Marketing To Generation Y: They’re Your Bank’s Future ✓ Solved

Marketing to Generation Y They’re your bank’s future

Generation Y, born between 1979 and 1999, are your bank’s future. They’ve already surpassed Baby Boomers in numbers and will exceed them in annual income by next year. They’re “digital natives,” the first generation to grow up with computers, but they’re also a social generation. How well you provide their favored technology and how you use it to communicate with them will determine your success in recruiting and retaining them as customers.

For boomers, technology was an end in itself, while for Gen X and Y, it’s just another medium of exchange that they learn quickly. The way Gen Y communicates and consumes information is an essential part of who they are. Their computer will be their window to work, socialization, and online banking. Their social network defines their lives and will be critical elements of banks’ marketing strategies to reach this valuable customer segment.

At present, there are almost 60 banks with a presence on Facebook, but there’s more that banks could do to attract Gen Y. Institutions may start distinct, co-branded spinoff sites targeted to Gen Y, with snappier design than a “plain-vanilla” banking site. The ease of establishing a long-term web-based banking relationship with Gen X and Gen Y gives them more opportunity to research the competition.

Banks have to adopt a different strategy of communication. Communications must be relevant and targeted. If you’re not on Facebook, you’re missing an opportunity to provide information on your services, but you don’t want to be overtly pitching or advertising.

When First United Bank and Trust Co. redesigned and updated its website, the bank’s chairman drew from the ranks of bank employees under age 30. The bank is now investigating an entry into mobile banking and establishing a presence on mediums such as Facebook or YouTube. As First United investigates mobile banking, it will want to offer the most secure site available.

What does Gen Y want? Immediacy, individualism, and social interaction. When the bank redesigned its website, it incorporated practical financial calculators such as the Lunch Savings Calculator and the Rent vs. Buy calculator to engage this generation effectively. A.Bright Idea’s Dietrich observes that Gen Y’s understanding of technology is innate, and banks must constantly refresh their sites with new information to attract them.

A.Bright Idea’s client, Slavie Federal Savings Bank, updated its web site to maintain a fresh and functional appearance, targeting first-time homebuyers at the upper end of the Gen Y age bracket. The agency developed the tagline, “Discover Today’s Slavie,” and utilized nontraditional approaches, including radio endorsements to appeal to this demographic.

Pennsylvania’s PNC Bank teamed with IDEO to conduct ethnographic studies to understand what Gen Y wants in financial service tools. Gen Y customers desire simplicity and clarity in services, as many money management concepts haven’t been taught in school. PNC Bank’s Virtual Wallet program reflects how Gen Y thinks about money with its user-friendly design.

Two-way communication is an essential aspect as Gen Y wants the capability to critique their experiences with banks. Fostering a platform where customers can share feedback is vital, yet few banks are willing to openly display such comments.

Additionally, a notable trend is the “Boomerang” phenomenon, where many adult children return to live with their parents due to economic challenges. This necessity may open avenues for banks to create products that assist these young adults in achieving independence like long-term savings accounts or down payment support for housing.

Corporate transparency has become a vital element of the value proposition, especially since the financial crisis experienced in 2008. Gen Y wants full transparency regarding fees and terms while aligning with companies that share their values. They show a strong sense of social responsibility and are less likely to trust institutions that prioritize profits over ethical practices.

Retention strategies have become crucial since acquiring new customers often costs more than retaining existing ones. Community banks need to find ways to keep Gen Y customers who could move away after college. A viable growth strategy is to promote “sticky” behaviors, such as direct deposits and automatic payments, that make account transitions more cumbersome.

It’s important to consider that while Gen Y are early adopters of technology, older generations are also rapidly embracing new banking solutions. Timely service offerings provide banks with a competitive edge, and research indicates that regular use of online banking applications leads to higher customer retention rates.

Furthermore, as financial education becomes more vital, banks must develop services geared towards enhancing Gen Y’s financial literacy. This generation values support that guides them in making informed financial decisions and forming responsible saving habits.

In conclusion, a bank’s ability to engage with Generation Y effectively will rely on understanding their unique characteristics and tailoring services to meet their expectations. Building a culture of transparency and responsiveness to feedback will further solidify a bank’s standing with this influential demographic, ensuring long-term growth and customer loyalty.

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References

• Cohen, L. (2009). How Different Generations View Banking. SRI Consulting
• Dietrich, C. P. (2009). Strategies for Engaging Generation Y. A.Bright Idea LLC.
• Newcomb, A. (2009). Communicating with Young Consumers. A.G. Newcomb
• Thayer, R. (2009). Evolving Banking Practices. First United Bank and Trust
• O'Neill, C. P. (2009). The Role of Technology in Banking. Maryland Banker
• Coretto, T. (2009). Marketing Strategies for Gen Y. PNT Marketing Services Inc.
• Ley, M. (2009). Innovations in Banking Services for Younger Clients. PNC Bank
• IDEO. (2009). Understanding Generation Y's Financial Needs. Research Report
• Mintel. (2009). Financial Services Overview. Mintel Group Ltd.
• National Bureau of Economic Research. (2009). Economic Trends and Young Adults. NBER Working Papers.