Gen-X Essay, Research Paper

Relationship Banking 1

Assignment Project

Erica Van Dyk

For: Mike Planche

BMFS 101

December 6,1999

Great X-pectations

Generation-X is seen by the financial world as a trough between the Baby Boomer and Echo generations. They are defined in many distinct ways; some classify a generation X-er as anyone born after 1960, between 1960 and 1966, and between 1968 and 1982, and account for 26% of the Canadian population, or 7.6 million potential clients. Whatever the case may be, this generation is the biggest and most homogeneous demographic group of all time. The terrible preconceived notions of this group as being aimless, drifting, demoralized, marginalized, poor, and disloyal, has led to the friendlier label the Nexus generation. Which means connection, bridge, or link, not a trough between baby boomer and echo generations. Although, Nexus, is now a friendlier sounding title, their predecessors the Baby Boomers still look down upon them, and cannot get used to their strange social conduct, extreme sports, body piercing, weird tattoos, and weirder music. Some of these baby boomers are even bankers.

This generations main concern with banks and bankers is just as the above stated. They are looked at as immoral, which leads bankers to believe they wouldn t be friendly customers, and seen as poor, which leads bankers to believe that they have no money to invest for the bank to make a profit. Due to this lack of respect and poor customer service, many X-er s are refusing help from the bank.

Today s bankers should lose some of these harsh judgements of generation-X, and pay more attention to this demographic segment. We know that this segment accounts for 7.6 million potential clients, but some bankers don t realize that that equals 104 billion dollars in after tax purchasing power per year, for an approximate left over life span of thirty to forty more years. That s money, which could be put towards the banks products or services. They truly could be dream customers but only 10% are satisfied with their customer service from financial institutions. Other reasons banks should be paying more attention to these potential dream customers are that they are, trusting and comfortable with the relationship between banks and machines. This acceptance of ABM s and online banking makes them attractive clients despite their lower incomes, and their fewer and smaller transactions, and makes them a useful port of entry for launching new electronic banking products and services. The generation has racked up loans in the past, so they are more comfortable with the idea of debt, which means interest for banks if loans were made more available. Given this credit, Gen-Xer s are purchasing big-ticket items at the same rate as the higher income level Baby Boomers. Gen-Xer s will also be receiving inheritances in around eight years. They also have a healthy tendency to save. When asked in a poll about long term savings plans, RRSP s were at the top of the list just as the baby boomers. Other than monetary factors determining them as a type customer, banks should be paying more attention to the possibility of Gen-Xer s as becoming employees. This is because the Nexus are highly skilled in all areas needed for the information age, they can keep up with technological changes better than their predecessors, and they also have the ability to multi-task, and have a knack for teamwork.

The best way to meet the needs of the Nexus clients is to hire Nexus employees. The banks should hire people who are more friendly and accepting of the Nexus generation, and who are able to design products to suit their needs. Some banks are already catering to the generation s do-it yourself attitude; a good example would be the Bank of Montreal s mutual funds Self-Test. Another good example would be the AMEX blue card, designed for people 25-34, which was associated with product attributes and a marketing campaign tailored for the generation. Some banks are now more supporting of young entrepreneurs, and are making it easier for them to get loans. The last stage in decoding the Nexus generation is for banks to hire a group of people whose main task is to provide strategic advice to financial institutions on dealing with Gen-X.