On sheer size, millennials, or Gen Y, represent a significant opportunity for all types of lenders, today spending an estimated $200 billion annually. In a decade, one third of adults will be millennials, representing a staggering 75% of the entire workforce. By 2020, millennials’ spending is anticipated to top $400 billion a year. Are you ready for them?
Gen Yers came of age in the shadow of the 2008 financial crisis and resulting Great Recession. To be sure, millennials face financial challenges: unemployment of 10% (vs. about 4% for Gen X and Baby Booomers), underemployment rates at about 30% (as compared to 22% from Gen X and 21% for Baby Boomers), and 45% of 25 year-olds have student loan debt, averaging $30,000 (30% of whom have marred their credit history with delinquent payments). Still, more people from Gen Y have bachelor’s degrees than any other generation that came before, according to the White House’s Council on Economic Advisors.
Get this, though. According to the Brookings Institute, on average, households under the age of 36 are apt to keep more than half of their savings in cash, relative to other generations keeping less than a quarter in cash. It would be hard to argue that between the millennials’ employment, investing, debt and credit history challenges, a ripe opportunity exists for the financial services industry to provide investing and borrowing education, not to mention a few things we will get to next.
Lenders and others looking to serve millennials need to keep in mind several things about Gen Y: Reengineering of the home-buying and lending process is underway, but it still has a long way to go. Education and training needs are going unmet. And, remember that any type of data collection, information sharing and signature gathering – every touchpoint - will have to be streamlined and integrated into technology. Nothing less will be expected. Don’t even think about asking for or showing a piece of paper to win the next generation’s business. Don’t even.
Millenials do their research on-line when it is convenient for them. Phone and face-to-face interactions are not that appealing. Self-service web portals and on-line chat are required. Almost 75 percent research on the web before making a purchase and conducting a financial transaction, according to the Intelligence Group, so the content had better be relevant, accessible and interactive.
Information can’t just be provided to millennials (or to the rest of us). It has to be interactive. Expect to follow up and engage. Today’s table stakes are mobile-centric applications. It’s not enough to claim cutting-edge technology and only offer rate comparisons. Gen Y will expect to be able to upload documentation on phones. Stay ahead of the curve or lose your potential customer’s interest. Electronic signatures, like mobile apps, will be table stakes too.
Need help executing this strategy? T.Aloise & Co.’s experienced staff can help.