By Robert McGarvey
Chew on this Credit Union Journal headline: Credit Unions are losing the war for Millennials.
Worse, the average member age keeps trending up. Per the CUJournal article, “Half of credit union members are now age 53 and older. These are members who for the most part have gone through their home-buying and wealth-building phases and are approaching the slow draw down of assets in retirement, if not there already.”
Credit unions could pat themselves on the back for wooing more than their share of Gex X – 31% of members are in that cohort – but hold the back slapping because credit unions are desperately failing in the fight for Millennials (born 1981-1996), the prime ages for active borrowers.
The CUJ piece said: “Right now, just 24 percent of members are millennials, while 40 percent of customers at digital-first direct banks and 34 percent of customers at the top 50 global bank are millennials. Credit unions are losing the battle for the youth.”
Probably credit unions are doing no better in the fight for Gen Z (born 1996-2015), whose oldest members are now out of school, in the workforce, buying cars, using credit cards, and dreaming about home ownership. They are about 20% of the US population and a reality is that most credit unions just ignore them. That’s pushing Gen Z into the arms of fintechs (can you say Venmo?) and the global and digital banks . And that’s a mistake.
What do credit unions need to do to win these generational battles? CU2.0 recently convened two focus groups. One with three Gen Zs, in the other three Millennials spoke up.
You won’t like what they had to say.
There is good news. Both cohorts agree that credit unions have a lot of plusses. Free checking is widely available – especially important to many who are burdened with sizable student debts. The non profit status of credit unions is a plus with these age groups. So is the community orientation of most credit unions.
And the last big plus are the vast credit union surcharge free ATM networks, via Co-Op and also via CuLiance, where each network is 2x the biggest bank ATM networks. Just one problem: very few millennials and Gen Z know about this. “I didn’t know about this network until today,” confessed one focus group participant who works for a company that consults with credit unions.
Just about all the participants said that few, if any, of their friends and generational peers knew about any of the credit union plusses. They don’t even know they are non profits.
“They seemed sketchy to me,” said one participant who indicated he had thought credit unions were kind of wannabe banks that weren’t big enough to qualify.
(Listen to the CU2.0 podcast with Teresa Freeborn who heads CUNA’s $100 million “Open Your Eyes” campaign to raise awareness of credit unions.”)
The bad news continues. Credit unions pride themselves on their branches – but do younger generations ever step in a branch? Nope is the answer from many. “I haven’t been in a branch in three years,” said one in the focus group.
And credit unions have a lingering reputation for serving up antiquated, secondrate technology – which is especially bad news with generations who want to do most of their banking on a mobile phone. Is the technology really this bad? Doesn’t matter if enough of the young believe it.
So is this RIP credit unions? It is not. The focus group members pointed to the strength of the credit union message and urged credit unions to get busy and active spreading their messages on social media (and maybe not Facebook – listen to the podcast to learn why).
Another idea that emerged from the focus groups is the suggestion that credit unions get busy offering financial education and budgeting skills classes geared to the young – perhaps as young as middle school students. With many young graduating college deep in student loan debt (upwards of $37,000 apiece), these generations could benefit from classes in basic budget skills.
And get them as members early and they just may stay members – especially when they understand that the ATM networks mean they can access their credit union no matter where their travels take them.
Last advice from the focus groups: run one of your own. Gather up three or six millenials for a one hour session, do likewise with Gex Z, and listen, listen, listen. They will tell you how to market to them if you only ask. The best route to actionable information is to go to the source. They want to tell you how to serve them better, Just ask.
Listen to the two part CU2.0 podcast on what the young say about credit unions.