Marketing Financial Services to Younger Consumers - US

Published by: Mintel International Group Ltd.

Published: Feb. 1, 2007 - 92 Pages

Table of Contents

Scope and Themes

What you need to know

Scope of this report

Abbreviations and terms

Abbreviations

Terms

Executive Summary

Key highlights

Mobility and education

Factors impacting the choice of financial institution

Number of banking relationships

Young consumers and banking products/services

Major trends being driven by younger consumers

Young Adults and Where They Keep Their Money

Introduction

What younger consumers look like

Figure 1: U.S. total population, by age, 2001-11

Figure 2: Percentage of age cohorts with undergraduate degree, 2005

Where they bank now

Figure 3: Type of banking institution for primary banking relationship, by gender and age, December 2006

Figure 4: Type of banking institution for primary banking relationship, by income, December 2006

Figure 5: Type of banking institution for primary banking relationship, by race/ethnicity, December 2006

Figure 6: Primary banking institution used in last 12 months, by age, June 2006

Figure 7: Investment/mutual fund firm used in last 12 months, by age, June 2006

Investment, savings and loan accounts—where they are held

Figure 8: Types of investments/savings accounts owned, by age, Spring 2006

Figure 9: Type of loans held, by age, Spring 2006

Figure 10: Type of institution where loan accounts are held (for those who have a loan of this type), by age, Spring 2006

Loyalty and the Younger Consumer

Mobility trends

Figure 11: Total mobility, by age, 2004-05

Figure 12: General mobility of persons 25 years and over, by age and educational attainment, 2004-05

Figure 13: Number of times respondents have changed banking institutions, by gender and age, December 2006

Figure 14: Frequency Canadian respondents have changed banks in last five years, by age, December 2006

Figure 15: Number of times respondents have changed banking institutions, by education, December 2006

Figure 16: Number of times respondents have changed banking institutions, by current employment status, December 2006

Figure 17: Number of times respondents have changed banking institutions, by race/ethnicity, December 2006

Figure 18: Number of times respondents have changed banking institutions, by current type of primary banking institution, December 2006

Location, location, location (even more important than fees)

Figure 19: Primary influence as to choice of bank, by gender and age, December 2006

Figure 20: Primary influence as to choice of bank, by income, December 2006

Figure 21: Primary influence as to choice of bank, by race/ethnicity, December 2006

Figure 22: Primary influence as to choice of bank, by current work/educational status, December 2006

Figure 23: Primary influence as to choice of bank, by education, December 2006

Figure 24: Primary influence as to choice of bank, by current type of primary banking institution, December 2006

Enticing young consumers to switch

Figure 25: Reasons respondents would switch banks, by gender and age, December 2006

Figure 26: Reasons respondents would switch banks, by income, December 2006

Figure 27: Reasons respondents would switch banks, by race/ethnicity, December 2006

Figure 28: Reasons respondents would switch banks, by education/employment status, December 2006

Figure 29: Reasons respondents would switch banks, by current type of primary banking institution, December 2006

Figure 30: Importance of banking services—18-24 year old respondents, December 2006

Figure 31: Importance of banking services—25-34 year old respondents, December 2006

Figure 32: Perceptions as to whether financial services companies are doing enough to ensure the safety of personal information, by gender and age, August 2006

Figure 33: Likelihood of switching to a different institution for better security, by gender and age, August 2006

Two- (and three-) timing

Figure 34: Number of banking relationships, by gender and age, December 2006

Figure 35: Number of banking relationships, by income, December 2006

Figure 36: Number of banking relationships, by type of financial institution, December 2006

Young adults are visiting branches frequently

Figure 37: Frequency of personal interaction with banks by customers with online banking access, by age, April 2006

Focus on online banking as a differentiator

Figure 38: Percentage of respondents who are online, have visited an online banking site, and frequency of usage, by age, Spring 2006

Figure 39: Internet banking services used by those with bank or brokerage accounts, by age, April 2006

Figure 40: Respondents who use online banking services, how used, by age, April 2006

Figure 41: Respondents with bank or brokerage accounts who do not use online banking services, reasons why not, by age, april 2006

Figure 42: Respondents with bank or brokerage accounts who do not use online banking services, likelihood of using Internet banking in the next year, by age and income, April 2006

Figure 43: Features that online banking users like or would prefer to have, by age, April 2006

Figure 44: Type of institution used for online banking, by age, April 2006

Young Consumer-centrism

Is generational segmentation informative?

