Betting On a Brand
CUs design rebrands to capture the attention and membership of contemporary consumers without alienating current members.
Can rebranding help credit unions appeal to and attract young members?
It’s a critical question because recent research indicated most millennials and Gen Zers are just not that into credit unions. Executives are betting that a brand change, coupled with competitive digital products and services, can help capture the attention of the younger crowd in their markets, convert some into membership and retain the members they serve.
Although credit unions are seeing loans grow at record rates in 2023, deposits are dwindling and that could create a liquidity shortage, Kate Marienthal pointed out in a CU Times article that ran in May. She is a client solutions lead for the New York, N.Y.-based Pinwheel, a provider of income data insights for financial services.
“This shortage threatens to become long term if credit unions don’t attract more members of the millennial and Gen Z generations,” she warned. “According to Raddon, around 75% of credit union deposits belong to members who are baby boomers or older, making the outreach to the younger generations all the more important.”
To drive home Marienthal’s point even more, a 2022 GOBankingRates national survey of 1,335 adult American consumers found that only 26% of persons age 18 to 24 use credit unions, while 36% in this age group opt for national banks. More importantly, people between the ages of 25 and 34 are even less likely to use a credit union because only 14% are members of one. Twenty-eight percent of people in this age group also choose national banks with 31% saying they are more likely to use an online bank. What’s more, 36% of people in the age range of 35 to 44 favor online banks and only 19% of this cohort bank with a credit union.
CUNA cited Equifax Analytic Dataset research that said 20.7% of Gen Zers choose credit unions, while 73.9% choose a bank. However, it should be noted that a sizeable portion of Gen Zers (ages 11 to 26) have not joined the workforce on a full-time basis, but by 2030, they are expected to make up about 30% of the workforce, according to national media reports.
The Equifax research also showed that only 22.3% of millennials (ages 27 to 42), most of whom are in the workforce, choose a credit union and 73.3% choose a bank. Among the remaining generations, the credit union/bank split is 22.5% to 73.7% for Gen X, 22.2% to 76.1% for boomers and 18.7% to 78.5% for the Silent Generation.
“Can rebranding help credit unions attract members, including young members? From my experience working with credit unions, the answer is an emphatic yes for a number of reasons,” Phil Davis, founder of Tungsten Branding in Brevard, N.C., said.
He explained that a credit union’s name is the most valuable marketing asset in its arsenal, and that an organization’s name signals to potential customers on a number of levels.
“An effective credit union name should convey not only what the organization does – provide financial services – but how it does it: Smarter, faster, friendlier,” Davis said. “Often this valuable asset goes underutilized by telling potential customers what they already know, for example the insert-town-name community they live in, or worse, an outdated population group they originally served – postal workers, teachers, fire fighters. These legacy names not only provide little useful, current information, they often hamper a credit union’s efforts to attract new customers, especially millennials, who are looking for more current, relevant and digitally friendly alternatives.”
But simply changing the credit union’s name and adding new brand colors and a new logo can only go so far. What can drive a rebrand over the long run is a competitive slate of online and mobile products and services that millennials and Gen Zers have come to expect.
Tungsten led in a rebrand of Central Florida Educators Federal Credit Union to what Davis described as the newer, sleeker Addition Financial – with a hint of legacy to its original audience and mission, educators, and a nod to its ability to bring financial education and success to everyone.
Addition Financial launched the rebrand in 2019 when its membership was 165,609. By the end of this year’s first quarter, the credit union’s members have grown to more than 170,000, according to NCUA Call Reports.
“One of the main goals of the rebranding was to reach new audiences. Key among them are students and young professionals who are establishing their financial future, looking to build credit and manage their money directly,” Addition Financial’s vice president of marketing, Jason Hansen, said.
He declined to share the average age range of its current membership.
“So while we don’t currently share the demographic [number] of our membership, we have seen really good strong response to the value proposition of our student checking accounts,” he said. “And what’s nice about that product is they are associated with co-branded college and high school debit cards that let these folks show their school spirit when they do their banking.”
Addition Financial also has strategic partnerships with regional colleges and local school districts, providing the credit union with direct opportunities to reach prospective young members.
When research revealed two-thirds of consumers did not know they were eligible to join Indiana’s largest credit union, leadership realized it was time for a rebrand. In addition, the average age of its 307,090 members is nearing 50.
In June, Teachers Credit Union (TCU) transitioned to Everwise Credit Union to better reflect the credit union’s mission to empower and serve all people and grow beyond its original educator roots. The “wise” word honors the educators the credit union has served for more than 90 years and its dedication to education and learning. The “ever” word connotes the credit union’s commitment to continuous growth, Everwise President/CEO Jason Osterhage explained.
“I can say just from talking with our younger employees, they are the ones who are most excited about this,” Osterhage said. “They feel like the brand, our refounding, is really speaking to them. The intent of the brand design was to be relevant to the contemporary consumer. We designed it for a diverse and changing consumer base in Indiana and the Midwest, and we wanted it to be relevant to people who are living in growing cities like Indianapolis.”
Although Everwise tends to have an older member base, Osterhage noted the membership’s average age has been trending downward a little bit over time.
“As we focus more and more on Indianapolis as our primary growth market, which is a strategic choice that we made late last year, and bring this new brand to market, we would expect that average age to continue to decline,” he said.
Angie Dvorak, chief marketing and growth officer, said the credit union is using this major milestone transition to make other important changes that will benefit members.
“We’ve made some enhancements to our online and mobile banking, and the way we serve our members, and we pride ourselves on delivering excellent member service,” she said. “And I think just having our members see how excited and positive our employees are has really carried over. We’ve received a lot of positive comments from our members.”
In 2021, when Delbert Lee Morgan was named CEO of the $2.8 billion PenAir Credit Union, Pensacola, Fla.’s largest and oldest financial cooperative, he knew it was very prosperous. But he also realized that market expansion, coupled with product and service enhancements and a new brand look that would appeal to a broader range of consumers, would be necessary to maintain the credit union’s positive momentum.
So he switched the credit union from a federal to state charter to expand the number of counties it can serve from three to 15 in Florida and two additional counties in Alabama.
While going through the process of planning the new brand image, the credit union also focused on improving the credit union’s online and mobile usability.
“When I first got here, we hadn’t really changed our systems, but we changed how our systems worked,” Morgan said. “Before, it would take you 45 minutes online to open an account. Well, you can do that in four minutes now. If you have an existing account and want to add a certificate you can add one in a matter of moments. Now, when you add an account, you can also add all of the transfer options.”
To compete with fintechs and internet banks, Morgan said he believes credit unions should provide digital products and services to members in a timelier manner.
“And that’s what we been focusing on over the two years,” he said. “Yes, we offer digital products, but we offer them quicker, better and more inclusive for all parties. With our digital services, we’ve really gone a long way to truly improve them and the timeliness of those products.”
While Morgan knows his credit union needs to attract young members, he also knows that you can never lose sight of attracting and retaining members from all age and demographic groups.
“It is amazing to see members from all age groups who are using mobile banking and ITMs,” he noted.
Because PenAir holds an extraordinarily strong legacy and brand recognition, it was decided not to change its name.
Morgan is betting that the credit union’s new bold and vibrant colors will appeal to members and prospective members, including the young crowd.
“We did want to kind of change it up a little bit, make it look a little different than what it was in the past,” he said. “And I’ll be honest with you, I’ve had a lot of people question it, but I like it, the board likes it and we’re excited about it. We’re excited where we’re going to be in the next two to three years.”