The same can be applied to the high-value millennial
customers.
From the data of over two million cardholders in
Brazil, it was observed that a significant number of
millennials could be considered affluent customers.
And because millennials are rapidly evolving and
increasingly gaining spending power, even those
who may not currently be exhibiting such behavior
may be on the right path to doing so. Thus, an
Upgrade to Upscale project can be applied to this
market by developing a typical profile for each
segment, based on common high-value traits,
activities and triggers, and then implementing an
upgrade strategy that anticipates the upcoming
needs and behaviors of the millennial cardholder.
But, since this generation is unique in that these
individuals are rapidly evolving, financial institutions
have the opportunity to fine-tune this particular
project by changing the scores that are used for
determining which customers qualify for upgrades.
By bending these cutoff points, banks will anticipate
the future behaviors of these individuals, and thus,
generate a first mover advantage with an even
greater slice of the millennial segment. This will
strengthen and develop enduring relationships
with the millennial customer because as a result of
this project, they will feel valued and will establish a
special connection with that bank that they will carry
with them for the rest of their lives.
Figure 16: Affluent customers among Millennials
$0.02 $491.72 $2,544.26$89.70 $877.78
Cumulative Spending per Card (Deciles)
Population
$4,596.48$239.22 $1,498.24 $9,406.23 $28,062.99
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-30%
-40%
$2,500+
% Affluent
Generation X
Older
Millennials
Younger
Millennials
Implications

On the retention side, there are three steps that could
be enhanced. The first one is proactive retention.
Millennials are evolving very rapidly across lifecycle
stages and their needs and expectations will also
evolve with time. A college student is expected to
be a young professional in 4 years and many may be
considered affluent very rapidly. As such, issuers should
follow the curve and offer better products, credit lines,
loyalty programs and be proactive to identify when
cardholder moves to the next step.
The second step is reactive retention. Many issuers use
models to classify clients according to their profitability
or potential to the bank. Generic models may fall short
when evaluating millennials as these clients may have
a different profitability in the future compared to what
they offer today. In addition, they have a longer life
and an ample cross-sell opportunity for other banking
products.
Finally, the third step. Because millennials have such
significant cross-border profiles (as Figure 13 revealed),
and because they have such a strong desire to travel,
it is important for banks to be aware of some unique
initiatives that they can also implement in order to take
advantage of this noteworthy generational value and
also utilize it as a means of establishing top-of-wallet
loyalty from an early age.
It has been noted in the past that declined transactions
may cause an increase in the cancellation of cards. This
is because oftentimes declinations lead to frustration
and embarrassment, leading one to more likely think
twice about using that card after that happens. Data
also reveals that this shows an even greater effect
for those cross-border transactions that are declined.
In fact, this effect is expected to be more profound
for millennials, who are still looking to build trusting
relationships with financial institutions and who are
highly influenced by what happens to them early in
their lives. Therefore, banks should develop initiatives
to only decline cross-border transactions if necessary
in order to not only magnify the cross-border impact
of this generation, but to also yield early millennial
retention and loyalty.
Retention
Other adaptations of current solutions from Visa Performance
Solutions portfolio such as Proactive Retention and Credit Line
Management can yield successful retention if applied to the
millennial generation.
27

28
Based on the findings of these studies, Visa LAC products team developed a comprehensive offer that
meets the specific needs of the segment and provided Visa issuers with the possibility of deliver an
adequate product to satisfy the needs of a generation that is dictating the pace not only in the payment
industry but in every market around the world.
The Visa LAC proposal incorporates:
Product Development
Visa LAC commissioned a series of studies in seven key
markets in the region (Argentina, Chile, Colombia, Costa
Rica, Mexico, Panama and Peru), that allow to clearly
establish the profile of these young Latin Americans and
identify aspirations, attitudes to life, consumption patterns
and forms of communication.[17]
A deep understanding
of the segment
Not only by sharing the findings
and results of the studies
mentioned above, but also with
the support of Visa Performance
Solutions LAC, through an
analytic methodology which is
explained later in this document.
Product value
Proposition
Incorporating the most valued
attributes by millennial in terms
of services and coverage to
meet their priorities related
with security, time optimization,
management and control of their
finances, planning and support
for social causes.
Communication and
promotion strategy
The proposal includes a
complete set of communication
materials explaining the main
benefits of the product, the
support in the design of digital
communication strategy and
promotional offers to encourage
the use of cards as the preferred
payment method.
[17]
Commissioned by Visa and conducted by Provokers through focus group study, research on social networks and collecting information from previous studies of Visa, among
Latin American youths aged between 18 and 30 years in countries like Argentina, Colombia, Chile, Panama, Peru and Costa Rica. Study commissioned by Visa and led by De la
Riba among Mexican youth between 18 and 30 years in the major cities of Mexico that included group interviews, anthropological pursuits, face-to-face and peer groups. Visa
Market Research, Inc. Mapping Colombia 2012.

Conclusion
Financial inclusion is still an important challenge for most markets in LAC, where only 39% of the
population over 15 years have a formal banking relationship, according to World Bank. Even in countries
with higher penetration of financial services like Brazil the opportunity is still massive as 44% of its
population unbanked. Opportuinity is even more important in Argentina (77% unbanked), Colombia
(70%), and Mexico (73%).
As a result of low financial inclusion, electronic payments indicators tend to be low compared to
developed markets and will expand intensively as more people adhere to formal banking relationships.
The average penetration of electronic payments in Private Consumption Expenditure in 24% according to
Euromonitor, a low mark compared to 40% in USA. None of LAC markets come close to USA, Brazil - the
more advanced - has 31%, Argentina 23%, Mexico 15%, and Colombia 11%.
Millennials can be the answer to accelerate the financial inclusion expansion and also generate additional
profitability opportunities to financial institutions as they make up nearly 36% of LAC’s population. It is
no doubt that they will become a major segment of clients for those banks who quickly learn how to
retain them. Even though they are young and have, on average, lower income, lower spending and lower
average tickets, such information should not be misleading. In the sample of over two million cardholders
in Brazil, for instance, it was observed that a significant number of the millennials in the sample exhibit
affluent behavior. So, it is pivotal for financial institutions to be aware of these tendencies and patterns,
and know exactly where these individuals will be as they progress along the generational life cycle.
Existing practices can be adapted and enhanced to leverage the opportunities on acquisition, activation,
use and retention for millennials. In general, to be a successful financial institutions with the millennial
population, it is important to be drive relationship and products that are more nimble, more digital, more
customized, more relevant and timelier.
Although some financial institutions in LAC have already begun to approach the millennial generation,
they need to go beyond generic and mass product offerings and approach this segment in a unique
manner. Visa Performance Solutions LAC accompanied with the Visa product strategy targeting the
millennial segment will, therefore, serve as an asset for any of its current or prospective clients looking to
develop specific strategies to capture the opportunities and the potential for long-lasting relationships
and profitability that this generation presents.
Finally, it is pivotal for these insights to be integrated with data, technology and efforts of financial
inclusion—three concepts that play a very important role in LAC. Achieving this can drive a major shift for
the potential of the payment industry in the region.
For more information and details on these findings, contact Visa Performance Solutions LAC and send
your contacts (Name, email, phone, job, company) to VPS_LAC@visa.com
29

Insights for Tapping into the Millennial Generation in Latin America

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