The untapped marketing channel that is costing you thousands of leads.   LEARN MORE
Kiran | Branch Workforce Evolution White Paper

A Tale of Two Gen-Ys: One Uses Branches, The Other Just Shrugs

Banks and credit unions hold many marketing misconceptions about Gen-Y. For starters, it’s a mistake to think of Gen-Y as one homogenous unit. One subset of Gen-Y uses branches a lot more than you think, while younger consumers generally couldn’t care less about banking.

A slow economic recovery, soaring student debt, and unprecedented unemployment have helped create two very distinct Gen-Y consumer segments, each with its own particular financial behaviors: emerging adults (those ages 18-24), and young adults (ages 25-34).

Subscribe TodayA report from Javelin Strategy & Research explores the differences between the these two divergent Gen-Y groups, examining how key trends impact financial institution’s costs and revenues.

“Today’s young consumers are hardly a monolithic generation,” says Javelin analyst Aleia Van Dyke. “This group is made up of two distinct age segments that act in significantly different ways.”

“By 2025, Gen Y will account for 46% of the nation’s income, making them a critically important consumer segment for banks and credit unions, “ adds Van Dyke. “The traditional approach to Gen-Y is no longer profitable for financial institutions. They cannot afford to let these future long-term profitable banking customers bring their loyalty elsewhere.”

Javelin says financial institutions are struggling to provide online and mobile services that entice and satisfy younger consumers — those who expect convenient, innovative, real-time services that enable them to bank and spend money when and how they want.

CO-OP Financial | CO-OP Premium Content

Financially Cautious Young Adults (Ages 25-34)

While young adults are more comfortable than others with online and mobile banking, they have major financial insecurities. The recession has created many financially cautious young adult consumers.

“Many are struggling to stretch their paychecks, and they’re hungry for better ways to stay on top of their finances,” said Mark Schwanhausser, Director of Multichannel Financial Services at Javelin.

Like previous generations, these younger consumers are in the stage of life where they establish financial behaviors and begin settling down in their banking relationships. However, despite growing up in the digital era, they still regularly seek person-to-person contact. They prefer to conduct transactions in person at branches at a rate of 2.5 times greater than consumers over the age of 65 — often thought of as the heaviest branch users.

Why is this Gen-Y subset using branches so often? Javelin isn’t entirely certain, although they do have some clues.

“One reason why is because they are developing their financial footing,” says Mark Schwanhausser, director of multichannel financial services and one of the report’s authors. “They need some hand holding.”


These in-person branch visits amount to a significant cost for financial institutions, compared to self-service channels such as mobile banking and ATMs. Javelin estimates that each in-person transaction at a branch costs a financial institution about $4.25, while an online channel transaction averages 19¢ and a mobile channel interaction averages 10¢.

Javelin encourages banks and credit unions to pick up the research where they left off, saying further study of these unexpected branch habits among young consumers is needed.

Currently 17% of Gen-Y ages 25-34 is already using a PFM tool today.
— Javelin Strategy & Research

Understanding these behaviors will enable financial institutions identify tactics to minimize unproductive branch visits and find ways to encourage even greater use of electronic channels).

“These consumers are still at an impressionable stage when their digital habits can be shaped and deepened,” Van Dyke points out.

What Javelin Recommends: Financial institutions should definitely prioritize the older Gen-Y segment, concentrating on those over the age of 24 first. These consumers represent the greatest opportunity. Banks and credit unions should focus on strengthening relationships with these older and more pragmatic Gen-Y consumers by developing deeper levels of trust. Javelin says this can be accomplished by providing services that keep consumers on track — like mobile alerts when someone may be at risk of missing a bill payment, of PFM tools that allow users to get a complete picture of their financial situation. It’s selfless services like these that will help financial institutions engender greater great among Gen-Y consumers. | Enhanced UCC Data

Financially Indifferent Core Millennials: Emerging Adults (Ages 18-24)

The youngest Gen-Y adults, often referred to as Core Millennials, maintain a laissez-faire attitude about money management, says Javelin, because they have yet to transition to a stage where managing a budget is necessary.

