Planes, Buggies, Letters, Email & Financial Services

The Credit Union Warrior (whom I am quite fond of) recently wrote “Unique Banking Needs? Hogwash.” and presents the theory that all this noise about Gen Y needing different and unique services is marketing mumbo jumbo.

We need loans, payment vehicles, investment vehicles, convenient access to our cash, and financial advice all at the best price possible…just like every other generation.

While I agree these are the basics, I cannot say they are the same as generations past. I believe that instant access to information has become a game changer and drastically effects how financial services are sought, delivered, and evaluated.

But isn’t it still just ‘loans’? Yeah…but isn’t flying ‘just’ transporting yourself from one location to another and yet the experience differs so much from driving (or horse and buggying…I’m guessing…might have to ask @rshevlin about that…) that they to hardly resemble each other.

And writing a personal email is ‘just’ communicating ideas in written form, but how different is that than sending a letter? (Both for better and worse.)

Given, flight and email are big time game changers, but so is this massive about of information we currently have at our fingertips. I’m not going to say that the use of this information breaks neatly down a generational line, but you can’t argue against it being here and being big.

If you think “We’re providing loans just like we have for the last 25/50 years” I’m afraid you’ll miss a large segment of your membership (and potential membership) that wouldn’t recognize a loan from 25 years ago if it were staring them in the face.


15 comments so far

  1. William Azaroff on

    Hi there. I agree with Matt on this. But maybe I’m just not seeing it from a different enough perspective.

    Mark, can you name some examples or concepts that you’re thinking of where a loan would be as radically different ten years from now as transportation has evolved in the last hundred years?

  2. christianmullins on

    The game has changed, there’s no doubt about that.

    In fact, that the lending process is widely available electronically is a testament to how much things have changed. (Agreeing w/CU Skeptic)

    However, there has been an unnecessary emphasis on tailoring products, services, and marketing to Gen Y (to the detriment of other member groups) knowing that they have little brand loyalty in the financial services industry. (Agreeing w/CU Warrior).

    Hmmmm, I seem to recall that Dante has a special place in Hell for people that can’t seem to take a side…

    Anyway, whether Gen Y (or any statistically significant group) will research and discover the best deal for themselves or be drawn to the flashiest deal like a moth to the light will ultimately determine how future marketing dollars are allocated between population segments.

  3. CU Skeptic on

    Wow…having to bring support to my point…um… 😉

    Some initial thoughts:

    * Loans from anywhere in the world. People are no longer constrained to borrow from institutions in their geographic region. Places like SmartHippo and CreditKarma and even Google are making people more informed about their options on this front.

    * Loans of all sizes will (and are continually becoming) totally automated. No interaction with people at all. Operations like LendingTree and BillMeLater^ are already moving on this front.

    * I’d love to say more peer to peer…but that’s definitely a shaky platform right now…we’ll see how it shakes out. :/

    What these illustrate to me is that ‘loans’ will always be changing. How they are initiated, agreed upon, their terms (100 year mortgages?), their expectations will always be morphing. This age of information has impacted each of these phases drastically and I consider that game changing. (And this of course is not the end.)

    In this way, a loan is not the unchanging constant, trust, security, and relevance are. I don’t think it’s a stretch to think that you need to gain the trust, security, and relevance of different segments in different ways and if that means different types of loans, so be it.

    ^ I consider credit offers at time of purchase a loan. Some may view that differently.

  4. Credit Union Warrior on

    Good points, but I don’t see how the “NEEDS” have changed. That was the purpose of my post.

  5. CU Skeptic on

    I can see that…but it’s never as easy as “I need money” and “I have money” (And never has been.)

    Is running water in your house a NEED in the US? It wasn’t 150 years ago. It is today? Maybe NEED is the wrong word. Maybe expectation is a better word.

    On this point I agree: The basic NEED of borrowing money is a constant in our society. However, the expectations around what it looks like and feels like to borrow money are anything but.

    If you lend based on the expectations of yesterfar, you may find many unsatisfied with your services.

  6. William Azaroff on

    Thanks Mark. All of those sound like cool products, I’m just not convinced that enough people will want them in large enough numbers to warrant the cost of creating and maintaining them.

    My view is that if we are listening to what our members want and need and react well, we will innovate products and services they will use. That is a business proposition that isn’t changed by servicing Gen Y or Boomers or Postal Union employees. It is just a way to evolve our businesses.

    If some FIs over-index in specific segments and run their business smartly, they will innovate new products that that market segment will appreciate and purchase. The over-arching eco-system of a marketplace will create innovations popping up all over the place, some of which will be easily reproducible and some of which won’t.

    Is Gen Y any different?

  7. Credit Union Warrior on

    @William I think there’s a temptation to make financial services a little more complicated than they need to be. The needs are pretty simple: the ability to borrow, education, investments, payments, and asset safekeepking are not rocket science. How do we make the lending process easier? How do we encourage members to save more? How do we help members grow their investments quicker? How do we make sure member assets are safe and sound? How do we teach members how to be better consumers? More thrifty?

    These are needs that transcend generations. The solutions may differ based on the audience (mostly in the way they are communicated), but the needs are overwhelmingly mature.

  8. Ron Shevlin on

    Mark .. I mean Skeptic:

    You might accuse me of mincing words here, but I think it’s important to distinguish between the product and the service.

    The “product” called a loan (or checking account, or whatever) has some basic characteristics which … as CU Warrior asserts .. fundamentally meets the needs of any generation.

    There may be, however, certain “services” (ie, real-time, online access) associated with a product that are more relevant to certain segments of customers than others.

