In today’s rapidly changing financial landscape, credit unions face the challenge of remaining competitive and appealing to younger demographics. According to the World Council of Credit Unions, the average age of credit union members in North America is 53 – significantly higher than the national median age of 38.9 years, according to the U.S. Census Bureau. This demographic disparity highlights the need for credit unions to adapt and engage with younger audiences, especially amid competition from larger banks and tech companies alike.
In fact, the sustainability of the credit union movement depends on attracting and retaining members for the long term. Do your products and services feature in-demand innovations to help keep your credit union competitive? What’s your strategy for strengthening relationships with younger consumers?
Recognizing the rise of Millennials and Gen Z
As the membership of credit unions continues to age, building strong connections with younger members is more important than ever for maintaining growth and relevance. Establishing credit unions as trustworthy financial partners for Millennials, Generation Z and beyond is not just about immediate gains of direct deposits and borrowers – it’s also about opening doors to becoming the primary financial institution for these members throughout their financial journey.
By earning their loyalty and expanding a member base of smart savers and loyal borrowers, credit unions can transform this cohort into advocates who will spread the word about credit union services within their networks. This word-of-mouth promotion can influence their Millennial and Gen Z peers to consider establishing a relationship with your credit union.
Meeting younger generations’ expectations
To win the loyalty of more youthful audiences, credit unions must understand their preferences and behaviors – and offer solutions that align with their expectations for variety, choice and flexibility. According to PSCU’s 2023 Eye on Payments survey, 80% of Gen Z respondents reported using a greater variety of payment methods than a few years ago. While debit remains the group’s most favored payment method, mobile wallets (13%) ranked as the third most preferred way to pay among Gen Z, surpassing all other generations.
As more members of Gen Z transition into adulthood, they’re seeking financial partners that embrace new technologies while still offering competitive traditional solutions like debit cards. Credit unions should invest in convenient, digital-first solutions like mobile wallets to meet these expectations. A commitment to perpetual innovation is crucial for retaining existing members and attracting new and younger members who represent the changing face of financial consumers.
The competition for younger consumers’ loyalty has expanded beyond big banks and other traditional players, with tech disruptors like Chime and SoFi gaining traction. Additionally, Apple’s high-yield savings account, launched in April 2023, amassed more than $10 billion in deposits within the first six months, showing the high demand for seamless digital experiences. Credit unions that fall behind and fail to meet the evolving expectations of the younger consumer segment risk losing ground to these fintech and tech companies as they continue entering and shaping the financial services sector.
Transforming youth banking for the digital era
Youth banking also presents a promising opportunity for credit unions to innovate and elevate their services for adolescent or junior consumers. While credit unions have traditionally offered competitive pricing and perks, such as waived ATM fees for kids and teenagers, fewer have prioritized digital enhancements in youth banking. In contrast, tech companies like Greenlight and Step have successfully attracted millions of users by offering digital wallet solutions for families and children.
By investing in youth banking solutions, particularly through collaborations with fintech firms, credit unions can leverage expertise and meet the growing demand for innovative, family friendly digital financial tools. This approach will help credit unions establish a strong foundation of loyalty among younger, digitally savvy consumers.
Sustaining growth and relevance
Credit unions are facing a critical moment as they navigate an aging membership base, accelerating technological advancements and continuously evolving expectations among younger consumers. Against the backdrop of larger banks and tech disruptors competing for the loyalty of Millennials and Gen Z, credit unions should prioritize investments in innovation to attract and retain younger members. Through this endeavor, credit unions position themselves not just as financial institutions but as trusted lifelong partners, ready to sustain their role and industry relevance for generations to come.