3 Principles Credit Unions Should Adopt to Attract More Millennial Members

The average age of a credit union member today is 47 – a whopping 10 years older than the average American: A 37-year old millennial. Millennials and Generation Z already hold a combined spending power of nearly $3 trillion and have the financial sway to make or break industries and institutions – including credit unions.

Millennials average 114 interactions each month with their financial institution, according to The Financial Brand – four times the average of other generational groups. Seventy-five percent would switch from their primary financial services organization for one single feature: A better mobile app. What’s even more concerning for credit unions is that 85% of millennials are interested in non-traditional banks such as Amazon, Apple or PayPal (though, interestingly, GenZ may prefer financial institutions).

Millennials face more unique financial challenges than previous generations, too. More than 60% of U.S. millennials earning over $100,000 annually are currently living paycheck to paycheck, according to pymnts.com. Pew research also showed that millennials are heavy overdrafters compared with other generations of the U.S. population – and this trend took hold even before the COVID-19 pandemic began. While Gen Z tends to be more debt-averse and pragmatic than their millennial predecessors, according to Salesforce research (perhaps because they came of age during a time of economic turmoil), they could still face many of the same financial challenges in the years to come.

In theory, there’s still time for millennials to inherit baby boomers’ wealth and become the richest generation in American history. Whether they’re better or worse off than their predecessors, it’s clear that these generations have completely different expectations for their financial institutions. To keep their member base growing, credit unions will need to quickly adapt to accommodate them.

Credit unions can start by embedding three foundational principles about millennial and Gen Z preferences into their strategies.

Principle #1: ‘Digital’ Doesn’t Matter if It’s Not Mobile

According to research from BAI, 62% of millennials and 61% of Generation Z indicated “they would switch their primary account for a better digital experience” in 2020, an increase from 47% and 54% respectively in 2019.

But it’s important to consider the generational differences inherent in even the word “digital.” Millennials might remember when mobile experiences weren’t available, but they certainly don’t want to go back to living that way. Gen Z grew up “digital-first,” meaning they have never known a world where mobile wasn’t the default option. They want to do everything via their phone (except make a call). And, they want it to be simple, understandable and easy to navigate. If they need to get up and turn on their PC to engage with your credit union, you’ve already lost the member experience battle. If you need them to call or visit a branch in-person, it better be the exception to the rule.

Principle #2: User Experience Can Make or Break You

It’s essential to capture this generation’s attention with relevant, short content on the right channels (think Instagram and TikTok, not Facebook and LinkedIn). And this is challenging enough. But all that hard work would be for naught if you don’t deliver on the promised experience, and outdated credit union technology is one of the biggest impediments here. Why? It delivers a bad user experience. Millennials place particularly high value on a good customer experience – and they’d pay for a better one. Gen Z takes their expectations even further: Not only do they want more innovation in the form of new products and services, two-thirds of them expect companies to translate their existing offerings into digital experiences.

Principal #3: Don’t Seem Shady

It’s widely understood that millennials and Gen Z value transparency and authenticity in the brands that gain their loyalty. This is an area where credit unions have an opportunity to really shine, because these values have been embedded in their member-centric approaches for decades.

Once again, experience matters – down to the last detail. If you say you’re transparent but millennials can’t understand your disclosures or feel duped by your overdraft processes, you’re back at square one. This is a golden opportunity for credit unions to rethink how they deliver their most controversial offerings, such as overdrafts, to help these generations feel that they are in control of their own finances. Credit unions can move beyond financial literacy campaigns and programs to embedding new functionality and services into their offerings that empower members to understand their options and make their own choices. Remember, millennials make up a sizable percentage of the 125 million adults living paycheck-to-paycheck in the United States. If you help them now, they’ll remember you as they build their wealth. Of course, it’s important to note that regulators and legislators are paying as much attention to this issue as millennials are.

The needs of prospective millennials and Gen Z members are unique and growing, and credit unions need to quickly adapt to ensure they can serve both their aging and emerging member base. One of the fastest ways to do this is to leverage a fintech partner. That keeps credit unions focused on what they do best (member experience!) without the distraction and expense of in-house technological development. To truly encompass all three principles – prioritizing mobile experiences, delivering a strong member experience and staying transparent – it’s best to find a fintech partner with strong experience in both the banking industry and technology. That approach puts credit unions in a strong position to move quickly while ensuring that their member experience still delivers.

Joel Schwartz is the Founder & Co-CEO of the fintech DoubleCheck Solutions based in Burbank, Calif.