Indeed, one-quarter (25%) of those ages 18-24 do not manage their money. These younger consumers are most likely to have their finances managed by another individual (presumably a parent) and are generally indifferent to their finances.

“Although they are interested in establishing spending limits, they are generally content to keep their heads in the sand until they reach financial maturity,” Van Dyke notes.

What Javelin Recommends Financial institutions need to start wooing these consumers before it is too late. Javelin strongly recommends targeting them with prepaid cards. More innovative prepaid features, such those designed to help users establish a credit history, make person-to-person transfers, or use geolocational tools to help redeem rewards offers. Javelin also recommends providing these laidback budgeters the means to find greater financial stability by showing them how to monitor and manage their checking, saving, credit and prepaid accounts. Specifically, they suggest:

  • Mobile alerts that help prevent impending overdrafts or exceeded credit card limits
  • Mobile ATM finders that help locate fee-free ATMs
  • Online budgeting tools that help categorize spending
  • P2P payment apps that eliminate the need to carry cash

Get the Report or Attend the Webinar

Javelin’s report, “A Tale of Two Gen Ys: On the Road to Long-Term Banking Profitability,” is based on data collected online in three surveys of more than 12,000 respondents. The report is 34 pages long and contains 15 figures and graphs.

In the full report, Javelin makes specific recommendations on how financial institutions can develop long-term profitable relationships with both groups of Gen-Y consumers.

On Wednesday, January 30, 2013, Javelin’s Aleia Van Dyke and Mark Schawnhausser will present a detailed overview of their findings on Gen-Y. The webinar explore how encouraging positive banking behaviors early on results in a win-win for banks and Gen-Y consumers alike. The cost of the webinar is $249, and you can find more details here.

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. Banks and credit unions that register by February 28th save $250 and get one free half-day workshop worth $265 — a total savings of $515.00!

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

Digital Banking Report | 2017 Trends & Predictions


  1. Great post. Being a member of Gen-Y, I am a frequent visitor to my local branch. I take my finances seriously and prefer to do transactions in person. Thank you for that recognition of some in Gen Y still banking traditionally. I recently wrote a similar post on Gen Y Transforming the Banking Industry and shared a lot of research on the banking power of Gen Y.

  2. Benjamin, I am interested in the reason for your frequent visits and curious to know if you visit because your FI doesn’t offer the services you are looking for online ? I’m a Gen Y just as serious about my money but no desire to visit a branch when I can easily get what I need (shop loans/rates, invest, etc) with my FI online.

  3. We do lots of research in the channel behavior area and we find many Gen Y folks preferring the branch for not only complex advisory type interacts (opening new accounts, resolving a problem) but also very routine transactions like depositing and cashing checks. I think what is driving this is a pretty high percent (25%) of the Gen Y segment do not have any form of direct deposit meaning they are regularly getting a paper check from their employer and the teller being their best option for quickest access to funds! What’s interesting is this segment also shows the greatest interest in remote deposit capture via mobile device (31% ‘likely’ or ‘very likely’).

  4. Great insights Jim. Thanks for sharing.

  5. Waiting on a teller line to deposit a check? Only if the branch has low traffic and I don’t expect to wait on a line.

  6. I know a Gen Y who loves to visit the branch. He insists that he is normal and I never believed him. Now I know that he is not alone. Since he is in the top 10% of Gen Y savers, maybe the rest should also spend more time in the branch.

    Both Gen Y segments hold promise for financial institutions(FIs), but their expectations are different than older consumers (i.e., 35 years old). Instead of training them on how to bank, the leading banks are learning how to adapt to this new market. It is important to ensure that the products and services offered match the needs and desires of Gen Y consumers.

Speak Your Mind


Show Comments