Figure 45: Attitudes towards money, by age, 2006

Figure 46: Attitudes towards insurance, by age, 2006

Figure 47: Attitudes towards investments and advice, by age, 2006

Approaching universal acceptance of debit cards

Figure 48: Debit card ownership, by gender and age, August 2006

Figure 49: Frequency of debit card usage, by age, August 2006

Figure 50: Preferred method of payment, by gender and age, December 2006

Figure 51: Attitudes toward rewards and rewards card fees, by age, August 2006

Figure 52: Debit card purchase amounts, by age, August 2006

Credit card ownership and usage

Figure 53: Percentage of individuals with at least one credit card, by age, Spring 2006

Figure 54: Individuals owning any credit card, by age, Spring 2006

Figure 55: Have any credit card, by age, 2002-06

Figure 56: Have credit card, Spring 2006

Figure 57: Type of credit card owned, by age, Spring 2006

Figure 58: Open rate for direct mail credit card advertising, by age, October 2006

Figure 59: Respondents who have a credit card and typically open credit card offers—what would motivate them to open the envelope, by age, October 2006

Figure 60: Credit card payment behavior, by gender and age, December 2006

Figure 61: Amount in non-retirement savings account, by gender and age, December 2006

Targeting the teen

Figure 62: Credit card ownership as a teenager, by gender and age, December 2006

Figure 63: Debit card ownership as a teenager, by gender and age, December 2006

Figure 64: Teens’ mail/phone order purchases, how purchased, by age, Spring 2006

Figure 65: Teens’ Internet purchases, how purchased, by age, Spring 2006

Figure 66: Type of bank accounts currently held by teens, by age, Spring 2006

Figure 67: Parental presence over banking relationship, by age, August 2004

Student financial aid

Student power

Figure 68: Preferred method of payment, by education/employment status, December 2006

Figure 69: Credit card payment behavior, by education/employment status, December 2006

Figure 70: How education is funded for college students, by gender and age, December 2006

Figure 71: How education is funded for college students, by gender and age, December 2006

Figure 72: Importance of banking services—respondents aged 18-24 and full-time college students, December 2006

Movers and shakers

Figure 73: Importance of banking services—25-34 year old respondents, December 2006

Advertising to Young Consumers

Targeting 18-25 - high volume acquisition mailings

Figure 74: HSBC Platinum Mastercard, September 2006

Figure 75: HSBC Platinum Mastercard, December 2006

Figure 76: Chase Flexible Rewards Visa Platinum Card, December 2006

Figure 77: BP Visa Card from Chase Bank, October 2006

Figure 78: Visa Platinum Card from Capital One Bank

Figure 79: Personal Loan from CitiFinancial, January 2007

Figure 80: Line of Credit from Bank of America, September 2006

Targeting 26-34 - high volume acquisition mailings

Figure 81: Platinum MasterCard from Chase Bank, January 2007

Figure 82: Mileage Plus Visa Card from Chase Bank, January 2007

Figure 83: World Wildlife Fund Platinum Visa Card from Chase Bank, January 2007

Targeting younger financial consumers—television advertising

Figure 84: A.G Edwards television advertisement, 2006

Figure 85: Edward Jones television advertisement, 2006

Figure 86: fidelity myPlan television advertisement, 2006

Figure 87: Nationwide television advertisement, 2006

Figure 88: Saveandinvest.org television advertisement, 2006

Figure 89: Wachovia television advertisement, 2006

Young consumers in the next decade

Gen X and Gen XY expectations

Figure 90: Age at which respondent started or plans to start saving to buy a home, by gender and age, December 2006

Figure 91: Age at which respondent bought or plans to buy a home, by gender and age, December 2006

Figure 92: Age at which respondents started saving or expect to start saving for retirement, by gender and age, December 2006

Figure 93: Expectations of receiving a lump-sum payment, by gender and age, December 2006

People are only going to become more mobile

Contactless cards

Figure 94: Respondents who would use contactless technology, by gender and age, October 2006

Figure 95: Respondents who would use contactless technology—what they see as the advantages, by gender and age, October 2006

Figure 96: Respondents who would not use contactless technology—what they see as the disadvantages, by gender and age, October 2006

Major trends being driven by younger consumers

Cutting out the middleman—social networking

Pick a cause—green marketing

Appendix: Trade Associations

Abstract

This report addresses the key topics in attracting and retaining the younger financial services consumer, aged 18-34. These include:

• The factors which impact the loyalty of young consumers
• How to reduce or eliminate switching behavior in this demographic group
• Actionable customer acquisition strategies
• Elements of branding that will appeal to this group
• How the young financial services consumer is evolving into the future

Will a “consumer-centric” focus be effective with these customers? Or is technology the most important way to appeal to this group? What are their primary influences in choosing a financial services provider? And why do they stay? Also discussed are the broader trends in the financial services industry that are being driven primarily by this age group.

This report looks at demographic and psychographic factors that impact acquisition, retention and loyalty of younger consumers for the financial services industry. It also looks at how the financial services industry is evolving—especially in terms of what appeals to this younger audience. What are competitors looking at in terms of targeting this group? What should they be looking for? What innovations are occurring in other industries that might provide a competitive advantage to financial services companies?

There is perhaps greater variation in this younger group of consumers than in any other age demographic, and this report examines these variations in detail.

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