Young adults are flocking to urban centers, reports the New York Times. According to the newspaper, the number of 25- to 34-year-old college graduates living in one of the United States’ 51 largest metropolitan statistical areas (MSAs) increased 25% from 2000 to 2012.
This presents a significant opportunity for credit unions in these cities to attract their next generation of membership. However, it’s not only urban credit unions that can grab a share of the desirable demographic.
The following strategies come from credit unions that operate in Denver, Seattle, and San Francisco. And although a credit union’s geographic footprint presents its own distinct challenges, credit unions across the country can benefit from the strategies presented here.
Consumer Products At Bellco Credit Union
Metro Denver’s 4.8% unemployment rate as of August 2014 is a full percentage point lower than the 5.9% national average. And it might be easier to find employment in the coming years. The Colorado Department of Labor and Employment estimates there will be a 26.2% rise in employment in the MSA by 2023.
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bellco Credit Union
data as of 06.30.14
HQ: Greenwood Village, CO
12-MO SHARE GROWTH: 7.6%
12-MO LOAN GROWTH: 11.6%
Bellco Credit Union ($2.5B, Greenwood Village, CO) operates branches in each of the six counties that make up the Denver MSA. According to John Rivera, senior vice president and chief retail officer at Bellco, Denver’s potential growth and the incoming population of young adults portend good news for the future of the credit union.
Denver’s aerospace engineering, telecommunications, and technology industries help establish a median household annual income that is well above the country’s — more than $62,000 compared to $53,000. That earning potential mixed with a 36% increase in 25- to 34-year-olds from 2000 to 2012 bodes well for consumer loans and mortgages.
“Denver can’t keep up with housing demand,” Rivera says. “Houses sell within 72 hours after they go on the market.”
Despite the popularity of housing, Rivera says young adults are most likely to gravitate toward consumer loans. Considering 15- to 35-year olds comprise 28% of Bellco’s total membership, a 91% increase since 2011, that’s a great place to start building youth-friendly products.
Bucking the national trend of tepid auto ownership for millennials and despite the availability of public transportation, Denver remains a robust market for autos. And Bellco is one of the top auto lenders in Colorado. It holds nearly 40% of its portfolio, or $790,000, in new and used auto loans, according to Callahan & Associates. By comparison, the average for all of Colorado’s credit unions is 37%, or $45,000.
Additionally, Rivera notes this generation’s need for credit cards and small lines of credit, which are often introductory products that offer low limits. Year-over-year, credit card balances at Bellco have increased by 9.30%. Balances at credit unions with more than $1 billion in assets grew 10.42% during the same time frame.
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Beyond having the products, Bellco must also attract the younger generation’s attention. The credit union does that in three ways: first, it recognizes how important reputation is to young adult decision-making and forms community partnerships with local companies, projects, and initiatives. One such example is the OneWall Project, a platform that facilities the instillation of large scale artwork across the city.
Second, it has improved its online and mobile offerings. And considering the adoption rates of such technology among this generation, the move has put the Bellco brand where young members are spending time.
Third, the credit union is building trust through financial education efforts. Responding to the negative perception of financial institutions developed in the wake of the financial crisis, the credit union wants to not only lend to young members but also give them advice on loan terms and how to improve their financial lives.
“There’s a trust factor here now,” Rivera says. “They are looking for some type of trust or rapport from their financial institution.”
Next: Deposit Products At BECU »
Deposit Products At BECU
Seattle’s 2.8% growth from 2012 to 2013 makes it the fastest growing city in the United States. Thanks to large revenue employers such as Boeing, Microsoft, Amazon, and Nordstrom, the city expects 115,000 new jobs by 2035 — Amazon alone is expected to nearly triple its local employ in the coming years to 40,000. To keep up with this growth, the city’s Department of Planning and Development anticipates the need for 70,000 new housing units in the next 20 years, according to Politico.
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data as of 06.30.14
HQ: Seattle, WA
12-MO SHARE GROWTH: 6.4%
12-MO LOAN GROWTH: 12.8%
BECU ($12.5B, Seattle, WA) operates more than 40 branches in the Seattle metro area. It knows a thing or two about the 18- to 34-year-olds who comprise the city’s young adults. They are tech savvy and smart, and a national survey conducted by Weber Shandwick found that nationally, Seattleites are often viewed as “friendly,” “environmentally conscious,” and “casual.” Politico called them “minimalist” and “anti-material.” Seattle’s young adults would rather rent a micro-apartment than own a home, rather ride bicycles or take public transportation than buy a car.
