Gen Y to Banks: Do Better
Memo to banks hoping to land 20-somethings as new customers: It's time for a makeover.
Members of generation Y, the group of Americans currently in their late teens to early 30s, have watched as the housing market collapsed, the stock market faltered, and financial institutions received massive government loans to stay afloat. As a result, many of them are skeptical about handing over their hard-earned money to traditional banks. More than 1 in 5 20-somethings report a decreased trust level in banks over the past year, according to a recent survey by the research and advisory firm
To avoid alienating these up-and-coming young customers, some financial institutions are changing the way they speak to them. Traditional bank marketing, which involves blasting off slews of product offers and hoping some hit their mark, only further erodes their trust, says
The campaign seems to be working. Young and Free Texas's
That kind of outreach works, says
The financial crisis has also underscored gen Y's interest in being savvy consumers when it comes to their finances. An October Scottrade survey found that one third of respondents ages 18 to 26 said they've learned more about how the economy works and have become more familiar with their own personal finance situation in the past year. Some 37 percent said they are now doing more research before making investments--a greater proportion than older age groups.
Other financial institutions have tried to capitalize on that interest, but they aren't always successful. Some large banks run blogs, but they aren't focused enough on gen Y interests to generate any traction among that group, says Shevlin. He adds that a lot of banks concentrate on mobile banking--the integration of banking services with cellphones, social networking accounts, and PDAs, for example--to reach young consumers. "They believe gen Y-ers want to do everything on a cellphone, but that doesn't solve the problems of distrust," he says.
In fact, excessive dependence on social networking sites can be a turnoff. "It's almost obnoxious to me," says
The social network campaigns that work are the ones that feel the most authentic and real, say youth marketing experts. A stream of Twitter posts written by public-relations officials on corporate news (which
Hsieh says his social media efforts are about forming better relationships with customers. Ultimately, he thinks his efforts boost sales. Companies from
It's hard to imagine many consumers signing up to follow a bank executive's missives on his daily grind, but contests featuring high-interest-bearing accounts or discounts on investment accounts? Gen Y might say, "Sign me up."
Personal Finance - Gen Y to Banks: Do Better
(c) 2010 U.S. News & World Report