Talkin' Bout the Y Generation

Generation Y, the children of the baby boomers, represents one of the largest growth opportunities for the financial services sector.


Generation Y, the children of the baby boomers, represents one of the largest growth opportunities for the financial service sector. This generation is in high school, college, and just starting their tenure in the work force — and they will soon be entering their high-spending, high-borrowing years as young adults.

Who is Generation Y?

In general terms, Generation Y is the children of the baby boomers. Born from 1981 through the mid 1990's, this generation is reaching maturity and starting to become a major spending and borrowing force in the economy. Generation Y is the largest consumer group since the baby boomers. Depending on where you draw the cutoff lines, some estimates are as high as 60 million members.

Compared to previous generations, a few demographic trends are worth noting:

1. This generation is more ethnically diverse than any previous generation. One in three members of Generation Y considers themselves non-Caucasian, a fact that should be kept in mind when designing marketing campaigns.

2. Generation Y is accustomed to technology and having access to unprecedented amounts of information at their fingertips. Computers have been a part of their life since elementary school. The Internet and cell phones are seen as a normal part of life - not a recent technological invention. When looking for information, including financial education and advice, the internet is the first place that they turn to.

3. Generation Y expects personalization and customized products and services. They recognize that one-size-fits all doesn’t apply in most situations. Rather than purchase a standard computer, they will buy a custom-built machine that is tailored to their specific needs. The same principle governs their expectations when it comes to financial services. Instead of a regular loan, they expect to speak to a loan officer about their specific situation and find a product that is tailored to fit their needs.

The Long-Term Opportunity

Successfully targeting this market now allows your credit union to develop a relationship that can grow with the generation as they mature, from the purchase of their first car to their first home.

While making some strides in the right direction, credit unions still have room to improve in terms of effectively serving this market segment. A recent article ( Credit Union System Lags in Fast-Growing Loan Segment) profiled how only three credit unions were included among the top 100 originators of Federal Family Education Loan Program (FFELP) loans in 2004. At this stage in their life, Generation Y members are making some of their first financial decisions as young adults, and positive experiences with the credit union will develop into future loyalty.

Education and Building Relationships

Clearly, reaching this generation will require a slightly different approach than what has been successful in the past. Some credit unions are turning to in-school branches as a way to connect with the high school student community.

First New York Federal Credit Union ( Schenectady, NY, $165 million in assets) has established a branch of the credit union in Schenectady High School – staffed by high school students who receive high school credits for their efforts. The in-school branch is an extension of the credit union’s education efforts, and goes one step further than just having credit union employees speak to students about financial topics. Prior to opening the branch, the high school students underwent a lengthy training with credit union officials. As part of their ongoing activities they accept deposits and withdrawals from students and teachers one day per week, and also spend time on marketing efforts to get fellow students to open accounts and educate them about saving and budgeting.

Michigan First Credit Union ( Detroit, MI, $380 million in assets) participated in a financial education seminar at Wayne State University entitle “How to Live on a College Student’s Budget”. Recognizing that many college students struggle to pay college tuition and fees, living expenses, and other expenses, the credit union took advantage of an opportunity to leverage their knowledge and experience to help students better understand their financial options.

In both of these examples, credit unions are approaching members of Generation Y with a targeted non-sales approach that delivers timely financial advice and positions the credit union as a trusted advisor that the member can turn to again in the future.

If your credit union is having success with the young adult market, our researchers want to hear about it! Send an e-mail to




May 9, 2005


  • not enough information about the "y's"
  • Excellent job of point out the need for customization or tailored needs. I would like to have seen more strategies.