Gen-Y College Students, Financial Services, and the Web

A recent Celent survey highlights a high level of sophistication and demand for multi-channel service among Gen-Y financial consumers, and underlines the often-overlooked importance of trusted advisors—parents and employers—in reaching college students and new grads.

Today’s college students are fairly savvy consumers of financial services who place a premium on high-quality online service and maintaining good credit. They are also most likely to choose providers based on recommendations from trusted sources: parents and employers. A recent survey of 375 undergraduates revealed these and other findings, which Celent has made available in its latest report, Gen-Y College Students, Financial Services, and the Web.

"With increasingly heavy competition in the consumer financial services marketplace, finding untapped pools of potential customers is more important than ever. College students and new graduates represent an important opportunity," said report author and Celent group manager Matthew Josefowicz. "By targeting full-time college students, financial services marketers have an opportunity to get a jump on their competitors in acquiring the most desirable segment of Gen-Y as customers."

Many banks and card companies already understand the importance of the college market and have established programs to reach and serve them, as have a few insurers. Investment firms have been much less active in targeting college students historically, but Celent’s survey reveals nascent demand and suggests that brokers may want to take a second look at this market.

Key findings in the report include:

Parental Guidance Necessary. More than 65% of respondents ranked parental recommendation as "very important" or "important" in choosing a provider.

We’ll Give at the Office? 27% of respondents said that being given information by an employer would lead them to "probably" check out a provider's services (more than any other channel).

Generation Web. 65% listed the Web as their preferred method for receiving product information, 38% preferred the Web or email as their top preferred way to interact with providers, and 60% rated online service as "very important" or "important" in choosing a provider.

Beyond Banking. 38% of respondents either had a current brokerage account, or were planning to open one within two years. Among male respondents, the numbers were even higher. And while the 25% of respondents who reported having current life insurance mostly received it from their parents, 15% expected to purchase life insurance within two years.

The report is based on an online survey of 375 full-time undergraduates between the ages of 18-25 conducted by Celent in August 2003. Respondents were asked about: their current financial product usage, their preferred methods of interactions with providers, their use of technology, their financial goals and concerns and how they expect to address them, what channels are most likely to reach them, and what factors influence their decisions in choosing providers.

Each section of the report presents analyses of the responses in these areas, and ends with key findings for that section. The report concludes with general recommendations for financial services providers and specific recommendations for retail banks, card issuers, investment providers, and insurers.