By Ray Birch
BROOKFIELD, Wis.—Traditional methods for financial education are often a waste of time when it comes to helping Millennials plan for their financial futures, according to one expert.
Instead, what the CU should be doing, is sharing financial advice that helps Millennials get through the week or month, and relaying that information through mobile platforms and real-time alerts.
Ryon Packer, SVP product strategy at Fiserv, told CUToday.info the latter approach is better for winning over Millennials and making them solid members of the credit union.
Packer explained that credit unions need to rethink their financial education approach toward Millennials and all other generations that follow due to the adoption of real-time banking.
“Prior generations could not live in real time because there weren’t systems in place, like real-time alerts, that allowed us to live close to the edge,” he said. “When I was newlywed and I recall making a $100 error on my checking account, that cost me two to three bounced checks because we got our communication from the financial institution in the mail.”
Careful Money Managers
Packer contends that the banking systems experienced by the generations the preceded Millennials forced consumers to be more careful managers of their money and plan longer term.
“When you are living in real-time banking, getting alerts, you know within seconds where you stand with your accounts,” said Packer. “For example, I pay with my credit card at a restaurant and I get an alert that my card has been charged before the waiter even makes it back to the table. That high level of transparency lets you live close to the edge financially.”
It also leads to greater stress, he suggested. A recent Fiserv study found the majority of Millennials have a great deal of concern for their financial lives. For instance, the report disc more than 50% of Millennials said they would not have the savings to handle a $500 expense and would have difficulty paying off a $500 loan.
The study asked consumers, too, to rate their levels of satisfaction in their lives. While the report found just 37% of consumers are satisfied with their financial health, the issue is greater among Millennials, Packer said.
He said the majority of Millennials rated their financial health satisfaction lowest among categories that included emotional, social and physical health.
“We look at that and say, overall, Millennials with their tight budgets are least satisfied with their financial health, that begins to raise the question as to what we need to do to help Millennials and get them into a better financial framework,” Packer said. “The issue of not being able to pay off a $500 loan speaks to the tightness of Millennials’ budgets, cash flow issues and budgeting problems.”
Packer noted that 60% of early Millennials use a mobile browser or app to track their finances and are solely relying on technology to see where their finances stand.
“The fact that 60% of Millennials are using a mobile browser to manage their finances (while) the general population is at 26%, that gives you an idea about how big that delta is between the banking styles of Millennials and older members,” said Packer. “Millennials want real-time banking data in their pockets.”
Moreover, Packer pointed out that 51% of all consumers say they want self-service and mobile from their FIs, but the percentage jumps to 81% for Millennials.
Packer stressed that credit unions should closely examine what its Millennial members need from the credit union.
“They are seeking guidance. They are not satisfied with their financial lives,” said Packer. “I believe credit unions need to create a highly self-service environment for Millennials that covers a broad range of mainstream banking capabilities.”
Just as important, Packer added, is that credit unions must deliver education to Millennials around budgeting and cash-management techniques and tactics that are in line with the “real-time mentality.”
“You can’t talk to Millennials easily about how to plan months or years ahead,” he said. “But you can talk about strategies to get them to the end of the week or end of the month. Provide real-time alerts, and maybe this is one of the ways you educate them. Instead of imparting some sage wisdom over traditional channels about how they can plan out their next year or even save for retirement, send them an alert that says, ‘Are you sure you want to spend this money now because you have bills coming at the end of the month.’ That kind of message is in line with Millennials’ real-time lives and real-time financial battles.”