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Robert Cartwright drives a company car. He has a laptop, iPhone and video camera paid for by this employer, and rarely spends time in the Bridgeton headquarters of Vantage Credit Union.

Instead, Cartwright is often online where he chats with ‘fans' on social networking site Facebook, posts videos on YouTube, microblogs to ‘followers' on Twitter, and does the kind of stuff you'd expect from a 26-year-old.

But he's not goofing off. Cartwright is spokesman for the credit union's youth marketing program, a key effort to win the financial business of the young demographic group Gen Y.

Vantage and many competing financial institutions are connecting with their next generation of customers by speaking their language - social media - and reaching them on smartphones.

"This age group, Generation Y, it's what we're on all the time," Cartwright said.

Several banks are also rolling out new accounts specifically geared to Gen Y, with no fees if they get their statements online and deposit checks electronically instead of visiting a bank branch.

The group's age range varies, but it generally includes teenagers up to 32-year-olds. It was dubbed "Y" after following Generation X - typically defined as those ages 33 to 46 - that succeeded the baby boomer generation.

The focus on youth is a way to build brand loyalty for future banking relationships, bankers say. In 2010, Gen Y's personal income, $2.4 trillion, accounted for one fifth of the total personal income in the U.S., according to Javelin Strategy & Research, a California-based financial services research firm. By 2025, when the last of the employed boomers draw closer to retirement age, Gen Y will account for 46 percent of personal income.

Financial institutions have been slow to use social media, because of regulatory and privacy issues. That's beginning to change as they realize that social media and smartphones are the main way to reach this coveted demographic, which prefers to ‘tweet' or text instead of visiting a bank branch. Banks are primarily using social media for marketing and connecting with customers instead of account activity.

"Gen Y is influenced more by the comments of their peers than traditional advertising" such as TV and

radio ads, said Jay Sinha, an associate professor of marketing and supply chain management at the Fox School of Business at Temple University in Philadelphia.

Financial institutions are following the lead of consumer products companies such as Adidas and Victoria's Secret that have used social media to increase sales, he noted.

"It adds positive cache to a brand, provided that it's not crass commercialism. Gen Y is really turned off by that," Sinha said.

To make sure Vantage's marketing message gets out, Cartwright posts dozens of Facebook and Twitter messages a week, showing up at baseball games and movie theaters that he tells his hundreds of online followers about and giving out free tickets and gift cards. He writes five blog posts a week on his website, and creates videos he posts to YouTube with tips on saving money and other topics.

"Most college kids are really bad with their money," he said. "I wish something like this would have been around when I was 18."

Vantage Credit Union, which has 15 branches, hired Cartwright last year as its first "Young & Free" spokesman.

The job, which pays $30,000, lasts a year. In June, Vantage will begin the search for the next spokesperson. Cartwright, who has a degree in education, got the job after he created and posted an audition video online that was voted on by the public.

The program has paid off for Vantage, says Executive Vice President Eric Acree. Since last summer, 2,500 customers have enrolled in its account geared to 18- to 25-year-olds, which offers free checking and additional benefits, and 40 percent of those are customers new to Vantage.

The average age of all U.S. credit union customers is 47, but Vantage's average customer age is about 41, which Acree credits in part to Vantage's social media efforts.

"We're spending a lot of time and effort to understand Gen Y, who thinks differently than Gen X," he said. "The 18- to 25-year-old crowd are the ones that will be buying cars, spending money on college and buying homes."

A challenge banks and credit unions have long faced when focusing on teenagers and 20-year-olds is that their accounts aren't as profitable as those of older customers, which tend to have higher deposits and loan activity.

Mark Schwanhausser, a senior analyst at Javelin, said financial institutions were now looking to Gen Y to make up for lost revenue after recent regulatory changes put limits on overdraft fees.

"Banks are realizing that online and mobile banking are more cost-effective ways to serve a customer," he said. "Most financial institutions can't afford to play a waiting game."


Now many banks and credit unions are accelerating their efforts and using the technology in different ways.

TheBank of Edwardsville spent nine months studying social media before it created a Facebook page last June. It uses the site to post links to community events in which the bank is participating.

Recent posts to its Facebook page include contests to raise money for charities. For each person who clicked "like" on both the charity and the bank's page, the bank donates a dollar.

Nearly half of the The Bank of Edwardsville's 1,088 Facebook fans are 34 years old or younger, said Grady Ambuel, the bank's senior vice president of marketing.

Meanwhile, Regions Bank enhanced its mobile banking offerings in February to include the ability to transfer funds, view recent transactions and locate ATMs by text message.

But it isn't just Gen Y that is embracing the technology, according to Stephen Lamar, a Regions Bank senior vice president and head of the bank's mobile banking efforts.

"We've been surprised at the number of people across all demographics that have been receptive to text banking," he said.

Gen Y's expectation that banks be accessible by social media prompted US Bank to create a Facebook page in June 2010 and launch a Twitter account three months ago.

"It's been a cultural shift for a bank to start talking in real time with the public online," said Karen Gutierrez, US Bank's social media manager.

Bank of America introduced its mobile banking platform four years ago, as cell phones began to get "smarter" with GPS capabilities and faster Internet access. Of Bank of America's 29 million customers who use online banking, the bank now has 6.5 million customers who use their cellphones for banking, and 1.1 million customers who use text messages on their cellphones to access account information. The bank cites Gen Y customers as driving its mobile and text growth.

"Kids are being taught at an earlier age to use mobile banking," said Tara Burke, Bank of America's consumer banking spokesperson.

Bank of America will launch two-way text alerts next year that will allow customers to transfer funds by text between accounts if, for example, they receive a text saying one of their account balances is low.

Bank of America also developed an e-commerce service six months ago for Gen Y that eliminates the $8.95 monthly account fee for those who don't use brick-and-mortar branches. Customers in the program receive their account statements online and don't have to maintain a minimum balance.

If a customer visits a bank branch to make a deposit or cash a check, the monthly fee is charged.


Still, not everyone is rushing headlong into social media.

Chuck Kim, chief financial officer and executive vice president for Commerce Bank, said regulatory concerns had kept the Kansas City-based bank from creating a Facebook page or Twitter account, although it is evaluating both.

"Banking is one of the most heavily regulated businesses in the world, and certainly in the U.S.," he said, adding that maintaining customers' privacy was a concern.

Commerce Bank has found success using another social media site, LinkedIn, for recruitment, particularly with Gen Y.

LinkedIn is an online networking site that allows users to add contacts to their page and post messages.

Commerce created a LinkedIn account last year and has since filled several positions using the site, where people can post their work history and job skills.

Financial institutions have found that social media can present public relations headaches. For example, there's a "Bank of America Sucks" page on Facebook, not affiliated with the bank, that has 1,291 fans.

But more banks see using social media as inevitable.

"What's changed is that we've realized that the conversation is happening online, whether or not we're there," said US Bank's Gutierrez.

"It's where our customers are, and we can better meet their needs if we're there."

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