Aging credit union membership

A survival guide

Credit unions face an aging membership base. At the recently held immersion18, Trellance’s annual conference, a survival guide was presented for credit unions to prepare for and counter this trend.

The average age of a credit union member is 47. This means that most members are past their prime borrowing years. Income from interest is the biggest line item on almost every credit union’s income statement, therefore if members are moving from borrowing age to saving age, the average Return on Member (ROM) will start to decline. That’s not to say that savers aren’t valuable members, a credit union needs both.

Much has been written about the need and difficulty reaching and acquiring millennials as members. But the reality is that the older half of this generation are looking much like the previous generation; they are starting families, needing mortgages, and are saddled with student loans. The younger half of the generation is out of college and looking to establish credit. Credit unions are well positioned to fulfill the needs of millennials, but many don’t. Why is this? Partially because the demographic has so many dichotomies that it’s impossible to offer one set of products that works for everyone.

Millennials apply for credit cards at higher rate than any other generation.

According to CNBC, “1 in 6 millennials have $100,000 saved.” At the same time, “fewer than half of millennials, the largest generation of U.S. consumers, have credit scores that will qualify them for credit accounts” according to id analytics. “One-third of millennials cannot be scored by a credit bureau due to their lack of credit history, and of the ‘scoreable’ group, two-thirds of consumers under 30 have subprime or non-prime credit scores.” So clearly there’s a need to be served, this is a potentially profitable segment, but there are challenges. However, there are a few credit unions that have added products or services that make the credit union much more relevant to young members.

“Alexa, how do I apply for a credit card?”

Fairwinds Credit Union wanted to add access to their services in a way that was meaningful to an increasingly digital generation, so they created Virtual Advisor, voice and social media access to banking. Virtual Advisor provides access through Alexa, Facebook, Google home and SMS to banking services such as applying for a credit card, reporting a lost debit card, querying the credit union’s routing number, or asking questions such as “What does refinancing mean?” These services are available through Virtual Advisor and can be done online, but more millennials are accustomed to speaking to Siri and Google rather than sitting in front of a screen.

Maps Credit Union set out to address the need for younger members to establish credit history. They implemented loan programs to help members build credit. And to go along with that Maps offers education and outreach to position the credit union as a financial partner. For example, Maps hosts financial education events at local breweries to reach older millennials, and offer classes on credit scores, basic banking, and saving money at local high schools.

Michigan State University FCU offers different accounts to different age groups. The Dollar Dog Kids Club is a savings program for ages 5-12, Cha-ching for ages 13-17, and a Totally Green Checking Account and companion Platinum Visa Card are for college students. Not surprisingly, their average member age is 39!

Four ingredients to grow your credit union’s membership base.

These credit unions that have had success in addressing the aging member problem, all have four common traits. Each of them embrace technology, provide financial literacy, offer competitive products, and offer wealth services and advice, tailored to targeted age groups.

For more information or expertise on growing your credit and debit portfolio to acquire and retain members, register for one of Trellance’s Payments Academy sessions: September 11-13, October 16-18  and November 6-8. You can also get in touch with an expert at info@trellance.com.

Stephanie Hainje

Stephanie Hainje

Stephanie Hainje is a Senior Portfolio Consultant with Trellance and is a payments industry leader with extensive credit and debit card portfolio management expertise including affinity and student card programs, ... Web: www.trellance.com Details

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