Turning to Tech-Savvy CUSOs to Meet the Needs of Millennials, Gen Zers

Credit unions often receive criticism for their inability to provide members with user-friendly, digital membership and loan application processes. According to the J.D. Power 2019 U.S. Retail Banking Satisfaction Study, consumers under 40 years of age prefer big banks because of their reputation for scale and technology innovation.

The study went on to report that 53% of retail banking consumers use mobile banking – with midsize banks experiencing significant declines in innovation and satisfaction scores among consumers under 40. Therefore, it may be concluded that consumers will take their business elsewhere if companies cannot meet their demands. In response to increasingly heightened member expectations, many credit unions are looking outside their organizations for solutions.

According to CUNA’s 2014-2015 National Member & Nonmember Survey, the average age of a credit union member is 48 years old, which is past the typical borrowing years. This may seem a bit dramatic, but the greatest chance for credit unions surviving is attracting more millennials and Generation Zers. Millennials are often classified as those born between 1980 and 2000, meaning anyone 19 to 39 years of age. Gen Zers are defined as anyone born in 2001 or later, meaning anyone 18 years old or younger. While millennials remain the largest demographic in the United States, according to a Bloomberg analysis of United Nations data using 2000/2001 as the generational split, Gen Z will surpass them in 2019 by half a percent, comprising 32% of the global population of 7.7 billion people.

Gen Zers are digital natives, meaning they have not known a world without digital technology. Because of this, they are often dependent on it. Furthermore, Gen Zers are likely to be even more financially savvy than millennials, who are already keen on implementing contemporary budgeting and savings techniques due to rising consumer debt. Many believe this can be attributed to the fact that Gen Zers lived through the 2008 recession and witnessed the adverse effects on their families. Given the importance of both technological and financial security to millennials and Gen Z, it’s clear the financial industry will need to continue advancing the delivery of its services – digitally.

Financial Technology: The Revolution

The expectations of millennials and Gen Zers has quickly led to a shift from traditional financial services to a revolution in financial technology. In recent years, there has been a surge of start-up companies finding tremendous opportunities in the financial sector. These emerging organizations are shaking up the industry. This has resulted in the United States’ largest banking giants scrambling to adapt to the modern delivery of financial services. Banks like JP Morgan Chase, Bank of America and Wells Fargo are all creating and/or partnering with tech companies to keep up.

In order to meet the growing financial needs of millennials and Gen Zers, CUSOs have been created to bring the credit union industry into the future by developing state-of-the-art, innovative technologies. These CUSOs are innovating credit union processes from account opening to underwriting to digital banking. Recognizing the shift that is taking place throughout the personal finance industry, credit unions are turning to such CUSOs for help adapting to and modernizing their services to better suit the demands of the nation’s largest demographic.

Arguably, one of the most impactful services is the account opening process, which is what sets the tone for the member’s entire financial relationship. To succeed in this crucial time, credit unions must consider and work to meet the expectations of millennials and Gen Zers.

Speed and Responsiveness

To attract Gen Z and millennial members, many CUSO platforms offer user-friendly technology that enables members to open new membership accounts anytime, anywhere. An optimized, multichannel platform makes it simple and low-stress for prospective members and staff alike to complete an application. This not only meets the digital needs of millennials and Gen Zers, but provides credit unions with the ability to service these patrons in a streamlined, prompt manner. In addition, speed and responsiveness are large concerns for many millennials and Gen Zers. Reliable, customizable platforms from credit unions help to keep these concerns at bay. By utilizing platforms like these, millennials and Gen Zers will experience speed and responsiveness due to a multitude of platform features, including:

• Modern, simple technology, and intuitive design and workflow;
• Agile application processes with quick turnaround times;
• Automatic approval and core system account creation;
• Real-time, same-day and next-business-day funding options;
• A responsive system that makes the loan process simple and easy; and
• Unique, tailored experiences for different account types.

Ease

In addition to a seamless membership application process, today’s young person expects the entire experience to be one that reduces stress. When done well, both members and staff can benefit. A customizable CUSO platform can combine sleek interfacing and third-party integration to create a flow that allows new and existing members to take advantage of functions like quick membership onboarding and simple loan application options. Such platforms can also ensure that credit unions are equipped to quickly and confidently make decisions – in some cases instantly. With so many financial institutions working to adapt to today’s market, millennials and Gen Zers expect to be able to utilize certain popular features, such as:

• ID photo capture and auto-fillable forms to help reduce data entry;
• A web-based system that is highly reliable and always available; and
• The ability to combine membership and loans to maximize efficiency.

Limiting Red Tape

Instant gratification is important to many millennials and Gen Zers. Like many businesses across a number of industries, credit unions are taking notice. Many CUSO platforms are focused on enhancing application, approval and welcoming processes to satisfy new and prospective members. Through secure, cloud-based platforms, CUSOs can help members secure approval and manage their accounts by utilizing safe and secure technological advancements. In addition, this gives members the ability to bank anywhere and anytime knowing their data is protected. Millennials and Gen Zers are able to experience safe banking through:

• Instant ID verification and credit checks;
• Back-end compliance and reporting that doesn’t require member involvement;
• Convenient e-signatures; and
• The ability to scan documents using a mobile device.

All in all, the new tools and processes these CUSOs are creating will be the driving force that enables credit unions to navigate through the personal finance revolution. The upgraded experiences these platforms afford will help credit unions to gain new members and better compete with the banking giants. Through these platforms, millennials and Gen Zers are able to bank with peace of mind knowing that their experience will be met with ease, speed and highly reliable security measures. Understanding the expectations of modern consumers, it is important for credit unions to continue adapting to their needs. If credit unions are going to survive, they must learn to serve millennials and Gen Z on their terms.

Larry Hayes is President of eCU Technology, a CUSO of First Service CU. He can be reached at  281-705-4841 or lhayes@ecutechnology.com.