Digital Self-Service is Key to Winning Millennials & Gen Z
Many Baby Boomers are transitioning into retirement where their portfolio is shifting from wealth-building to waning assets. About 50% of credit union members are now 53 or older, and even though they will continue to rely on credit unions for their wealth management, CUs are in need of new members who are in their prime growth stages. Millennials and even some Generation Z-ers are now the target audience for credit unions as they are beginning to buy houses, cars, and paying for (or paying off) college. Millennial’s older sibling, Generation X, comprise 31% of the CU demographic largely due to the financial crisis in 2008 and 2009. They joined after becoming frustrated with big bank bailouts and stayed for personalized financial services. 10 years ago, Gen X fled to CUs, thus fulfilling their need for new, young members. However, Millennials and Gen Z will not be so easy to capture. Big banks have 10% more Millennial members than credit unions, and there’s one key way that CUs can win their business: digital self-service.
The warm hometown vibe and personable staff members will not be enough to win over these two generations. Millennials are of the do-it-yourself era, and in fact, they prefer as little human interaction as possible when it comes to their service needs. Gen Z even more so with their seemingly singular reliance on technology. Those aged 18-26 ranked digital self-service as the most important attribute for banking services, even higher than trust. Embracing digital banking self-service tools will not only capture these younger members but also add relevant and useful features for existing members. Incorporating features like digital lending, card controls, free FICO credit scores and customized account notifications can be easy with the right technology partner.
Another feature Millennials & Gen Z are not willing to go without is peer-to-peer (P2P) payments. Even Baby Boomers and Gen X use P2P platforms like Zelle and Venmo to split the cost of dinner, drinks and an Uber ride home. Both existing members and new members would be excited about the integration of a P2P platform, and for attracting younger members, the absence of P2P payments can be a deal breaker. Millennials are also keen on rewards programs. They use them for their morning coffee at Starbucks, for their groceries at Kroger and they want rewards with their financial institution as well. Millennials often get a bad rep for needing a participation trophy to feel valued but when it comes to banking they may be onto something. Rewards programs build better relationships with members by incentivizing their loyalty and improve member satisfaction in the process.
Unlike their parents, some Millennials and Gen Z are not confident in managing their personal finances. That’s not to say they’re reckless with their money. They live in a pension-less world and beyond that, they are juggling expenses like student debt, rent, and child care, which leave them with little funds to funnel into savings. As a result, just 30% of Millennials site investment in the stock market as the best way to save money compared to 38% of Baby Boomers, even though financial analysts have also confirmed that members get higher returns through the stock market. The younger generation is wary of investing their remaining income in the stock market because they see it as too volatile if they don't have a solid nest egg. They admit they have a lot to learn when it comes to their personal finances and they are eager to become educated. Credit unions can provide a lot of value through websites, blogs, and other resources that give members access to the financial education they crave, and in a space where they can learn on their own time.
CUs have been able to grow and prosper over the past few decades by on-boarding Gen X and Baby Boomers but Millennials and Gen Z have not been so quick to jump on the credit union bandwagon. However, they are open to joining credit unions who provide the elements they need. Banking is already moving to digital self-service and although credit unions have thrived through personal interactions, younger members will not be won in that same way. They value trust but they value their independence even more. Through features like P2P payments, mobile lending, mobile applications and online financial education they can become happy and loyal credit union members for life.