The Financial Brand Forum kicks off May 17-19! Registration closing soon — space is limited and time is running out!   EVENT DETAILS
360 View | Growing Local Banks in the Millennial Market

Data Reveals Truths About Gen Y’s Financial Habits

Fiserv, one of the world’s biggest information management companies in the financial industry, released the results of a study looking into the financial habits and influences of Gen Y. The survey, conducted in July 2009, involved 3,271 Internet-connected households.

The study’s most surprising finding? That the level of hype regarding the importance of online communities in Gen Y’s financial lives doesn’t match its actual influence.

Personal relationships and relatives dwarf other influences on Gen Y’s financial decisions by a factor of 6 to 1. Gen Y relies on information it finds on bank and credit union websites more than twice as much as they rely on input and information from online communities. Gen Y is only slightly different than Gen X in this regard. Indeed if social media was any less influential, it would be essentially irrelevant.

Among the other findings in the Fiserv study:

  • 80% of Gen Y has used online banking within the past month.
  • One-third of Gen Y has conducted mobile banking activities in the last month.
  • 43% of Gen Y plan to perform mobile banking activities in the next year.
  • The most common financial activity Gen Y plans on using their mobile phone for is checking account balances (32%).
  • Members of Gen Y conduct a larger number of monthly debit card transactions than average (14.1 vs. 10.6)

It’s interesting to note that in the study, Fiserv defines Gen Y as those ages 21-29, an eight-year segment. Gen X is defined as 30-44, a 14-year span. And Baby Boomers are cover a 19-year period including those ages 45-64.

Unibind | Financial Products

Social media’s lack of influence isn’t the only surprise finding in the study.

Finding: 48% signed up for a credit card online.

That means 52% didn’t. That means most were either filling out paper applications, visiting a branch or using the phone.

Finding: Gen Y said they do not keep file cabinets full of financial records. Instead, they prefer organizing their finances electronically. They also prefer e-bills and e-statements instead of the traditional paper formats.

This isn’t a big surprise. Researchers tend to chalk this up to Gen Y’s concern for the environment, but isn’t this more the practical consequence of growing up digitally wired than it is about being eco-conscious? Young people are increasingly accustomed to managing their lives with computers — calendars, to do lists, class assignments, reminders, party invites, etc.

Finding: 75% of Gen Y consumers have a savings account, 5% higher than any other generation.

Fiserv suggests this could be tied to Gen Y’s “proclivity for responsible financial management.” Perhaps… But how many Gen Y savings accounts (1) were opened by their parents, (2) are the obligatory “share draft” accounts credit unions require, and/or (3) have less than $25 in them?

Jeffry PilcherJoin over 1,500 of the brightest minds in banking at The Financial Brand Forum 2017 for three days loaded with the big ideas, strategic insights and latest innovations that are transforming the industry today. Hurry, registration closing soon! The conference kicks off May 17th. Don't wait, register now!

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

The Financial Brand Forum 2017 | May 17-19 | Las Vegas

Comments

  1. Good insights, as usual. I think the hype is way bigger than the reality, as you say. But I also think social media can be a useful part of the web of customer interactions. In that vein, I tend to view any social media stats with skepticism, whether they are raving good or dismal. In the end, I think social media is what you make of it.

    I imagine that influencing financial decisions could be a motivator for some financial services companies to engage in social media — and in this case, it’s useful to know that maybe such a goal is a waste of time. But it could be useful for other goals.

    Considering that “friends and family” often make up someone’s “online community” (ie, mostly friends and family would be Gen Y’s friends on FB and followers on Twitter), it might be interesting to drill down on what the survey, or the survey participants, meant by “online community.”

    Since this survey is about “who do you trust” in a way, I throw this out for consideration: Isn’t it possible that via social media at least some customers start to view a “bank” or a “credit union” not as just that, but as the person they connected with on Twitter who helped fix that big problem they griped about in a tweet directed at nobody in particular? In that customer’s mind, couldn’t they potentially start to think of that bank or credit union with more positive feelings, as being more trustworthy than they previously might have believed, a kind of “friend” who was looking out for them when they had an issue? Maybe that bank or credit union then transitions to a higher level in the realm of influences; it becomes not just a faceless corporate entity that is part of an “online community,” but a little bit closer to being part of the “friends” circle. I’m just thinking out loud.

