Gen Y: The High Maintenance Generation?
In 2011, Fiserv conducted a study to better understand the ways consumers manage their finances every month. We've conducted this survey at regular intervals for over 10 years and each year the survey reveals interesting insights. In the last post, we highlighted some of the findings related to tablet banking. This week, I'd like to share my thoughts on one of the more contrarian insights that came out of the survey. The study found that Gen Y consumers can be "high maintenance" when it comes to their financial management habits.
As you would probably suspect, Gen Y consumers are avid users of digital channels. When asked about the most useful products for managing their finances, Gen Y respondents chose, in order:
- Online Banking
- Debit Cards
- Bank Based Bill Pay
- Biller Direct bill payments
- Credit Cards
However, this preference for digital services does not seem to limit their actual usage of physical channels like branches, ATMS and call centers. In fact the research showed Gen Y consumers are more likely to visit a branch, drive up to an ATM, or call a call center than any other age segment. In addition, Gen Y consumers represent the highest percentage of high volume users – 5 or more visits a month – for each of these services. Gen Y consumers appear to have an "all the information, through all the channels, available all the time" attitude.
Why? It is likely this stems from three underlying forces – high expectations, lower average balances, and evolving lives and financial habits. Gen Y consumers, those born after 1980, grew up in the age of microwaves, cable television, email, and cell phones. Asking them to wait overnight for up-to-date banking information is like asking them to send a telegraph or walk across the room to change the television channel. Ease and accessibility have always been their expectation for every interaction, and this applies to their financial interactions as well. They expect their financial information to be always available, accurate and easy to use.
The majority of Gen Y consumers are still in their 20s, and especially in this economic climate, they may not have a solid career or financial foundation. Many Gen Ys have moved back in with mom and dad after college because they couldn't find a job. Even for those with jobs, their incomes are typically lower than later phases in life. In "Portfolios of the Poor: How the World’s Poor Live on $2 a Day", Daryl Collins actually found an inverse relationship between the amount of money someone has and the amount of time they spend managing it. Our focus groups have shown us similar insights. Higher income households usually check their balances weekly to "make sure it is +/- $100 where I think it should be." Lower income households check their balances daily, sometimes even multiple times a day, to ensure they have enough money for daily living expenses like food, bills, gas, etc. Gen Y consumers want real-time information because they are managing their narrow financial margins in real time.
Gen Y consumers are still developing their financial management habits. They live more fluid lives and are more likely to move, purchase first homes, start new jobs start families and initiate new financial relationships than older generations. Many of these life changes may lead to branch visits – for activities such as applying for loans, opening new accounts or getting financial advice. The complexity of financial processes, fear or unfamiliarity could also cause Gen Y consumers to more regularly seek help through more service-intensive channels for the financial institution.
So how can banks and credit unions better serve Gen Y? That's for a future post – and in the meantime I am interested to hear your perspective. Feel free to email me directly or contact me on twitter at @danielrsteere.