10 Ways Credit Unions Can Resonate More Deeply With Millennials & Gen Z During Uncertain Times

The economic impact of the coronavirus is already hitting millennials and Gen Z hard, making it more difficult than ever for credit unions to resonate with these younger generations about money.

Credit unions offer perks that upcoming generations could benefit from, such as shared ownership and low interest rates. So how can you convince them to choose a credit union over a traditional bank when they are coping with the devastating financial impact of COVID-19?

The most important thing to remember when marketing to millennials and Gen Z is that they are not the same, so don’t lump them together. These two generations span from young children to adults in their late 30s. That’s a massive age gap. While there is some overlap between the behaviors and attitudes of millennials and Gen Z, they are two distinct generations shaped by vastly different technological, political and economic landscapes.

Here’s how you, as a credit union, can tap into the needs of the upcoming generations and resonate more deeply with their financial and economic concerns in the midst of COVID-19.

Gen Z

Generation Z includes anyone born after 1996, meaning that the oldest members of Gen Z are recent college graduates who are entering the workforce for the first time. There are a few important things to note about Gen Z, including that they are:

• More racially and ethnically diverse than any previous generation;
• The most well-educated generation to date; and
• The first generation of digital natives who have little or no memory of a world without smartphones.

Prior to COVID-19, Gen Z was set to enter the workforce with record-low unemployment rates and a generally thriving economy. While they are more financially savvy than their millennial counterparts, most Gen Zers have not had the opportunity to build an emergency fund, invest in a retirement plan or gain full-time employment.

The negative impact of the coronavirus on Gen Z is already significant and will likely continue to impact their financial well-being throughout their early adulthood. The immediate impact of COVID-19 on Gen Z is two-fold: Loss of income and frontline employment.

The oldest members of Gen Z are ages 18–23 and tend to work in essential, frontline jobs such as retail, grocery stores and restaurants. These young workers were already vulnerable to job loss before the coronavirus outbreak, as they are overrepresented in high-risk, service-industry jobs. In a Pew Research Center survey, 50% of the oldest Gen Zers reported that they or someone in their household had lost a job or taken a pay cut as a result of COVID-19, which illustrates just how disproportionately Gen Z jobs have been hit during this pandemic.

There is no question that this is a challenging time for Gen Z. As credit unions, it’s important for you to market to the specific financial needs of Gen Z in order to gain their trust. The services you prioritize in your marketing may include:

1. Low-Interest Student Loans: While many Gen Zers are still in school, the oldest members of this generation are graduating with massive amounts of student debt during a time when the cost of living is disproportionately high compared to entry-level income. This is a financially conscious generation that values stability and independence, so in your messaging, go a step further than just emphasizing your low interest rates. Paint a picture of what it would be like to graduate college with more financial stability.

2. High-Interest Checking and Savings Accounts: Accumulating wealth is harder than ever, especially in the midst of a global health and economic crisis. As such, Gen Z is pretty skeptical when older generations give advice on how to save. For them, it’s about saving in small ways that add up. Show them how they can do that with high-interest checking and savings accounts to differentiate from the penny-pinching mentality of traditional banks.

3. Accessible Personal Loans: With little work experience, no emergency funds, crippling student debt and ongoing monthly expenses, Gen Z is in need of low-interest personal loans. But many Gen Zers have little credit history. Acknowledge the fact that little or bad credit is often unavoidable during a crisis like this and talk about the alternate ways your credit union determines creditworthiness. This kind of transparency and compassion will likely result in some lifelong members.

4. Financial Advice: Navigating an economic crisis as a newly independent adult is scary, and Gen Z is feeling it. Keep in mind that their parents had a very different financial experience when entering the workforce, so many of these young adults are seeking sound financial advice elsewhere from people who understand their own experience. Offering realistic, shame-free advice is key to avoid sounding tone-deaf and thus losing your audience.