“They are not driving our auto loan business,” says Stephen Black, vice president of marketing at BECU.
But they do need checking and savings accounts and credit cards to establish credit, says Todd Pietzsch, manager of public relations. And eventually they are going to start families or businesses, so future opportunities exist for mortgages, HELOCs, and business services.
Outreach is critical during these relationship-building years, and BECU does so in different ways.
The litmus test for our advertising is: Could you take the BECU name off that and put another bank or financial institution’s name on it?
The credit union offers a co-branded debit card with Seattle-based University of Washington. It also has a partnership with private Seattle University. And to compete for the attention of young adults, BECU tailors its marketing message to focus more on culture and connection than rates and product features.
For BECU, it’s all about the three Bs:
Be Real — Through its social channels and newsletters, the credit union wants its message to come across as authentic. The relationship is not meant to “push products at them,” Pietzsch says. It’s meant to engage them in a conversation about their finances and teach them how to make smart decisions. To that end, the credit union’s SHARE campaign features real members talking about their experiences.
Be Where They Are — What does this generation like? Where do its members go? BECU pays attention to its social media and mobile channels, but it also interacts with university students through its co-branded debit cards and on-campus ATMs. Additionally, it’s working on building affinity relationships with large employers of young Seattleites, such as Starbucks and Amazon.
Be Where They Are Going — “Stay out in front of them,” Pietzsch advises. To do this, consider the trends in member-facing technology and payments. Think about how the credit union can design its products to meet those future needs. BECU is rolling out a redesigned website in the first quarter of 2015, Black says, and the credit union is involved with Apple Pay.
Black uses the three Bs to create meaningful and relevant messages for this generation that highlight how different BECU is from its competition.
“The litmus test for our advertising is: Could you take the BECU name off that and put another bank or financial institution’s name on it?” Black says. “Would be the same? Are we saying something that is captivating and different and unique to us?”
That’s good advice for any credit union.
Next: Member Outreach At San Francisco Federal Credit Union »
Member Outreach At San Francisco Federal Credit Union
“San Francisco is ground zero right now for millennials and high-tech workforce,” says Jude Gogan, chief operating officer and senior vice president of San Francisco Federal Credit Union ($910.6M, San Francisco, CA).
Employment in the City by the Bay increased 6.1% from 2011 to 2012; that’s triple the national average of 2%. The tech sector has accounted for 30% of San Francisco’s job growth since 2010.
It’s a diverse city, not just economically — chief drivers here include finance, technology, tourism, and shipping — but also culturally. San Francisco is well-known for its five districts, including The Castro, Nob Hill, and the Financial District, that each contain a number of small, distinct neighborhoods.
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san francisco federal Credit Union
data as of 06.30.14
HQ: San Francisco, CA
12-MO SHARE GROWTH: 9.6%
12-MO LOAN GROWTH: 14.0%
“It’s so different from neighborhood to neighborhood,” Gogan says.
Because of this, the credit union tailors its message and outreach to each community’s personality and needs. It understands why the neighborhood differences are important because it sees them firsthand. It has a four-branch presence that stretches across the city from the Financial District neighborhood in the northwest to Lakeside in the southeast. The credit union is even working on a new branch location in the Excelsior neighborhood toward the southern city limits.
Volunteer work and community participation have been helpful tools in attracting the growing population of young adults in San Francisco. The number of 25- to 34-year old college graduates living in the city increased 11% from 2000 to 2012. For its purposes, San Francisco FCU considers a young adult member anyone between the ages of 23 and 45.
“When it’s an issue they have a concern with, they want human guidance.
In The Castro, the credit union has developed a strong relationship with local LGBT groups. It exhibits at the annual Castro Street Fair as well as at the Now and Zen music festival held in Golden Gate Park. Additionally, credit union staff members volunteer hours at the San Francisco-Marin and San Mateo food banks. The credit union also offers financial accounts and assistance for the Mayor’s Youth Employment and Education Program, which places teenagers ages 14 to 18 into work-study programs.
As the credit union servers more younger adults, it must review and update its products and services, says Gogan. This includes developing a consultative approach to branching. Today, the minutiae of banking can occur through online or mobile channels. The need for face-to-face interaction with the credit union has declined, especially among young adults, Gogan says, but that’s not to say these members don’t need human interaction.
“When it’s an issue they have a concern with — whether it’s about how to buy a car or house or how to consolidate their bills — they want help and guidance,” Gogan says.