3 strategies to grow millennial membership

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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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