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Gen-Y ‘Turned Off’ By Banks, Worried About Finances

Twentysomethings are frustrated by banks, with less than a fifth of Gen-Y saying they have recommended their banking provider in the last year.

Just 17% of those ages 20 to 29 felt their primary financial institution was worthy of their personal endorsement. The other 83%? Not so much. The Young Money survey, conducted by financial services consultancy MRM, set out to measure the attitudes of Gen-Y towards financial subjects like banks, money and home ownership.

MRM director Michael Taggart said his firm’s findings suggested big banks are a “turn-off for twentysomethings.”

“Today’s twentysomethings are tomorrow’s big earners and if banks fail to win their loyalty and trust today,” Taggart cautioned, “they are storing up big problems in years to come.”

Banks struggle to keep Gen-Y happy

For the last couple decades, banks have pushed customer interactions to alternate channels. According to MRM’s research, this has often added — rather than removed — the friction from banks’ relationships with Gen-Y.

For instance, some one in ten of twentysomethings (10%) admitted to hanging up prematurely during a phone call to their bank due to being “frustrated or angry.” Those in their early 20s (20-24) were more likely to have done this – 13% compared to 7% of 25-29 year olds.

Almost a quarter (23%) of people in their 20s had visited their bank in the last year only to find it closed.

While 7% of those in their 20s say they have complained about their bank’s services via social media, less than half as many — 3% of those surveyed – reported having had a banking problem solved through social channels.

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How far will Gen-Y go for money?

In its study, MRM proposed a range of actions Gen-Y might take — from the conventional to the controversial to the illegal — and asked survey participants if they knew another twentysomething who had done those things to raise money.

More than a fifth (22%) of respondents said they knew of someone in their 20s who had gone without food in order to cover expenses or make money.

Nearly one in every five (19%) of our respondents knew of someone in their 20s who had taken out a payday loan.

Some 3% of our survey group said they knew of a man or woman in their 20s who had sold their hair in order to balance the books.

8% knew a twentysomething who was drawn to the big bucks offered in the sex trade — either through porn, prostitution, escorting or stripping.

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There’s no place like a home?

Financial struggles or concerns appear to play an important role in affecting twentysomethings’ feelings. Nine out every 20 of our survey group (45%) said they will never have enough money to buy a home – with 25-29 year olds much less likely to expect to be able to buy a property than those in their early 20s (54% and 38% respectively). Non-graduates in their 20s are also more likely than graduates to think they’ll never be able to afford a home (54% compared to 37% respectively).

Growing unemployment figures might also be weighing heavy on the minds of our young adults. More than a third (38%) said that they have little job security which makes it difficult to them to buy a home. One in seven twentysomethings (14%) don’t want to be tied down to a property.

One in seven young people (14%) think that owning a property is actually a poor investment. Almost one in five (18%) of 20-24 year olds look negatively on a home’s investment potential, compared to 10% of those aged 25-29.

One in ten (10%) plan to stay at home and live with their parents rather than purchase a property.

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Comments

  1. What a stark commentary on the emotional health of this age group. It makes me concerned as a parent of a Gen Y child. Time proves that optimism is worth fostering and goals must be set regardless if things seem bleak at the moment. I thought about our ideals at that age. We certainly had many of the same worries and issues and frankly, even fewer options. There are probably many Boomers who did similar illegal things to raise money and I hope as parents, educators, and mentors we can help Gen Y and subsequent generations have more positive outlooks and find healthy ways to cope with reality.

  2. With ballooning post-collegiate debt (relative to that education and other reasons as well), struggling difficulties to procure employment relative to that debt, surging home prices (regardless of the reset in prices from the past 4 years, they still are signficantly higher than what they were when my baby boomer parents entered the homeowner world), and a offstepped pace rise in median income, this is the perfect storm to stifle the ‘want’ for homeownership in my generation. In my humble opinion, rightfully so. There isn’t much emphasis in this as much as this is making an impact in your professional life. Once revered a benchmark in measuring success in ones personal life, homeownership (within the peer group of Gen-Y’ers) isn’t viewed nearly in the same light. I do not foresee this change happening any time in the near future.

  3. Gen-Y isn’t buying cars either.

  4. It’s a challenge for financial marketers to assess how much time they should spend on the Millennial opportunity. It comes down to determining what is a good business decision. And then doing more helping than selling. We posted on this subject recently. http://bit.ly/MTo8km

  5. Dan, I think one of the arguments in favor of pursuing Gen-Y goes something like this: “Gen-Y might not be profitable today. Indeed they can be fussy, fickle and difficult to please. However, they will be profitable at some point. If you wait to secure relationships with Gen-Y until they are/can be profitable, it may be too late; they might be tied to their PFI already. So you need to win Gen-Y relationships today and bide your time (as cost-effectively as possible).”

    How much truth is there in this theory? Not sure. Only time will tell.

    Now for credit unions, the rationale is much more simple. The average age of the typical CU member is like 57… and getting older. Credit unions need to attract younger members or their organization will die of old age.

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