Credit unions and their average age of member obsession

by Ron Shevlin

For a few years now, credit unions have been obsessed (not too strong a word) with lowering the average age of their member base.

The rationale goes something like this:

Younger consumers represent the future of credit unions, therefore we have to attract more Gen Yers and reduce the average age of our members.

My take: OK, I can see some logic in this. But it doesn’t make mathematical sense.

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Allow me to explain this with some examples. Imagine, for simplicity sake, that your credit union has 100 members, all of whom turn 47 sometime during 2013, and that each member produces a strong $10 in profit.

2013 Average age of members: 47. Total profits: $1000. Average profits per member: $10.

Now consider the following scenarios:

Scenario A. In this scenario, the credit union enjoys 100% member retention going into 2014, with no change in member profitability. But no new member growth.

2014 average age of members: 48. Total profits: $1000. Avg profit/member: $10.

Oh no! The average age of member went up! This is terrible!

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