a deeper look at millennials and credit
TRANSCRIPT
millennialsAND CREDIT
A DEEPER LOOK AT
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
millennialsWHO ARE THEY?
BORN BETWEEN
1980-1995Diverse
Self-expressive #selfie
Generally Optimistic
Socially Conscious
Travellers/Jetsetters
Foodies
80Mmillennials
=25% of USpopulation
Millennials are nowthe LARGEST generation, surpassing Baby Boomers.
$200Bannual buying power
21%of US discretionary spend
=
They’re cash hoarders and conservative investors.
Millennials keep 52%of savingsin cash!
Source: The Intelligence Group, September 2012 Delotte 2014 Millennial Survey
They (on average) spend 2 hours a day ontheir 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 X557,578,000
Baby Boomers499,866,000
Silent Generation60,845,000
TOTAL HOURSof Smartphone
Weekly Use
banking and credit?WHAT DO THEY THINK OF
They’ve been slowto 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
2.2M
M (<
50%
)
4.6M
M 1
9-ye
ar o
lds
Esta
blis
h C
redi
t (8
0%)
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.
AverageVantageScore* Average Debt** Average Debt
(Excl Mortgage)Estimated
Avg Income***BankcardBalances
BankcardUtilization
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& GreatestGeneration(Age 50+)
709 $87,438 $19,217 $46,340 $5,603 25%
National Average 667 $88.313 $23,089 $46,790 $5,340 34%
Gen X46%
Gen Y27%
Bankcard Utilizationis 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.
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.
millennialsWHAT DO THEY WANT?
They expectreal-time responses
to their specific needs and make important financial decisions based on social feedback
and collaboration.
They expect a more personalized
experience, one where products are recommended based on past behaviors and excellent
values are presented routinely.
Millennialsexpect lenders to:
Make the offer relevant. Think long-term.
Give honest feedback. Be consistent.
Provide online financial education and management tools.
They want to conduct their affairs on a smartphone; not
at a bank branch. Approximately 40% of
all consumers who use finance appsor visit mobile finance websites are…
you guessed it …Millennials.
Source: EMS Financial Outlook Study
71%would rather go
to the dentist than listen to what banks are saying.
A third ofyoung adults are ready to switch banksin the next 90 days
Source: Millennial Disruption Survey
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 accessour money will be totally different.
the right millennials?HOW DO YOU TARGET
The college-educated crowd is a great
place to start.College-educated Millennialsappreciate 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
$52,700AVERAGE INDIVIDUAL INCOME
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.
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.
Serve up the right offers.Insights will help you gain a greater share of wallet with this influential and growing group.
thin-file millennials?WHAT ABOUT
It mightappear dauntingto assessthe thin-file Millennial.
With fewer trade lines, their missteps are amplified.A skipped payment or high-credit utilization hurt exponentially more.
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.
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.
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 approvedprequalification inquiries is 52%, representing a significant upsell
opportunity for lenders.
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?
To learn more about Experian’s Millennial Insights, visit
www.experian.com/millennials