    What I would argue is not that the product needs of Gen Yers are different, but that how they want to interact w/ FIs are different than previous generations… and that they expect more (and different things?) from their relationships w/ FIs.

    I would also argue, however, that these needs will change as you get older, have kids, and transition from party mode to adult responsibility mode.

    I KNOW what I speak of. I — and tens of millions of other boomers — made the same transition. As did the generation before mine. And as will yours.

  9. tinfoiling on

    I can agree conceptually with Ron’s differentiating between products and services. What I see as the difference in this day and age is the ability of the end user to be knowledgeable about what they want and to have the ability to negotiate to a greater degree. Loans are the revenue generator for FI’s and that area in the past has been a proposition to the end user of “take it or leave it”. That is no longer the case. There has to be a flexibility in the product in order to accommodate the customer. There also has to be the service in the manner the customer wants it.

    What that does is change the landscape somewhat. The FI has to understand what it can offer in the way of capturing the loan. It pushes the FI to be very diligent and it can’t just rest on its past accomplishments. There is also the responsibility of making sure the customer is using credit, leverageing it for their advantage, and not taking it for granted and creating a problem for the themselves later.

    Lending is not a science but also an art. Though we tend to group and segment in so many areas I for one have never seen two loans exactly the same. There are always unique qualifications and circumstances with each lending facility. The key in product development is to allow greater flexibility while managing the risk.

  10. Ron Shevlin on

    @tinfoiling: Agree 100% that “the difference in this day and age is the ability of the end user to be knowledgeable about what they want and to have the ability to negotiate to a greater degree.”

    But let’s be real clear about something: This is a trend that was underway well before any Gen Yer came along.

    For decades — if not a century already — we’ve become a “self-serve, self-directed” society. Technology has certainly facilitated — and perhaps to a certain extent, caused — this trend.

    But to think that Gen Yers are somehow different because they “take control of their financial lives” is laughable.

  11. Gene Blishen on

    Agreed Ron. We have had this trend for a long time we just didn’t expect to be able to view this in such a prominent manner. And because it does upset some apple carts we quickly put the badge on it as Gen Yers. It fits in a lot of cases for that specific group. The group didn’t have that big a badge before.

  12. James on

    Hmm. I wrote quite a lengthy post, but it hasn’t turned up yet.

    I’ll do my best to remember what I was on about…

    I think I have some authority to talk on the topic of Gen Y… after all, I am 23.

    Firstly, I think that it’s clear Gen Y don’t have any fundamental banking need difference to that of any previous generation. We want money. We are in the stage of our lifecycle where we are dissaving.

    We want to buy furniture, cars, houses… you all know the drill. That means we need personal loans, secured car loans and mortgages.

    There is still nothing new.

    What is new, I think, for Gen Y (and other generations, but I think it is most pronounced in Gen Y) is that we want immediacy.

    We want to be heard, now.

    We want things, now.

    We want service, now.

    What does that mean for us as Credit Union Folk? Well, I think it means we need to re-think the way we deliver our exceptional service.

    Forget instant approval of loans. How about instant funding of a loan. Or, if you’re small, 15 minute funding within business hours.

    Or think of this scenario. It’s 8pm and you’re a 20 something, thinking about to grab a (cheap) bite to eat… but you’re not sure how much money you have. You check your internet banking to see if you have cash, but wait… there is a penalty fee that has gobbled up $10, $20, or $30 of your money. The call center is closed, so you can’t call your Credit Union to sort it out.

    How about having a fee challenge type app, where members can dispute a fee that has been charged. If it fits within some set criteria, there is an auto reverse. If a member repeatedly challenges, set it for a review within business hours.

    That type of thing shows that we accept that we make mistakes, and are prepared to fix them.

    Above all else, though, serving Gen Y is not going to be to a detriment to the rest of our member base. As I mentioned earlier and Ron mentioned in his post, the “self-serve, self-directed” mentality is most pronounced within Gen Y, but it is prominent throughout all demographics.

    I’m sure we all have members aged 60+ who use Internet Banking regularly, pay bills over the phone, or renew their car registration over the internet… So, what am I trying to say? Everyone loves convenience, regardless of age.

  13. Ron Shevlin on

    @James: I got a lot of respect for you, my friend… but being a member of a generation — or member of anything for that matter — doesn’t make a person qualified to speak for, represent, or claim to “know the mind” of the group in question.

    The funny thing about the claim that “I am a Gen Yer, therefore I know Gen Yers” is that the CU Warrior is always telling me how “individualistic” Gen Yers are (ok, he only told me that once). If that’s so, then other Gen Yers are — by definition — nothing like you, and therefore, being a Gen Yer hardly qualifies you to “know” about Gen Y.

  14. James on

    @Ron: I know what your saying – I didn’t really mean that literally, I just was having a bit of a dig at everyone talking about this mysterious Gen Y individual.

    As in “Hey, I’m gen Y, Listen to me!”


  15. Credit Union Warrior on

    @Ron Your mind is like a sponge! 🙂 I did say that Gen Yers are individualistic (once…about a year ago). And, in many ways, I still agree. However, I’m becoming increasingly convinced that young people are just…young. There’s no real glue that binds these people together, save for the fact that they (ahem, we – I’m 29) are inexperienced, impulsive, and short-sighted. These aren’t bad things…in fact, in terms of innovation in the workplace I think these traits are mandatory. But these aren’t traits unique to a generation – they are traits associated with youth.

    Sure, technology has really changed the way that Gen Yers communicate, interact, and spend their time. But these technologies are also being used by the rest of the world as well. My blog post in question made the point that the financial service NEEDS of Gen Y are not unique. I stand by that.

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