Adjust;to;a;Generational;Shift
Mortgage companies should keep up with Generation Y’s coming of age
Most mortgage companies rec- ognize that Generation Y — aka millennials and echo boomers — is a major customer demographic
that warrants serious consideration. In
the past few years, many companies
have focused on understanding and
building relationships with this market
segment. Initially, this has meant many
companies going green and touting their
corporate responsibility, as well as embracing this generation’s social networking penchant.
But what’s next?
Gen Y’s coming of age is pressing
mortgage companies to stretch beyond their comfort zones to best serve
a population segment that is ethnically diverse, technologically savvy
and rapidly growing to overtake baby
boomers. this is a smart move, as
most millennials have entered their in-come-earning years and are projected
to comprise 30 percent of all homeowners by 2015.
Rising technology adoption and
changing lifestyles that demand more
payment choices call for mortgage
companies to go from just targeting
this generation to serving it effectively.
Using research and lessons learned
as a launch pad, mortgage companies
can implement a smart, comprehensive payments strategy that can reduce
costs and decrease delinquencies,
while increasing profits and customer-retention rates.
Turn challenges into solutions
Serving Gen Y effectively means understanding its challenges and how
to translate them into payment solutions. According to a recent study,
30 percent of millennials expect it to be
more stressful to budget and pay bills
this year. As a result, many are planning
to be more financially prudent, with
39 percent putting more emphasis on
increasing savings and 22 percent looking to reduce debt this year.
to receive their bills on the Web or via
e-mail. they also pay electronically and
often appreciate companies that offer electronic payment options, opting
to use biller sites over bank-payment
options. In fact, 33 percent pay online through their bank’s website and
38 percent pay online directly at the
biller’s site. this is especially notable
because many billers currently charge
a service fee for certain types of payments, while banks often don’t — a
potential added source of revenue for
billers that recognize the opportunity.
Although 39 percent of Gen Y turns to
Web portals, online articles and advisers as their preferred media channels
for financial-management resources,
most also are likely to turn to spouses,
partners, parents and close friends for
help in managing their finances. they
have a high comfort level with information through electronic channels, but
they value the trust and security of personal relationships when making financial decisions. personalized outreach
that brings technology and high-touch
communication together such as text
message and e-mail payment notifications will go a long way.
Disciplined money management now
is predicted to translate into financial
gains in the future. With more than
75 million members, Generation Y’s
collective income is increasing — from
$1.43 trillion in 2008 to a projected
$2.28 trillion in 2013. this means that
many millennials will have greater
dreams of owning a home. More than
70 percent expect to own a home by
the time they reach their early 30s, with
73 percent of those at least 25 years of
age expecting to own by 2015.
If this generation acts true to plan,
mortgage companies should see a
large influx of young borrowers looking for technology-friendly, diverse and
flexible mortgage options and payment
choices to support their growing financial needs.
“Having practically cut
their teeth on technology,
managing their finances
electronically is
second nature
for members of Gen Y.”
The strategy is in the mix
• • •
Reeling in Generation Y revenue will
require mortgage companies to be as
agile as this segment. Keeping in mind
that Gen Y wants — and is accustomed
to getting – it all, mortgage compa-
nies must now prepare and implement
smart, momentum-building plans de-
signed to position servicers to capture
this growing set of borrowers. •
Missy Zakett is vice president of sales,
enterprise banking at Western Union Global
Business payments. She joined the company
in 2001 after working for more than 20 years in
the financial-services and mortgage industries.
Zakett is a member of the Mortgage Bankers
Association and the American Institute of Certified public Accountants. She has a bachelor’s
degree in accounting from the University of
Florida and is based in Laguna Niguel, Calif.
Reach her at missy.zakett@ westernunion.com.
