Jun 01 2008
Young Adult Transaction Accounts
Before they need lending products, young adults need a transaction account. This brief explores how credit unions can secure long-term relationships beginning with a transaction account.
Managing Director, Research
Report Number 160
Long before most adults need a mortgage, a car loan, or even a credit card, they need a transaction account. Institutions that secure the transaction relationship earn interchange income from debit card use and gain the ability to market more profitable loan products as members enter their borrowing years, rather than trying to lure them from another institution.
What is the research about?
It is easier said than done when it comes to convincing young members to choose your checking account. To see how credit unions around the country are reaching out to capture the all-important checking relationship, Filene surveyed the Web sites and executives of more than 20 credit unions that have a discrete transaction account geared toward young adults. For the purposes of this survey, young adult accounts are those that are targeted toward 16- to 30-year-olds, though the most prevalent age target is for older teenagers and younger twenty-somethings.
What are the credit union implications?
For those thinking about offering a transaction product marketed specifically to young adults, consider these best practices:
- Integrate the most popular features. From the accounts Filene surveyed, the following features were integrated most: online banking (95%), online bill-pay (84%), and e-statements (84%).
- Free is not essential, but it’s close. Combine a basic mix of features, including no minimum balance and free access to online services.
- The debit card is your best bet for keeping young adult members active. Find ways to make the debit card an exciting part of your offering.
- The most successful credit unions find ways to make their young adult transaction accounts profitable, rather than just giving away a service.
- Information and education sessions can be helpful in extending brand presence, but most of the credit unions surveyed have greater success when gathering members in conjunction with other organizations, like schools or businesses, rather than hosting independent sessions.
This report is sponsored by PSCU Financial Services, the Credit Union Executives Society (CUES), Fiserv, and the Corporate Credit Union Network.