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Teens worry how COVID-19 will impact future college, career plans

Yahoo Finance’s Brian Sozzi and Alexis Christoforous speak with Citizens Bank Head of Consumer Banking Brendan Coughlin about how teenagers are reacting to the financial impact of COVID-19.

Video Transcript

BRIAN SOZZI: Now teenagers may not be as worried as others about contracting the coronavirus, but COVID-19 has brought forth a different type of burden for this age group. Joining us now is Citizens Bank head of consumer banking, Brendan Coughlin. Brendan, good to see you this morning. And I understand Citizens Bank is out with a new survey on the financial impact of teens from COVID-19. What stood out to you?

BRENDAN COUGHLIN: Yeah, Brian. Thanks for having me on this morning. We are seeing a pretty dramatic shift in attitudes amongst college age students as they digest COVID. About 44% of those that we surveyed said that the current situation is significantly impacting their plans for college, for higher education. 30% of those said they are going to delay their start to school. And in fact, 13% of students said it's actually changed their school that they desire to go to. So pretty dramatic shifts.

I think on the positive side, one of the other things we've noticed come out here is 72% of college-aged students are now talking to their parents about how they finance school and how they pay for it. That's up from in the 40 percentage point range a couple of years ago. So the dialogue is improving. You know, consumers are certainly getting more savvy around how they think about navigating school. But the current situation is certainly weighing at the front of mind of new students entering school.

ALEXIS CHRISTOFOROUS: Brendan, I'm sure with all this time at home, kids are getting a different kind of window on to family finances. And some of these teens have seen parents lose their jobs during this pandemic. Did you talk to them at all in this survey about how their families are discussing money? Are they talking about the family budget more as a family?

BRENDAN COUGHLIN: Yeah, they are. And yeah, building on that last point, 72% of them are talking to their parents about finances. It is very, very clear-- and this is, I believe, a very healthy dynamic that's happening at the family level, that children and parents are getting closer to talking about finances.

And as I mentioned, not just two, three years ago, there was a very big divide, where it was very clear that the majority of Americans, their children and their parents were not having, we've sort of called it the other talk, around their finances as they get to college age school. That is changing rapidly. And this is a forcing function for it to happen at home. So, and again, we believe that is a very positive development under a lot of challenging, the environment right now.

ALEXIS CHRISTOFOROUS: I'm also curious, just to bounce off the teen stuff for a moment, to step away from that, just, overall, people have really been forced to move to digital banking. Those people who were very used to going into branches, never going online to do their banking, have you seen a seismic shift to digital banking, and do you think it's here to stay, even when you are able to open branches and people are able to go back in?

BRENDAN COUGHLIN: We've seen a very dramatic shift early days here, and we do actually believe it's sustaining and it's causing us to really accelerate some transformation in our consumer bank. So over the last just couple of weeks here, about 30% growth in what we call remote deposit capture where you take a picture of your check at home are transactions that happen with our customers.

For the first time in the history of the franchise, more than 50% of them are happening digitally versus in a branch. That number was in the low 40s just two months ago, so a rapid acceleration. The use of online banking and mobile has increased 25% to 30%, just here in the first couple of weeks.

And as I sit back and compare it to non-financial services on whether or not this sustains or not, you just think about supermarkets, and you've got millions and millions of folks that are now hooked on home delivery for groceries that may never have tried it before.

And so as we sit back and think about the future of banking, is it reasonable to expect that consumers out of a forcing function of the pandemic have been exposed to these new conveniences, will they sustain or will they decide to go back to the grocery store every Friday? Or will they continue to buy groceries delivered to their home?

I think the same dynamic will play out in banking, that they're now becoming accustomed to the conveniences that digital offers and changes their behaviors permanently, which leads to a very broad set of strategic changes for the banking system across the world, and in particular, in the US.

BRIAN SOZZI: Brendan, we just had Fed chief Jerome Powell come out this morning, and in a speech and in a discussion, he suggested that the economic recovery is taking a little bit slower than I think he would like to be seeing. Do you see that level of caution still in your business around debit card spending, around the willingness to take out a mortgage this summer?

BRENDAN COUGHLIN: Yeah, there's been some dramatic changes in behavior. I would describe the reaction of debit card spending, we're down about 40% year over year. The ticket sizes are up significantly. The number of transactions are down sizeably.

So what does that mean? Well, consumers are going out less. And when they go out, when they do have to go out, they're spending a little bit more. So instead of going to the grocery store three times a week, they're going once every two or three weeks. So that is still bottoming out. The behavior there is still bottoming out. We haven't seen the tide dramatically turn yet.

There's been a variety of other implications. Mortgage volume is at record levels and has been for quite some time and continues to crest upwards in terms of demand for consumers. It's a form of stimulus, if you will. With rates at historic lows, consumers can restructure their debt and get some payment savings.

We're seeing the same dynamic in student loan refinancing, another wave of 25 to 35-year-olds taking advantage of rates dropping very, very substantially to lock in those historic low rates and get themselves some cash payment savings. So consumers are hunkering down on spending, but they're taking advantage of the low rates to stimulate better health in their personal balance sheets.

BRIAN SOZZI: All right, let's leave it there. Brendan Coughlin, head of consumer banking at Citizens Bank, stay safe, and we'll talk to you soon.

BRENDAN COUGHLIN: Thanks very much.

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