David Bakke is a blogger for Money Crashers Personal Finance, where he writes about banking tips, money management and innovative, smart shopping ideas.
A study conducted by Javelin Strategy & Research found that by the year 2015, Generation Y spending will approach $2.5 trillion – and in 2018, the annual income of Gen Y-ers will surpass $3 trillion. Banks have recognized both the opportunity at hand, as well as the fact that traditional marketing just won’t cut it for this demographic.
Fortunately, everyone can benefit by the efforts banks are making to woo Generation Y. Here are a few changes to look out for and use to your advantage:
1. Social Media
63 percent of banks either have a social media presence or plan to launch one in the next year. Banks can say whatever they want in brochures, and online reviews are often less than objective, but social media lets everyone be heard.
To know how real customers feel, check out the bank’s social media page before you open an account. For example, Wells Fargo’s Facebook page shows a list of customer complaints.
2. Mobile Banking
Seventy-six percent of big banks currently offer mobile banking, and 54 percent of those without a mobile app plan to launch one by 2013. If you own a smartphone or mobile device, make sure any bank you’re considering offers you the convenience of banking on the go, or that they plan to in the near future.
3. Stellar Customer Service
These days, superior customer service has more to do with additional account features than a smiling teller. Look for free options, such as the ability to open an account online or transfer funds online. Also look for easier ways to contact your bank, rather than visiting a branch. Live online chat is a great feature, but at the very least, a bank should offer 24/7 phone support.
4. Financial Advice
One-third of Gen Y-ers have said that they need help managing their finances — and banks have begun to respond. For example, the Chase Slate credit card comes with a program called Blueprint that lets you design custom payment plans, and also gives advice on how to avoid paying interest. If built-in financial advice is important to you, ask your bank or the one you’re considering what they have to offer.
5. Unique Products
American Express recently introduced the ZYNC charge card. It requires you to pay your balance in full each month — which is a great way to build and keep a good credit score — and lets you customize your rewards package for the items you buy most.
If you’re into buying “green,” for example, build your rewards around the Eco Pack (which is free) and get double points on all purchases at any of over 5,000 green merchants. Amex even brought on a Gen Y life coach you can talk to via the ZYNC Facebook page for help. However, bear in mind that all this comes with an annual fee of $25.
6. Cash Incentives
Don’t forget about the best marketing strategy banks use to attract new customers: Cold, hard cash. If you open up a Chase Total Checking account and set up direct deposit, for example, you can get $150 cash. There are other new checking account promotions and incentives as well. Do your research to find which works best for your spending habits.
Banks were recently crippled by new credit card legislation, a mass exodus to credit unions and the recession — and they’re looking to you to recoup profits. Unfortunately, this often results in hidden fees and account charges.
Before you choose a bank, inquire about any fees you will be or might be held liable for if certain account conditions aren’t met. Reading the fine print is another great way to discover the things banks would rather hide from you. And beware of time-sensitive teaser offers at sign-up. For example, “free banking for the first year” could mean that significant fees will kick in once the first 12 months are up.
Ultimately, if you do your research, you can take advantage of these marketing efforts to find a bank or credit card that works well with your lifestyle.