3 strategies to grow millennial membership
TRANSCRIPT
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3 Strategies to Grow Millennial Membership Nov. 12, 2015
Scott Butterfield, CCUE, CUCE, CUDE
Your Credit Union Partner
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CUDE, CCUE, CUCE
More than 30 years of credit union service
Trusted advisor to leaders of more than 100 credit unions
Specializes in strategic planning, board governance, market research and analysis, and community development
Featured Industry Expert – Scott Butterfield
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Understanding Millennials
The Millennial Opportunity
3 Strategies to Grow & Retain Your Millennial Membership
Agenda
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Born between 1980 – 1995
Diverse
Self-Expressive
Socially Conscious
Digitally-Dependent
Prefer to Support Local
The Millennial Profile
And now officially the
LARGEST and MOST EDUCATED
generation of all time!
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Officially Became Largest Generation in 2015
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Convenience
Lower, Predictable Fees
Positive Experience
Financial Preferences
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Millennials Using Alternative Finance Sources
“While 92% of Millennials report using a bank, 45%
have supplemented their banking with some form of alternative finance within the past year.”
-Think Finance –
Why???
Products are more convenient (42%)
Lower or more predictable fees (31%)
Products generally better meet their needs (30%).
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So what does
this mean for
Credit Unions?
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44% of Millennials are unfamiliar
with Credit Unions
15% of Millennials are currently
attached to a Credit Union
The Millennial Opportunity
1 Filene Research Institute Study, https://filene.org/assets,pdfreports/368_Youngest_Millennials.pdf
2 Pew Research Center
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1.
Membership
Growth
2.
Lending
Growth
The Opportunity for Credit Unions
Experian/YCUP Survey Reveals 2 Greatest Credit Union Concerns.
Millennials
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Your Millennial Obstacles
Can I speak their language?
Educate them about credit unions?
Manage risk?
Need to adjust my scoring models?
What can I do with limited resources?
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3 Strategies to Grow and Retain Your
Millennial Membership
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Strategy #1: Assess Your Appetite for Risk
Shop Alternative Finance
Assess your risk tolerance
Where does your
board stand?
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Internal Assessment Yes No
Do you utilize social media?
Do you offer mobile banking?
How do your online tools stack up?
Do you accept online applications?
Do you render real-time decisioning?
Do you utilize instant prescreen?
Is your board risk averse?
Are you open to borrowers with limited credit?
Do you have a strategy for thin-file candidates?
Strategy #1: Know Yourself
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Strategy 1: Case Study Example The Smart Risk Taker
Asset Size: $1.3 Billion
Statewide footprint/Community Charter
Diverse balance sheet
Highly competitive landscape
Large banks
Credit unions
Solution for lending deeper
Increased membership growth
Higher average loan yield
Manageable losses
5-Year Financial and Growth Results
Net worth 9.58%
ROA 1.32%
Loan Growth 8.05%
Membership Growth 7.94%
Asset Growth 7.56%
Delinquency 0.53%
Charge Off 0.62%
5-year average loan yield 4.60%
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Strategy #2: Segment to Find Your Universe
Millennials can be segmented as follows. These are fairly broad buckets, but key
segments for credit unions to consider.
• Hispanics
• Young Millennials
• College-Educated
• Single
• Married
• Married w/Kids
• Entrepreneurs
• Active Military
• Students
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Strategy 2: Case Study Example The Segmentation King
Asset Size: $96 million
Know their competition
Alternative Financial Service providers
Deeply embedded in community
Serve younger, underserved
Specialized products for:
Thin-file
Millennial
Hispanic
First-time buyer, credit-builder programs, ITIN
5-Year Financial and Growth Results
Net Worth 11.5%
ROA 1.04%
Loan Growth 18.8%
Membership Growth 15.6%
Asset Growth 15.1%
Delinquency 0.66%
Charge Off 0.38%
Nearly 45% of members are millennials!
5-year average loan yield 8.3%
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How do your products and services match up with the
financial needs and challenges of Millennials?
Popular Millennial Products:
Prepaid Debit Cards
Credit Builder Loans
Remote Deposit Capture
Mobile Technology
Sub-prime Lending
ATM/Shared-branching Services
Financial Education
Strategy #3: Evaluate Your Products & Services
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Strategy 3: Case Study Example The Product Mix Sweet Spot
Asset Size: $200 Million
Know their competition
Deeply embedded in community
Serving younger, underserved
Adjustment to Lending mix and scoring models:
Robust Indirect Auto Lending
Subprime lending programs
Mortgage Lending Programs
Targeted Financial Education
Credit Builder Loans
5-Year Financial and Growth Results
Net worth 8.82%
ROA 0.56%
Loan Growth 13.85%
Membership Growth 15.21%
Asset Growth 16.63%
Delinquency 1.16%
Charge Off 0.67%
74% loan portfolio used auto
5-year average loan yield 6.15%
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1, 2, 3 … Go!
Assess Your
Risk
Tolerance/
Modeling
Segment to
Find Your
Universe
Evaluate Your
Products and
Services
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Closing thoughts…
Millennials WANT:
Community - Ethical Institutions - Convenient Access to Credit
Ways for You to Deepen the Relationship:
Start with Indirect Portfolio
Portfolio Assessment to identify ways to grow wallet share
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Questions
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Experian.com/Millennials
More Millennial Insights
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