Youth is wasted on the young, the saying goes, but not bank and credit union memberships. More and more, banks and credit unions, including government employee credit unions, are going after younger members with vigor because they, unlike their older
Youth is wasted on the young, the saying goes, but not bank and credit union memberships.
More and more, banks and credit unions, including government employee credit unions, are going after younger members with vigor because they, unlike their older counterparts, are more likely to take out loans rather than just save.
“Credit unions survive by the number of loans they have, and older workers save, they don’t take out loans,” said Ed Medeiros, general manager and chief executive officer of Kauai Government Employees Federal Credit Union.
The implication is that Kauai’s government workers are aging.
“They’re getting up there into their middle and late years now,” Medeiros said.
With that in mind, local government credit unions are targeting younger people with special promotions and membership options in an attempt to make up for their traditional – and aging – memberships who, Medeiros says, are simply less likely to take out loans.
Ideally, says Medeiros, he’d like to see something like 75 percent of his business done as loans, but that’s still a long way off. Until recently, federal credit unions like his weren’t allowed to go after non-government members, who often represent a younger demographic.
“In the past, our regulator was restrictive in the field of membership that credit unions could serve,” Medeiros said. “We could only serve government employees and their families.”
But a recent relaxation of those regulations by the National Credit Union Administration now allows KGEFCU to offer memberships to employees of private, non-government businesses. And the younger the employees, the better.
Medeiros’ 4,800 members now include young, hip employees from places like the Kaua‘i Athletic Club, S&S Business Machines and Ohana Motors. So far, they have 39 island businesses enrolled in their Select Employer Group program and are looking for more.
But government employee credit unions aren’t the only ones targeting younger members.
The Kaua‘i Community Federal Credit Union, which anyone can join, will roll out advertising and promotions next year to attract what they call the “Y” Generation – that group of savers and spenders today topping out at age 24, just behind Generation X.
“The key is that you have to speak their language,” said Shannon Hoeckele, KCFCU’s vice president of marketing. “You have to stay up with trends in sports or music.”
By doing so, Hoeckele says, credit unions are better able to offer young people the credit cards and loans they’ll need for a hi-tech future, while themselves benefiting from a demographic with a long, glowing financial future.
“We’re thinking about things like monthly rewards for sound financial planning, or credit cards that don’t need a co-signer,” she said, including exploring ways to merge high technology and personal financing.
Nobody does this better than the Japanese.
For example, they were the first to implant credit card chips into cellular phones – that ubiquitous youth accessory – so that now, Japanese youth talk, shop and email from one device, without missing a beat.
According to one recent financial industry study, the new “Y” generation of American savers and spenders will have some $17.8 trillion available over the next decade or so. By neglecting them, Hoeckele says, the average credit union could lose $14 million.
“Education is really the key,” she says. “We’ll be focusing on educating young members on new services and how to maintain strong financial plans.”
But private banks like Bank of Hawaii and First Hawaiian Bank, perhaps, will continue to have the upper hand when it comes to wooing young members.
With huge reservoirs of money, they are able to flood the airwaves with advertising and promotions designed to draw young people in. Think about it: When was the last time you saw an ad on TV for a local Kaua‘i credit union? Yet, there’s nothing more ubiquitous – and annoying, perhaps – than BoH’s “That’s My Bank” campaign, which, through sheer repetition, has become part of Hawaii’s pop culture.
The only way to compete with that kind of competition, says Medeiros, is by offering local savers and spenders those less tangible benefits: a smile and a more personal relationship.
“We like to think of ourselves as an alternative for island residents who are tired of the impersonal service that come with larger institutions,” Medeiros said.
It’s that kind of service that makes for word-of-mouth advertising, which, for Kaua‘i, might be the best form of advertising.
Yet, with today’s fast-paced life, and the sure knowledge that it will all speed up and coalesce, one wonders if tomorrow’s savers and spenders will have time to stop and say hello.
