Engaging and Retaining Millennial and Gen Z Members

Not surprisingly, recent economic news has America’s youngest consumers more focused on their financial health and looking for help. In fact, according to our recent research, nearly 70% of Gen Z and millennial consumers believe the current economic environment is hurting their ability to be financially independent adults and more than one in four don’t feel optimistic about their current financial situation.

Access to credit can unlock significant financial opportunities for consumers and help restore optimism for the future. Ensuring young consumers receive education and resources is key to restoring confidence in their future.

Credit unions are uniquely positioned to leverage expanded data and advanced analytical tools that can help bring more consumers into the mainstream credit ecosystem, while also being a trusted resource for young consumers who are actively seeking personal finance information and looking to protect and improve their financial health by:

1. Being a trusted source.

With the growth of social media and a lack of effective financial education in schools, personal finance misinformation is perpetuating at an alarming rate. This is leaving many young consumers searching for trusted sources. In fact, nearly four out of five millennial and Gen Z consumers are striving to be more financially literate and nearly 70% are actively searching for a trusted source of personal finance information.

By sharing educational materials directly with members, or by working with partner organizations, credit unions can engage their members with information that may help improve their financial health. Doing so can help establish lasting relationships while educating members on ways to be more financially responsible, which may help open the door for future opportunities to engage members with additional products or services.

2. Providing education to unlock life’s big moments.

Our research shows most millennial and Gen Z consumers understand they’ll need an established credit history to access many of the things we want in life, including purchasing a home or a vehicle. A good credit score is also an important factor when considering a life partner for 65% of millennial and Gen Z consumers and nearly half (47%) said it’s a key consideration before having a – or another – child. Nearly 80% (79%) are actively trying to increase their credit score now rather than later, yet most millennials and Gen Z consumers (52%) don’t know how to start building credit.

By providing members with access to credit building education and tools, credit unions can help actively engage young consumers with resources that can help make their life goals more attainable.

3. Meeting members where they are with the latest advancements in data and technology.

By leveraging the latest advancements in analytics and technology, credit unions can help identify members who may be struggling and provide them with education and resources before more mistakes are made. Doing so can help build lasting relationships with members while mitigating losses, which is a win-win.

There are also tools available today to help improve access to credit for young consumers that didn’t exist even a few years ago. These tools can create meaningful impact for credit unions and their members.

Expanded data is also a valuable tool for credit unions to extend access to credit for consumers who need it most. Our research with Oliver Wyman shows there are an estimated 28 million “credit invisible” and 21 million “unscoreable” individuals currently excluded from the credit ecosystem.

Many young consumers have limited or nonexistent credit histories because of their lack of experience using credit, but a lack of experience with traditional credit doesn’t mean a consumer is inherently risky. Combining machine learning and expanded data sets when making lending decisions delivers better insights on a prospective borrower and a more accurate risk assessment.

The latest tools available allow for an estimated 65% of the credit-invisible population to be scored in addition to the entire conventionally unscoreable population.

Looking Ahead

In a testament to their resiliency, 64% of millennial and Gen Z consumers feel confident they will be OK financially despite recent economic news. Education is a key component to ensuring we can provide financial power to all. Credit unions that prioritize education, advanced analytics and expanded data can reach and engage young consumers to create lasting member relationships in our current environment and beyond.

Rod Griffin is Senior Director of Consumer Education and Advocacy for Experian.