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Tag: baby boomers (Page 2 of 3)

Give Your Card A Security Update

Originally published on CUInsight.com

Update 7/12/16: An earlier version of this article claimed Samsung Pay did not use tokenization. They do, my mistake! Corrected. (CUInsight version not updated)

A family friend was in town this past week. She is part of the Boomer generation, so, a user of new tech, but semi-begrudgingly. At one point, we discussed how her Android phone supported mobile payment. “It’s easier and more secure for you!” I explained to her. “You’ll never need to go through the hassle of getting a new card number again!” Her response? “Yeah, still wouldn’t bother. I’d prefer to just swipe.”
This is the type of apathy you’re facing. She didn’t grow up in a world of data security breaches, and considers a reissued credit card “par for the course”. It’s not that she doesn’t believe me when I tell her that mobile payment is vastly better. She just doesn’t care.

Maybe I framed it wrong. As we all have, using terms like tokenization instead of just calling it what it is: A security update for your credit card. So what is tokenization (To-Ken-I-Zeh-Shun)? Besides a big, scary word, of course. It’s always thrown around when mobile payments are discussed, but a recent survey shows understanding is lacking. Nearly a third of people admit to not knowing what it means and almost half say that it wouldn’t encourage them to use mobile payments. My interpretation: That latter group doesn’t grasp what it is either, but are afraid to admit it. So, what is it and why should you care? Tokenization represents how your card number is handled during the transaction. Still fuzzy? That’s ok.

Here’s how a normal purchase works (greatly simplified and leaving out payment processor):

1. Swipe at terminal (or type number on computer).
2. The number on the front of your card goes to the merchant.
3. Merchant asks credit card issuer (your credit union or bank) if the number is good.
4. Bank or credit union looks at number and gives a “yay or nay”.
5. Merchant keeps your name and card number so they know who you are when you buy again.

As you can see, the number on your card passes through multiple hands, and even stays with some. While your financial institution guards the number, others along the line may not. This is how major breaches occur. Bad actors break into these non-bank systems and steal the list of names and numbers, then sell them on the black market. Sometimes they lie in wait, gathering new numbers for months before anyone even notices. Then, the numbers are sold or posted online, and that’s when your frustrations begin.

Here’s how a tokenized mobile payment works:

1. When you add a card to your phone’s “wallet”, it asks your bank or credit union to verify your identity.
2. Your issuer then creates a new number just for mobile payments (which you never see).
3. Upon paying with your phone, a fingerprint is required to show it’s really you.
4. The phone then uses your “mobile payment” number to make another one-time-use number and sends that to the merchant.
5. The merchant asks your bank or credit union if this number is good, but learns nothing from it, since it will never be used again.

The number on your card never leaves your possession. Best part of this? If every one of those systems was hacked, your card number would still be safe. The issuer just makes a new “mobile payment” number for you, and that’s it. No canceling accounts, changing numbers, or mailing cards. In fact, it might happen without you ever knowing. Think of it like a security update for your credit card.

Tokenization isn’t scary. Swiping your card the old way is. Your credit union put a lot of work into supporting the mobile payment systems…growth will remain stagnant if only 1/4 see the value. Help your members live a safer financial life and spread the knowledge!

5 Ways to Better Budget for Tuesdays

You’ve read a whole lot of “5 Ways to” posts around the web. And I’m sure they were all helpful. But this is the last one you need, for finance, at least. Yep, I’ve figured it out. The ultimate congregation of brainpower, diligent research, and sheer brawn comes together in this list. Not only will my readers become instantly wealthy, they’ll meet the person of their dreams and join together to purchase that island they’ve always wanted. Because they followed these five tips.

Oh, you want to see them? Sure, you could scroll down and skip all this amazing writing, but then you’d miss out on exclusive reveals of industry statistics and trends. (Disclaimer: This post will contain no exclusive reveals of industry statistics or trends. But who reads disclaimers?) Hey, did you know that people who spend money they don’t have find themselves in rough situations? Yes, I spent 20 years living in the Everglades in order to bring you that information. Let me tell you, the mosquitoes are bad, but, they pay their debts.

