Engaging the Next Generation: A Challenge for Credit Unions
As Baby Boomers transition into retirement, their financial priorities are shifting from wealth-building to managing assets. Currently, about 50% of credit union members are 53 or older, and while they will continue to rely on credit unions for wealth management, it's crucial for CUs to attract new members who are in their prime growth stages. Millennials and Generation Z have become key targets as they start making significant financial decisions, such as buying homes, cars, and paying off student loans.
The Changing Face of Credit Union Membership
Millennials, now well into their careers, and even some Generation Z members, are prime candidates for credit union membership. Generation X, who currently make up 31% of the CU demographic, joined credit unions largely due to the financial crisis of 2008 and 2009. Frustrated by big bank bailouts, they sought out the personalized financial services that credit unions offer. However, attracting Millennials and Gen Z may not be as straightforward. Big banks hold a 10% advantage in Millennial membership over credit unions, making it essential for CUs to adopt new strategies.
Why Millennials and Gen Z Matter
The warm hometown vibe and personable staff that credit unions are known for may not be enough to win over Millennials and Gen Z. These generations are part of the do-it-yourself era, often preferring minimal human interaction when it comes to their service needs.
This is especially true for Gen Z, who have grown up with technology at their fingertips. For those aged 18-26, digital self-service ranks as the most important attribute for banking services, even surpassing trust. To attract these younger members, credit unions must embrace digital self-service tools, which will also add relevant and useful features for existing members.
Digital Self-Service: A Key to Winning Younger Members
To capture the interest of Millennials and Gen Z, credit unions should focus on integrating the following digital services:
- Digital Lending: Offer a seamless and quick loan application process through digital channels.
- Card Controls: Provide members with personalized control over their cards, including spending limits and real-time notifications.
- Free FICO Credit Scores: Allow members to monitor their credit scores directly through the credit union's platform.
- Customized Account Notifications: Keep members informed and engaged with tailored alerts and updates.
Peer-to-Peer Payments: A Deal Breaker for Many
Another critical feature that Millennials and Gen Z demand is peer-to-peer (P2P) payments. Platforms like Zelle and Venmo are widely used by all generations, including Baby Boomers and Gen X, for splitting costs like dinner, drinks, and transportation. The absence of a P2P payment option can be a deal breaker for attracting younger members. By integrating a P2P platform, credit unions can not only appeal to new members but also enhance the experience for existing ones.
Rewards Programs: Building Loyalty with Younger Members
Millennials are also particularly keen on rewards programs. They regularly use them for purchases at Starbucks, grocery stores, and more. When it comes to banking, they expect similar benefits. Rewards programs are more than just perks; they build stronger relationships by incentivizing member loyalty and improving overall satisfaction.
Financial Education: A Value-Add for Younger Members
Unlike their parents, some Millennials and Gen Z members may lack confidence in managing their personal finances. This isn’t due to recklessness but rather the challenging financial landscape they face, including student debt, high rent, and childcare costs, leaving little room for savings. Only 30% of Millennials believe investing in the stock market is the best way to save money, compared to 38% of Baby Boomers. Credit unions can provide tremendous value by offering financial education through blogs, websites, and other resources, allowing members to learn at their own pace.
Adapting to Thrive: The Future of Credit Unions
Credit unions have successfully grown by attracting Gen X and Baby Boomers, but Millennials and Gen Z present new challenges. However, they are open to joining credit unions that meet their needs. As banking increasingly moves toward digital self-service, credit unions must adapt to remain competitive. By offering digital services like P2P payments, mobile lending, mobile applications, and online financial education, credit unions can win the loyalty of younger members and ensure they remain satisfied members for life.
