11 January 2009

Unique Banking Needs? Hogwash.

A topic I have become increasingly consumed with is the misconception and overestimation of financial services market fragmentation. There is great focus these days on the emerging Gen Y market and all of their "unique" and "distinct" needs and preferences. I have no doubt whatsoever that this generation is unlike any that has come before - if for no other reason in the way we integrate technology, especially communications technology, in our lives.

I have had trouble, however, agreeing that our needs and preferences are all that "unique" and "distinct" as they pertain to financial services. We need loans, payment vehicles, investment vehicles, convenient access to our cash, and financial advice all at the best price possible...just like every other generation. We'd prefer not to be forced to deal with a financial institution.

So, to me it is the financial institutions, and particularly our marketers, that have fragmented (or tried to fragment) the market. I believe, to the contrary, we are a very mature industry with a very stagnant set of customer/member needs and wants.

This isn't exactly a bad thing for credit unions. I think we have unique ways with which we can deliver and price these services - dictated by our ownership structure. But let's not fool ourselves into overestimating this generation's uniqueness in terms of their financial service needs.


Ron Shevlin said...

I think you misunderstood. The "unique" needs refers not to their product needs, but their need to be coddled, because they're so special.

Matt, the Credit Union Warrior said...

@Ron I think you've actually hit on a very important point. It's not the product needs that are unique - it's Gen Yers' expectations regarding communications, convenience technology, and conflict resolution that are different.

Anonymous said...

I think that the current amount of information available to members (and especially Gen Yers) drastically changes these 'basic' financial services.

I've expanded on my blog for those brave enough to travel for CU Warrior Land to the Skeptic Valley. :)

Planes, Buggies, Letters, Email & Financial Services

Anonymous said...

I think demographic segmentation is vastly overestimated and psychographic analysis is vastly underappreciated.