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3 Strategies to Grow Millennial Membership

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3 Strategies to Grow Millennial Membership

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Sporting $200 billion in annual buying power, Millennials are a financial force. And while many have been slow to adopt credit, segments are proving to be prime candidates for bankcards, mortgages and auto loans. But where are Millennials taking their financial business? Data reveals only a very small percentage of Gen Y has connected with credit unions, and credit unions have expressed frustration in how to grow this relationship. Dig deeper and gain insights from Scott Butterfield, founder of Your Credit Union Partner, to learn how credit unions can do a better job reaching this market through segmentation and a refined product mix.

Sporting $200 billion in annual buying power, Millennials are a financial force. And while many have been slow to adopt credit, segments are proving to be prime candidates for bankcards, mortgages and auto loans. But where are Millennials taking their financial business? Data reveals only a very small percentage of Gen Y has connected with credit unions, and credit unions have expressed frustration in how to grow this relationship. Dig deeper and gain insights from Scott Butterfield, founder of Your Credit Union Partner, to learn how credit unions can do a better job reaching this market through segmentation and a refined product mix.

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3 Strategies to Grow Millennial Membership

  1. 1. ©2015 Experian Information Solutions, Inc. All rights reserved. Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Confidential. 3 Strategies to Grow Millennial Membership Nov. 12, 2015 Scott Butterfield, CCUE, CUCE, CUDE Your Credit Union Partner
  2. 2. 2©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential.  CUDE, CCUE, CUCE  More than 30 years of credit union service  Trusted advisor to leaders of more than 100 credit unions  Specializes in strategic planning, board governance, market research and analysis, and community development Featured Industry Expert – Scott Butterfield
  3. 3. 3©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential.  Understanding Millennials  The Millennial Opportunity  3 Strategies to Grow & Retain Your Millennial Membership Agenda
  4. 4. 4©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential.  Born between 1980 – 1995  Diverse  Self-Expressive  Socially Conscious  Digitally-Dependent  Prefer to Support Local The Millennial Profile And now officially the LARGEST and MOST EDUCATED generation of all time!
  5. 5. 5©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Officially Became Largest Generation in 2015
  6. 6. 6©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential.  Convenience  Lower, Predictable Fees  Positive Experience Financial Preferences
  7. 7. 7©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Millennials Using Alternative Finance Sources “While 92% of Millennials report using a bank, 45% have supplemented their banking with some form of alternative finance within the past year.” -Think Finance – Why???  Products are more convenient (42%)  Lower or more predictable fees (31%)  Products generally better meet their needs (30%).
  8. 8. 8©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. So what does this mean for Credit Unions?
  9. 9. 9©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. 44%of Millennials are unfamiliar with Credit Unions 15%of Millennials are currently attached to a Credit Union The Millennial Opportunity 1 Filene Research Institute Study, https://filene.org/assets,pdfreports/368_Youngest_Millennials.pdf 2 Pew Research Center
  10. 10. 10©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. 1. Membership Growth 2. Lending Growth The Opportunity for Credit Unions Experian/YCUP Survey Reveals 2 Greatest Credit Union Concerns. Millennials
  11. 11. 11©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Your Millennial Obstacles  Can I speak their language?  Educate them about credit unions?  Manage risk?  Need to adjust my scoring models?  What can I do with limited resources?
  12. 12. 12©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. 3 Strategies to Grow and Retain Your Millennial Membership
  13. 13. 13©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Strategy #1: Assess Your Appetite for Risk  Shop Alternative Finance  Assess your risk tolerance  Where does your board stand?
  14. 14. 14©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Internal Assessment Yes No Do you utilize social media? Do you offer mobile banking? How do your online tools stack up? Do you accept online applications? Do you render real-time decisioning? Do you utilize instant prescreen? Is your board risk averse? Are you open to borrowers with limited credit? Do you have a strategy for thin-file candidates? Strategy #1: Know Yourself
  15. 15. 15©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Strategy 1: Case Study Example The Smart Risk Taker Asset Size: $1.3 Billion  Statewide footprint/Community Charter  Diverse balance sheet  Highly competitive landscape  Large banks  Credit unions  Solution for lending deeper  Increased membership growth  Higher average loan yield  Manageable losses 5-Year Financial and Growth Results  Net worth 9.58%  ROA 1.32%  Loan Growth 8.05%  Membership Growth 7.94%  Asset Growth 7.56%  Delinquency 0.53%  Charge Off 0.62% 5-year average loan yield 4.60%
  16. 16. 16©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Strategy #2: Segment to Find Your Universe Millennials can be segmented as follows. These are fairly broad buckets, but key segments for credit unions to consider. • Hispanics • Young Millennials • College-Educated • Single • Married • Married w/Kids • Entrepreneurs • Active Military • Students
  17. 17. 17©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Strategy 2: Case Study Example The Segmentation King Asset Size: $96 million  Know their competition  Alternative Financial Service providers  Deeply embedded in community  Serve younger, underserved  Specialized products for:  Thin-file  Millennial  Hispanic  First-time buyer, credit-builder programs, ITIN 5-Year Financial and Growth Results  Net Worth 11.5%  ROA 1.04%  Loan Growth 18.8%  Membership Growth 15.6%  Asset Growth 15.1%  Delinquency 0.66%  Charge Off 0.38% Nearly 45% of members are millennials! 5-year average loan yield 8.3%
  18. 18. 18©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. How do your products and services match up with the financial needs and challenges of Millennials? Popular Millennial Products:  Prepaid Debit Cards  Credit Builder Loans  Remote Deposit Capture  Mobile Technology  Sub-prime Lending  ATM/Shared-branching Services  Financial Education Strategy #3: Evaluate Your Products & Services
  19. 19. 19©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Strategy 3: Case Study Example The Product Mix Sweet Spot Asset Size: $200 Million  Know their competition  Deeply embedded in community  Serving younger, underserved  Adjustment to Lending mix and scoring models:  Robust Indirect Auto Lending  Subprime lending programs  Mortgage Lending Programs  Targeted Financial Education  Credit Builder Loans 5-Year Financial and Growth Results  Net worth 8.82%  ROA 0.56%  Loan Growth 13.85%  Membership Growth 15.21%  Asset Growth 16.63%  Delinquency 1.16%  Charge Off 0.67% 74% loan portfolio used auto 5-year average loan yield 6.15%
  20. 20. 20©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. 1, 2, 3 … Go! Assess Your Risk Tolerance/ Modeling Segment to Find Your Universe Evaluate Your Products and Services
  21. 21. 21©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Closing thoughts… Millennials WANT: Community - Ethical Institutions - Convenient Access to Credit Ways for You to Deepen the Relationship:  Start with Indirect Portfolio  Portfolio Assessment to identify ways to grow wallet share
  22. 22. 22©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Questions
  23. 23. 23©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Experian.com/Millennials More Millennial Insights
  24. 24. 24©2015 Experian Information Solutions, Inc. All rights reserved. Experian Confidential.

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