Tech Time: Embedded finance is the path to the next generation of members

This modern approach to ‘People Helping People’ occurs when members are most in need of a trustworthy lending option.

Finding the right strategy for growth is a challenge for many credit unions today. According to the most recent data from the NCUA, annual membership growth hovers around 4.4%. And credit unions often struggle to reach younger consumers who have a lifetime of financial needs ahead of them. Despite the median age of U.S. consumers being 38, the average age of credit union members is 53 in North American, according to 2020 data from the World Council of Credit Unions. The majority of millennials (68%) prefer to do business with larger, well-known banks like Wells Fargo, JP Morgan Chase or Bank of America or nontraditional financial institutions and fintechs like Chime or SoFi.

Credit unions often lag behind national bank brands and digital banking alternatives because of one shortcoming: the failure to connect with a more modern digitally-minded consumer. This is not only because CUs can’t compete with the marketing budgets of bigger brands, but also because they rely on less modern tactics to acquire new members across the demographic spectrum. Because of this, credit unions’ superior suite of services are less often presented as a financially positive alternative to prospective members.

Word of mouth and brand reputation fueled by local events and direct marketing have proven successful in the past, but they aren’t enough to acquire the next generation of members. This is the case for both younger digitally savvy generations as well as convenience-centric consumers across all demographics whose daily lives and digital habits shifted and accelerated significantly during the pandemic.

 

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