During that time, I was also investigating the idea of generational gaps in financial literacy. Turns out, Filene Research was doing the same thing, and likely with much better controls than mine (alligators represented Boomers, escaped pythons slithered in for Gen X, and ospreys flew by for Millenials). While all I learned was that alligators sometimes get eaten by pythons (unsuccessfully) and ospreys respond to your call (also, they have really sharp talons), Filene generated a useful study. Their results told us about how poorly various groups (separated by age, sex, ethnicity, and economic class) understand basic financial concepts. But who wants to hear what we’re bad at? You know what we rock in? Spending. A-mer-ic-a! A-mer-ic-a!

The average American household carries $7,400 in credit card debt. Counting only the ones who have debt of any kind, that average rises to $15,863. Mmm, interest payments. I’ll give you a hint: That costs a lot more than just the debt.

So, you’ve stuck with me this long, and I do appreciate it. But that’s only because you know this is the last of the 5 Ways lists you’ll ever need. And now it’s almost over. What will you do with all your newfound time after this post is complete? Learn to play an instrument? Speak another language? The possibilities are endless. Except for poorly managing your finances, because we have that fixed.

What are my ultimate 5 Ways to Better Budget for Tuesdays? (You have my permission to use it for Thursdays also, but absolutely not Wednesdays!)

  1. Spend less money.
  2. Make more money.
  3. Save more money.
  4. If you owe someone money, pay it back.
  5. If you can avoid owing someone money, do that.

Go ahead, share them, far and wide. Credit me, or don’t. It’s the information that matters.

You’re welcome, America.

Rationale behind this post: The discussion on why financial literacy is so bad in the United States can be traced to a lack of education in traditional schooling. Not a surprise. However, later in life, people are faced with countless advice sources, from articles to newscasts, to “5 Steps” posts similar to this. Some of these offer productive advice (which can be simplified into the previous list), but many create more problems than they solve. I wanted to poke fun at the near obsessive sharing of these types of lists with a tongue-in-cheek discussion. The funny part? If you’re reading this, you are among a privileged few. Those who never got this far must be thinking, “Gosh, that CU Geek is a real jerk!” Must be fun to get distracted so quickly.

Oh No! Millennials Aren’t Doing What We Expected!

The average age of a credit union member is 47. So it stands to reason the industry has a love affair with those of the younger demographic. If only they would talk about it!

Truth be told, a day cannot go by without seeing at least one discussion of Millennials and credit unions (And yes, Gen Z as well).

Everyone Has The Answer

So, is it tech solutions? Or streamlining your lending? There’s a lot of content out there. Most tell credit unions like yours exactly what you need to do to attract Millennials.

Is it really that simple? Can one thing change everything?

You know better. It’s no one thing. It’s a culture change. Why?

Millennial Challenges

It’s not an easy road to bring in these younger generations. If you listen to all the naysayers, Millennials don’t buy homes (mortgages), they don’t use credit cards, avoid owning cars (auto loans), and have no intention of changing.

Maybe it’s because their wage growth is stagnant and they are buried in student loans…no, it’s probably because they’re completely different from every other human ever to exist.

The World From Our Perspective

Tamagotchi

Alongside the disappearance of Tamagotchi pets, the needs of a generation had changed. Face it, it’s hopeless to even bother being in the banking industry anymore. Consider yourself lucky if you even retain a piece of their meager savings.

Except all of this turned out to be false. Or, as Obi-Wan would say, “from a certain point of view.”

When the average Millennial walked for graduation (like me), here’s what we had to enjoy in “the real world”:

  • Global recession
  • High unemployment
  • A banking sector in disarray
  • Wall Street in free-fall
  • Continuous threats of government shutdowns
  • Student loan burdens

Not an encouraging environment to make a stand!