    It might sound like I’m defending social media, but in reality I also question its true ROI value. Or at least I question it’s value based on what financial services companies have done with it so far. I do trust that some companies will get more creative and impressive as time goes on.

    On another point: I agree with you that it’s important to note the age ranges used to define the demographic groups. In this case, I think they are a little odd. I suppose they wanted to limit Gen Y to the adult portion of that group. But it might have been more useful to go with “20somethings” as a label than Gen Y. (I’ve read one definition of Gen Y as being those born from late 70s to late 90s.)

  2. Good stuff. Let me share with you something that jumped out at me, and it has nothing to do with Gen Yers: Less than half of Boomers, and less than 3 in 10 seniors, said “friends and family” was an influential factor in their decision.

    So what does this say about WOM (word-of-mouth) marketing and net promoter score? It supports some things that I’ve been arguing for years: That focusing on “intention to refer” is a misguided metric. And that the change (improvement) in a firm’s NPS might reflect nothing more than an underlying shift in the demographics of its customer (or worse, survey sample) base.

    Here’s another thing that I think marketers (specifically, the net promoter syndrome sufferers) just don’t understand: People change. Got news for them: When I (and others of my generation, i.e. boomers) was in my 20s, I relied a lot more on friends/family for advice on products. Became less reliant over time. Will this happen with today’s Gen Yers? Maybe not, thanks to the tools that exist that make it easier to connect w/ friends and family, but the Fiserv study goes to show how the focus on WOM is overblown.

  3. I’d be curious to know what the definition of ‘online comunities’ is in this study. And, I wonder if bank websites in this study would include microsites, blogs, etc. While it’s not all that surprising to see that Gen Y, and the other segments, allow trusted sources like friends & family or a significant other to influence their financial decisions, I do find it interesting that Gen Y reported being influenced more by each of these categories than all other segments.

  4. @Brady: Was wondering the same thing.

    Another thing: Is this the complete list of “influences”? For seniors, the percentages don’t add to 100, so it implies there are other sources. Like how about bank branch reps?

    Actually, since I haven’t seen the source doc, just this article, maybe I should be asking Financial Brand: Were there were more sources shown, but only four included in the graphic in this article?

  5. I debated whether to use “social media” as a synonymous term for “online community.” Ultimately, I concluded that they have to be essentially the same thing.

    I agree with you though: How was “online community” defined? If they used the term “online community” in the survey, then I could understand why social media would score lower than expected.

    Also, I wonder if Gen-Y makes any distinction between recommendations, advice and referrals they get from friends and family online vs. other channels.

  6. Interesting that Fiserv would issue this type of study…and suspect it is the CheckFree influence at work here. I agree with MZ in that friends, family and significant others ARE our social media connections. Social media is a means to connect to the people most influential in our lives. Fiserv muddied the survey by mixing sources and channels.

  7. An older post, but I just happened upon it…

    If anything, this study further illustrates the power of social media (when done well). Promoting brand advocacy – getting other people to spread the word about you – is a huge part of it. And a referral from a friend via a Facebook comment carries no more weight than a statement made in person. They are one and the same.

    Additionally, I agree with some of the earlier statements that the phrase “Online Community” could have negatively impacted the results. I am active in several online social circles, and I’ve not heard any of them referred to as such by other users.

  8. I do know that Facebook users don’t think of their personal page as an online community, rather an additional channel with which to communicate with one another. Gen Y does use Facebook to tell their friends and family what they are up to, and to keep track of the activities of others. I agree with previous posters that this research was perhaps not thought through from the standpoint of how people really use social media. “Online communities” can be interpreted as “content that I do not own.”

Speak Your Mind

*

Show Comments