5. High-Quality Online Service: If you think Gen Z is going to wait five minutes while you put them on hold, think again. In fact, they probably won’t even call you in the first place. This is a generation that knows no world without smart technology. They value digital connection, high-speed online customer service and the ability to manage their money from anywhere. As the coronavirus pushes the need for virtual business, Gen Zers will not work with companies that have low-quality digital services, slow-loading websites or limited online banking capabilities. If you haven’t already, start looking into implementing a customer service chat line.

Millennials

Millennials are adults born between 1981 and 1996, meaning that this generation is currently between the ages of 24 and 39. Vastly underpaid and often misunderstood, the millennials have sparked controversy from the older generations for their new perspectives on family, politics and the workplace. Here are a few key things to know about millennials. They:

• Came of age during the Great Recession of 2008;
• Are slower to get married and have children than previous generations; and
• Are less likely to own their home.

One of the most important things to remember about millennials right now is that the coronavirus will mark the second recession that has negatively impacted their employment and financial security since entering the workforce. While they are all too familiar with the current economic state, this crisis came at a time when millennials were finally gaining their financial footing after entering the workforce during the Great Recession.

Forty percent of millennials – slightly lower than Gen Z – have reported that they or someone in their household has lost a job or taken a pay cut due to coronavirus. Unlike Gen Z, millennials are independent adults with monthly expenses, families and residual student debt. Many have families and children to support and are grappling with the loss of one or more sources of income as a result of COVID-19.

As millennials face a second economic recession, it’s important for credit unions to market services that will address the pressing financial needs of this generation. Here are a few ways you can better resonate with millennials and their families:

1. Student Loan Refinancing: While many millennials have made a dent in their student debt, monthly payments can be overwhelming when dealing with job loss or reduced income. Talk about your refinancing plans for student loans to help lower monthly payments and make paying off student debt more manageable during this time.

2. Financial Planning: Millennials are no stranger to economic turmoil, and they want financial security to ensure their stability in the future. Offering sound guidance for long-term financial stability will help millennials navigate through debt, income loss and savings under the additional economic pressure of coronavirus. But as with Gen Z, make sure any financial advice is realistic. Sounding tone-deaf is one of the easiest ways to lose your millennial audience.

3. Low-Interest Mortgage Rates: Owning a home is something that is often out of reach for millennials who came of age during a housing crisis. But an economic downturn poses an opportunity for millennials to purchase a home while mortgage rates are low. Marketing your low-interest mortgage rates during an economic downturn allows millennials to capitalize on the opportunity and potentially own a home for a lower monthly rate than renting. Don’t just focus your messaging on the lower monthly payments, though. Show them how owning a home will benefit them in the future.

4. Shared Ownership: After the economic collapse of 2008, millennials prefer local and not-for-profit businesses over large corporations and banks. Credit unions offer shared ownership to members, a key feature that would be particularly attractive to millennials. Highlight the benefits of shared ownership, such as lower interest rates and fees. But remember to highlight the community aspect, too — ways your credit union gives back to its members and community through any programs and scholarships you offer.

5. Forgiving Loan Qualification Standards: Credit unions are able to be more forgiving when it comes to loan qualifications, which is a huge plus to millennials who are struggling with the financial impact of the coronavirus. Many millennials will be facing damaged credit and will want to work with a credit union that will help them qualify for a loan and improve their credit score, instead of turning them away. As with Gen Z, be transparent about the alternate ways you determine creditworthiness to get those essential conversations started.

The bottom line for credit unions that are trying to engage with millennials and Gen Z during these uncertain times is to acknowledge their specific financial struggles and offer services tailored to their banking needs. Be genuine and transparent in your messaging, avoid sounding tone-deaf and make sure your technology is up to speed. Most of all, lead with compassion for our youngest generations who are doing their best to navigate the economic repercussions of an unprecedented global health crisis.

Maggie Marshall is the content manager at FindCreditUnions.com, a site dedicated to educating Millennials and Gen Zers about credit unions and wealth inequality, and helping them become financially independent.