The “Hesitant” Generation

So, Millennials waited. They put off moving out. They held off on new wheels. All in the hopes for a chance to visualize a solid career path (or a job that fit their degree!).

With all this patience, you can almost call them the Hesitant generation. Sure, adoption of technology, in every form, was rapid, but they also were the first to grow up with the Internet.

It was a given they would be comfortable amongst cyberspace. The real world? Not so much.

Until things started to improve. Like now (written in 2015). It’s far from fixed, however, credit is more readily available. More companies are hiring. For the most privileged (and sometimes, just lucky) growing incomes situated them in up-and-coming urban centers.

Big cities, sure, but also the smaller metro areas (like our own award-winning Fort Lauderdale) are experiencing dramatic influxes of young professionals. “Yeah, but in the city, they don’t drive, and they rent condos, so nothing changed.” Except not.

Millennials Have Drive

Millennials have grown into the second largest car buying group, behind their parents, the Boomers. You were right, they want the technology, and cool for us represents efficient and modern.

Chrome Tesla Headlight

While the Tesla Model S and X stand as the pinnacles of “cool”, I have a number of friends who drive the Model 3. And they love it. Plus, they’re saving money on cost-of-ownership, while making a statement on environmental and social change.

No wonder other carmakers are pushing their own plug-ins, electric, and other forward-looking models. Only, without the culture, I’m not sure how successful they’ll be.

And, it’s true, a lot of younger people want robust public transportation and walkable communities as well. Unfortunately, we’re not there yet in most places. So, cars are still necessary.

Also, Mortgages

Large Home Along Street
A typical Millennial starter home. /s

Millennials are also buying homes, when they finally can afford it. To be clear, building up enough savings to get a traditional mortgage is still out of reach of most. An opportunity for your credit union, perhaps?

Renting was a necessary evil, and also helpful for a rapidly-shifting work environment. Now, the highest wage-earners of the Millennial generation are able to “settle down” just a bit, and that comes with buying property.

Help Us Learn!

Credit card usage amongst Millennials and Gen Z is down, in comparison to older generations. That’s true. However, debit cards are embraced wholly. To me, it’s a financial literacy issue more than anything.

If only credit unions served that role…

Also mentioned in a recent post was the activities of CU Student Choice, helping CUs become financiers of student loans. If you can help reduce the monthly payments, you can change a life.

The Millennial Struggle

So this Millennials group…where do credit unions fit?

It’s about connecting with culture and technology. You can be the coolest cause around, but if we can’t access it all from our phones, then you’re getting passed up.

Woman Drinking Coffee on Phone
It’s a stereotype, guys. But we do enjoy local coffee shops.

What can you do now to attract this generation? Show them how you can help their real challenges:

  • Offer student loan refinancing (Show the savings)
  • Help them get rewards-based debit cards (And work towards credit cards with even more back)
  • Provide a seamless online auto loan experience (With a functional car buying service)
  • Be there for their first mortgage (And help them when they don’t have the savings)

Offer your time-honored service. But pair it with the tech people today expect. Ask yourself: “How much of our banking experience can be done from our mobile app?” If the answer is less than 75%, you’re going to struggle.

Robust. Simple. Genuine.

I’m not saying everything is great for Millennials. It’s not. There are a lot of problems that our society needs to address. However, not being a member of a credit union is one that can get solved.

Millennials use the big banks because they’re easy. Be just as simple, ensure you’re genuine about what you say and do, and package it all to be ready on the go.

Do all this, and you’ve got a bright future ahead.

Sources: http://www.chicagotribune.com/classified/automotive/sns-wp-blm-news-bc-autos-millennials25-20150425-story.html, http://www.cuinsight.com/make-new-friends-reaching-the-younger-demographic.html

Image credit: https://bluesyemre.files.wordpress.com/2012/12/generation-x-y-z.jpg, https://perfectlylegitimatebusiness.files.wordpress.com/2015/09/tamagotchi.png

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