The frugal generation: How credit unions can start wooing Gen Z today

What do bagels, YouTube, the environment and mobile wallets all have in common? (Read on to find out.)

X, Y, Z.

Meet Generation Z, a cohort of children and young adults set to massively transform the way credit unions do business. If they aren’t on your radar yet, they should be. Born between 1997 and 2015, Gen Z is the largest and most ethnically and socially diverse generation to date – with $143 billion in current spending power. And here’s the real kicker: half of them haven’t graduated from high school yet.

Children of the Great Recession.

Unlike recent generations before them, Gen Zers have been heavily impacted by the financial crisis and are generally more frugal, debt adverse, hardworking and already saving for retirement as a result. Common financial concerns include the rising cost of living, paying for college and having enough money. Gen Zers often don’t feel confident in their knowledge or abilities to manage money and are eager for coaching and advice.

The Takeaway: This opens the door for credit unions to shine, but in order to engage the next generation of members, they must take action today.

An Easy Win.

Let’s start with the low-hanging fruit. Despite having come of age in a time of global unrest, financial uncertainty and divisive politics, Gen Zers are extremely purpose driven when it comes to social and environmental issues, with eight in ten believing they can personally make a difference in the world. Inherent in the very fabric of their DNA, credit unions are also committed and invested in supporting the communities they serve.

The Takeaway: Keep up the good work you are already doing. Make sure Gen Z employees are included as public faces on your outreach teams and that your community investment efforts encompass the hot button issues Gen Zers care about.

First Truly Wired Generation.

Here’s a wild thought. The oldest Gen Zers are still younger than Amazon. This group has never known life before the internet and expects digital solutions to be intuitive, streamlined and omnichannel. They look to technology to solve their problems and the banking world is no exception. According to Accenture, 69 percent of Gen Zers use mobile payments multiple times a week and would like their digital wallets to think for them, citing the example of having them automatically choose the card with the best rewards.

The Takeaway: In order to attract, engage and retain Gen Zers, credit unions are going to have to continually innovate to develop digital-first solutions that are social, educational and evolve over time. And where better to seek input for such innovations than Gen Zers themselves? (Hint: Hire them.)

Banking Behaviors.

Many Gen Zers claim to hate what big banks stand for, yet nearly half (47%) use them, indicating that the convenience, technology and products major banks can offer often outweigh any moral outrage. Twenty-four percent opt for regional and community banks, and the remaining 19 percent use credit unions. Not all that surprising though, as key differentiators between big banks and the rest of the financial community are often sophisticated, user-friendly tools and a broad range of personalized product offerings.

The Takeaway: So how can credit unions better compete for a larger piece of the Gen Z wallet? Let’s revisit what’s most important to our financially conservative friends and create product offerings to help them reach their financial goals.

Gen Zers are particularly averse to fees of any kind, which would make an overdraft-fee free account particularly attractive. And since saving, rather than spending, is a key financial driver for this audience, innovative savings products like round-up accounts could provide a lot of value.

Knowing that Gen Zers are reluctant to accrue debt and anxious about paying for college, credit unions should promote their student and personal loan offerings as alternatives to credit cards. At the end of the day, you know your members better than anyone else, so put your thinking caps on! And, as always, don’t forget to include your Gen Z employees in the discussion.

Go Social or Go Home.

YouTube is currently the most popular social channel among Gen Zers, who watch an average of 68 videos per day and spend 23 hours weekly interacting with its video content. Eighty-five percent even watch a YouTube video to learn a new skill at least once a week. Along with friends, recent high school graduates name YouTube as one of the two most common places they go to seek financial information. Gen Zers also frequently use social media channels to learn about and participate in issues they care about.

The Takeaway: Credit unions have a tremendous opportunity to provide much sought-after financial advice via YouTube and other social channels. Consider providing content on third-party channels as well, not just your own. Digital media habits are constantly changing, so don’t assume that the social channel that was popular yesterday will still be so tomorrow. Also, explore ways to provide face-to-face financial advice over live video.

Food for Thought – Literally.

Despite all the talk about the wired, tech-first generation, it interesting and somewhat unexpected that Gen Zers really enjoy going into the branch. There are two main suppositions as to why. The first has to do with the lack of zeros in their bank accounts and their desire for financial handholding. The second boils down to this: the way to a Gen Zer’s bank account is through his stomach.  In fact, 39 percent of Gen Zers say it’s at least a little bit important that their financial institution hands out free goodies when they show up to make a deposit or withdrawal. And 61 percent concede that food of any kind – free or not – adds immensely to their banking experience.

The Takeaway: Whether bagels, bananas, or rolling out a version of the Capital One Café concept, credit unions would do well to consider how best to serve up some nibbles and nosh to best meet the financial appetites of Gen Z.

Phew! Let’s Recap.

Generation Z is a big deal, and it’s only going to get bigger – in size, influence and purchasing power. Here are some ways credit unions can start engaging Gen Zers today, so they don’t miss out on the members of tomorrow.

  • Diversify your staff; hire Gen Zers
  • Invest in technology; streamline website and apps
  • Deliver innovative financial education via social channels
  • Align community involvement with hot button issues
  • Evolve product offerings
  • Feed the people

Learn More.

For a deeper dive into how credit unions can best engage the most ethnically and socially diverse among us, don’t miss CRMNEXT’s webinar on fostering engagement with the next generation of members, featuring a dynamic panel of credit union leaders and Gen Z founders. Register here.

Emily Thomson

Emily Thomson

Emily Thomson is the director of marketing strategy at CRMNEXT, a leading CRM solution for credit unions. She is well versed in all things banking and branding, and has spent ... Web: Details