Sporting $200 billion in annual buying power, Millennials are a financial force. And while many have been slow to adopt credit, segments are proving to be prime candidates for bankcards, mortgages and auto loans. But where are Millennials taking their financial business? Data reveals only a very small percentage of Gen Y has connected with credit unions, and credit unions have expressed frustration in how to grow this relationship. Dig deeper and gain insights from Scott Butterfield, founder of Your Credit Union Partner, to learn how credit unions can do a better job reaching this market through segmentation and a refined product mix.

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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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