A Deeper Look at Millennials and Credit
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Millennials, born between 1980-1995, represent the largest generation with significant buying power but have been slow to establish credit due to factors like the recession and student loans. They expect personalized, tech-driven financial services and show greater interest in products from tech companies rather than traditional banks. Despite their slow start, millennials are approaching important financial milestones and lenders need to adapt strategies to engage this demographic effectively.
A Deeper Look at Millennials and Credit
- 1. millennials AND CREDIT A DEEPER LOOK AT
- 2. WHO ARE THEY? WHAT DO THEY WANT? WHAT DO THEY THINK OF BANKING AND CREDIT? HOW DO YOU TARGET THE RIGHT MILLENNIALS? WHAT ABOUT THIN-FILE MILLENNIALS? millennials
- 4. BORN BETWEEN 1980-1995 Diverse Self-expressive #selfie Generally Optimistic Socially Conscious Travellers/Jetsetters Foodies
- 5. 80Mmillennials =25% of US population Millennials are now the LARGEST generation, surpassing Baby Boomers. $ 200Bannual buying power 21% of US discretionary spend =
- 6. They’re cash hoarders and conservative investors. Millennials keep 52% of savings in cash! Source: The Intelligence Group, September 2012 Delotte 2014 Millennial Survey
- 7. They (on average) spend 2 hours a day on their smartphone, which equates to 765.9M hours per week of captivation on their mini-screens. Raised in the digital age, more than anything Millennials are tech-dependent MILLENNIALS 765,919,000 Generation X 557,578,000 Baby Boomers 499,866,000 Silent Generation 60,845,000 TOTAL HOURS of Smartphone Weekly Use
- 8. banking and credit? WHAT DO THEY THINK OF
- 9. They’ve been slow to adopt credit … Chalk it up to... the Great Recession, hefty student loans or stricter regulations surrounding credit card marketing to younger adults. The numbers speak for themselves. In 2014, less than 50% of all 19 year olds had established credit, compared with 80% in 2006. 19 20 21 22 23 24 Age of Consumer ■ 2006 ■ 2010 ■ 2014 1 2 3 4 5 Millions of Consumers 2.2MM(<50%) 4.6MM19-yearoldsEstablishCredit(80%)
- 10. And their credit scores lag behind their Gen X and Boomer counterparts. *VantageScore 3.0 was used for this study. The score range is 300-850. **Includes credit cards, mortgage, auto loans and personal loans/student loans. ***Calculated using Experian’s Income Insight. Average VantageScore* Average Debt** Average Debt (Excl Mortgage) Estimated Avg Income*** Bankcard Balances Bankcard Utilization Millennials (Age 19-34) 625 $52,120 $26,485 $34,430 $3,403 43% Generation X (Age 35-49) 650 $125,000 $26,670 $50,400 $6,752 41% Baby Boomers & Greatest Generation (Age 50+) 709 $87,438 $19,217 $46,340 $5,603 25% National Average 667 $88.313 $23,089 $46,790 $5,340 34%
- 11. Gen X 46% Gen Y 27% Bankcard Utilization is also down ... 46% of Gen X’ers had bankcards when they were 18-34, compared to today’s millennials at 27%. And when they do have a card, balances are lower compared to other generations.
- 12. But as they come of age – graduating, buying homes, starting families and moving up the career ladder – millennials’ financial needs are growing. 7% Buy first home (208) 6% Sell or change home (129) 16% Change to a better job (194) 7% Change to a different job (180) 7% Graduate from school (263) 6% Enroll/return to college (223) 5% Buy/lease new car/truck (117) 11% Buy used car/truck (145) 7% Get married (214) Events expected to experience in next 12 months* Comparisons made vs. all adults. *Among events with at least 5% frequency.
- 13. millennials WHAT DO THEY WANT?
- 14. They expect real-time responses to their specific needs and make important financial decisions based on social feedback and collaboration.
- 15. They expect a more personalized experience, one where products are recommended based on past behaviors and excellent values are presented routinely.
- 16. Millennials expect lenders to: Make the offer relevant. Think long-term. Give honest feedback. Be consistent. Provide online financial education and management tools.
- 17. They want to conduct their affairs on a smartphone; not at a bank branch. Approximately 40% of all consumers who use finance apps or visit mobile finance websites are… you guessed it …Millennials. Source: EMS Financial Outlook Study
- 18. 71%would rather go to the dentist than listen to what banks are saying. A third of young adults are ready to switch banks in the next 90 days Source: Millennial Disruption Survey
- 19. 73% prefer new finance products from tech companies. They’d prefer financial services from the likes of Google, Amazon, and PayPal. Source: Millennial Disruption Survey 68% believe within 5 years the way we access our money will be totally different.
- 20. the right millennials? HOW DO YOU TARGET
- 21. The college-educated crowd is a great place to start. College-educated Millennials appreciate financial security and will likely be good candidates for multiple products within a company. (Fall 2013 Simmons Connect study) 84% HOLD JOBS 87% FULL TIME $52,700 AVERAGE INDIVIDUAL INCOME
- 22. Know your audience. Banks are the repository of customers’ financial information. They see: the day-to-day transaction records; information about money in, money out; salary deposits, tax payments; and tuition and education loans.
- 23. Access to these vast data sets can be used to personalize the digital customer experience. Precision-targeting tools give you the information needed to create a complete financial picture of Millennial prospects.
- 24. Serve up the right offers. Insights will help you gain a greater share of wallet with this influential and growing group.
- 26. It might appear daunting to assess the thin-file Millennial. With fewer trade lines, their missteps are amplified. A skipped payment or high-credit utilization hurt exponentially more.
- 27. Risk-based pricing strategies, using tools like Extended View, can identify unique credit offers to “right size” the thin-file candidate and assign the appropriate credit limits.
- 28. Prescreen individuals before they apply to match Millennials with the products that best meet their credit profile. Instant Prescreen enables lenders to target ... the Right Consumer at Right Time with the Right Offer.
- 29. Prequalification, a consumer-friendly option, can be added to your decisioning toolkit. The consumer consent-based credit inquiry allows lenders to match a consumer with the best option before the application process, and it takes just seconds. The conversion of approved prequalification inquiries is 52%, representing a significant upsell opportunity for lenders.
- 30. So while Millennials may have had a slow credit start, no one can deny they are coming of age. The question is – who will be ready and willing to partner with this massive market?
- 31. To learn more about Experian’s Millennial Insights, visit www.experian.com/millennials