Data reveals banking customers embracing the digital age. Credit unions have an opportunity to combine member-focused missions with customer intelligence that will prioritize engagement with younger members.
Let’s begin with a quick reminder of the advantages credit unions have over big banks when it comes to customers. CUs are member-owned, not-for-profit organizations with member-focused missions. Membership includes normal banking transactions, but with better rates and fees. Their value drivers include progressing the communities they operate in, commitment to education, and – as democratic institutions – decisions are driven by member and community needs. In short, they care about their customers and offer a personalized approach to service that big banks fail to do.
This customer-centric approach to service has long appealed to consumers from older generations. In fact, for decades, the average member age has not dipped below 47. But as these generations reach retirement ages, credit unions must pivot their approach to appeal to a new generation of members.
In this article, we dig into how CUs can use customer intelligence to identify new opportunities to engage with young members by understanding their financial health, communication habits, and digital engagements. These data-driven insights can help retain, build, and grow member participation to solidify their institution’s future.
Aligning with Young Members
Young members currently comprise over a third of credit union memberships. These members consist of two generations of working professionals: Young Millennials and Generation Z.
Young Millennials (25 to 35 years old): Recently out of college, and an integral part of the economy, 35 million young millennials currently power the US workforce. Although this generation as a whole surpassed spending expectations by over a trillion dollars in 2020, young millennials money isn’t spent on dream weddings or giant mortgages. Quite the opposite. More tend to live at home with their parents, prioritize saving for their future, and make purchasing decisions based on societal and environmental impacts.
Generation Z (18-24 years old): The US is currently welcoming Gen Z, the largest and most ethnically diverse generation, into its workforce. It is estimated by 2030 that they will have spending power of up to $143 billion! They are digitally savvy, fiscally responsible, and are also making decisions based on principles that impact the environment and the greater world they operate in.
According to PMNTS.com, “CUs have an opportunity to see a comeback with the youngest generation of banking customers,” Generation Z.
In order to truly understand and connect with their youngest members, CUs need actionable data insights around their communication habits, digital engagement, financial health, and values.
These generations do not connect with society the way their predecessors have. Having been born into a world that is globally connected at their fingertips, they are tech-savvy and spend a minimum of 3 hours a day on their mobile devices. As such, they prefer communicating through social channels and messaging apps, rather than phone calls or in-person interactions.
This communication preference is a central weakness for CUs as they struggle to connect with younger customers. However, customer intelligence enables CUs to identify each touchpoint, time, and communication channel that these young members are most engaged with to receive product and service information.
The BlastPoint platform makes it easy to understand the channel preferences of younger customers, which takes the guesswork out of determining ROI for new technology implementation. As a result, CUs can increase engagement and drive product adoption while increasing member satisfaction.
Another area that sets young members apart from older generations is their adoption of mobile apps for nearly every transaction they perform. For banking, a study found that 99% of Gen Z and 98% of millennials use mobile banking apps to conduct transactions.
For example, young members seek consolidated options that provide many of the following app options in a single place: payments, money transfer services, loan providers, investment/saving, bill payments, and expense-tracking.
While it may seem prohibitively expensive to keep up with this generation digitally, it doesn’t have to be. CUs don’t necessarily need to develop their own apps to grab the attention of their young members. Rather, they can prioritize integrating their current technology with younger members’ preferred apps, which also helps services to feel personalized.
For instance, money management apps, which help customers budget their spending, are built to help integrate multiple accounts from different financial institutions. By partnering with technology companies that specialize in money management, CUs can provide a seamless experience which could draw young members looking to benefit from them. This is an opportunity to provide services that their current platform may not offer.
Student loan debt, limited affordable housing, an unstable economy, higher interest rates, and more – combined, these factors are preventing younger adults from hitting major financial milestones earlier in life.
The Better Money Habits Millennial Report found that the top financial priorities for younger adults include saving for retirement, building emergency savings, and saving for life milestones – like purchasing their first home.
Credit unions can help young members plan for their futures by identifying which stage they are at in their journey and where they will be most responsive to products and services. BlastPoint’s platform makes it simple to identify where young members are in their financial lives so CUs can offer the right products at the right time and help young members find security while building their future free from financial worries.
While the majority of CU members may be older, CUs’ investment in improving the communities they operate in aligns closely with the values of younger Americans. But many younger consumers may not be aware of that, so it’s important to educate young people about how CU values set them apart from other financial institutions.
Young adults care about social impact, they do their research, and that information guides their decisions on who they transact with. This affects where they work, where they purchase their products, and where they bank. More than the generations before them, Millennials and Gen Z are more loyal to brands that embody their social values. Conversely, value misalignment causes them to switch brands, according to a recent report from McKinsey. During the Covid-19 crisis, more Millennials and Gen Z consumers switched brands than other age groups.
CUs have an opportunity to enact meaningful change by establishing trust with young members. BlastPoint’s platform helps CU teams strategize their messaging, allowing them to share values that resonate with their young members. If CUs stay true to their values, which make them stand out, and are able to effectively communicate those values to younger consumers, they’ll continue to grow their young member base and shape a new generation of banking.
Activate Young Members
CUs have a huge opportunity to activate their 35 and under members, as well as attract new ones. The not-for-profit, community-focused nature of CUs has the potential to be much more appealing to a generation coming of age amidst financial uncertainty and growing wealth inequality. Meanwhile, benefits like higher savings rates and lower fees appeal to their financial caution resulting from high student loan debt and soaring housing prices.
Customer intelligence enables CUs to act meaningfully on this information and make the most of data-driven behavioral insights to increase engagement with younger members. By understanding key data attributes, such as communication habits, digital engagement, and financial health, CUs are empowered to strategically allocate resources that will have the most impact.
BlastPoint works with CUs to identify relevant internal and third-party data for reaching younger customers. We then utilize our proprietary AI and machine learning powered technology to deliver data-driven, actionable insights that can be operationalized right away through our platform. That means CUs can understand and segment customer metrics, identifying younger customers and their preferences with just a few clicks. Learn more about how our solutions help credit unions become more customer-centric and get results here.