How can we learn from our mistakes with millennials?
Cast your mind back to not too long ago, when every credit union marketing campaign, research program and member segmentation initiative seemed to be built with the millennial in mind.
A seemingly endless slew of wily youngsters was entering the workforce, and CUs were primed to capitalize on the opportunity … or so we thought.
The reality was that millennials matured when fintech disruption was burgeoning, driving traditional banks to invest heavily in digital services. Some credit unions—certainly the highly capitalized—kept pace, but most of the system is (or at least was) traditionally cautious about innovation. The market demanded convenience, CUs prioritized service, and the flashy apps and digital shopfronts won out.
“You know, there’s a saying: Man plans, and God laughs,” said David Metz, CEO of Prizeout. “One of the great things about credit unions is they don’t typically engage in anything risky; they don’t have investment banking. People value that sense of security, but there are also downsides.
“Credit unions are realizing now that digital services are not a nice-to-have but a have-to-have. We’re seeing a much more aggressive approach to tech investments and partnering with fintech, ... and it’s putting the entire credit union ecosystem into a more competitive space.”
A Missed Opportunity
In all, the opportunity to capitalize on millennials—and truly position the credit union system as their primary partner for a lifelong—may go down as a missed one.
Of course, there’s still significant opportunity. Even the oldest millennial is barely into their 40s, but credit unions do need to learn from past mistakes, and quickly.
An Economic Engine With Ideals
While the millennial marketing manuals have barely begun to gather dust, Gen Z will in fact make up more than a quarter of the workforce within the next 18 months—commanding an impressive $360 billion in purchasing power when they do. However, they’re also inclined to wield that utility for good.
This generation’s global perspectives have been shaped by catastrophe—climate crises, political upheaval, social justice movements, the COVID-19 pandemic. This is a cohort that has demanded a better, more equitable future for everyone. This has to be the Credit Union Generation.
CUs have traditionally focused and marketed themselves on community connectivity, on giving back and the “people helping people” philosophy. But this isn’t a winning formula in and of itself. The efforts to woo millennials proved that.
Certainly from a consumer perspective, value isn’t derived from simply being present or visible in a community. And for a socially progressive generation driven by caring to the point of “idealism,” value—and therefore brand affinity and loyalty—can be earned by providing tangible, measurable impact within a community. With ongoing digital investments, the ability to communicate that impact is becoming increasingly affordable.
Marketing and AI
Marketing has long been a challenge for CUs. There isn’t a CU event in history where someone didn’t utter those infamous words: “We need to do a better job of telling our story.” And the gizmos and widgets that so enticed millennials to big banks and fintechs were effective not exclusively through their function, but also their form: They were new, shiny and therefore marketable.
Bigger banks (and now companies like Apple) have marketing coffers that far outweigh those of the vast majority of CUs and were quick to position their digital services as a marketable commodity. But according to Ted Coy, director of innovation at $1.8 billion Alabama Credit Union, Tuscaloosa, what set some credit unions back less than a decade ago may now be leveling the marketing playing field: the smartphone.
“The most immediate, powerful and cost-effective marketing channel to reach Gen Z is in their pocket, constantly,” says Coy. “And as credit unions invest more heavily in digitization, their institutional knowledge, appetite and willingness to pursue innovation only grows. With a more robust technological infrastructure in place, AI now has the potential to be a great equalizer for credit unions.”
Coy points to Valiify—a member attribution platform that leverages artificial intelligence to streamline decisioning, enhance marketing efficacy and build stickier relationships.
“What’s exciting about Valiify is that it’s really developed for the smaller credit union,” he says. “This is about sustaining and strengthening the credit union system, and that doesn’t happen if the smaller organizations are left behind. AI can democratize marketing power. Of course, it has its limits, but just two years ago, delivering automated, algorithmic marketing to bring in new members and deposits would have been unthinkable for the vast majority of credit unions.”
Like Coy, Norm Patrick, vice president of Advisors Plus, a subsidiary of CUESolutions provider PSCU, St. Petersburg, Florida, believes CUs are starting to make the investments needed to compete, but still have more to do.
“Credit unions have an opportunity to become a trusted partner throughout this young generation’s entire financial journey by meeting them where they are: on their phones. These digital natives use their phones for banking, transacting, shopping. Technology is key to meeting their expectations.”
Patrick cites joint research from PSCU and PYMNTS.com showing that among CU early launchers, or “companies at the forefront of technological innovation,” 83% are investing in mobile banking—up nearly 10% from 2021.
“Gen Zers are concerned about how the economy will affect them,” says Patrick, “and they need credible financial education and advice. Credit unions can ease these financial woes.”
There’s a good reason Gen Zers are concerned about the economy: They saw their parents struggle through the Great Recession. This is a financially conscious generation. Their focus on debt is so acute that student loans were core to the Democratic political platform during the midterm elections, and it remains high on the incumbent president’s manifesto in addition to “junk fees” that include overdraft charges.
Put simply: Loans may not be the lure for a debt-adverse generation. Credit unions will have to innovate—and once again, that brings us back to technical partners.
“At the end of the day, bells and whistles are nice, but your No. 1 priority is that your money is safe and secure,” says Metz. “Credit unions have that reputation. We’re helping them build on that.”
Prizeout integrates with a CU’s mobile banking and online core, living as a button on its checking page. It connects a nationwide network of merchants—from big box stores to local businesses—to consumers where they are and provides additional value to the often-overlooked staple debit card.
“After 2008 ... what happened was debit card users got impacted and rewards were removed,” says Metz. Doing so created a two-class system: “the credit card users who get everything and the debit card users who get nothing. A lot of credit union business is debit spend, and Gen Z, more than any other generation, are sweating the small benefits. We can bring those benefits back.”
Prizeout allows members to buy digital gift cards from merchants from within their CU’s online banking or app. Participating merchants make these digital gift cards special, giving, for example, $120 of value for $100.
Metz adds: “The member is getting an additional $20 of value for doing what they would have done anyway—using their phone. It’s giving them more disposable currency, it’s giving a merchant a sale, and it’s building brand loyalty for the credit union.”
Don’t Overlook Education
Despite being connected to any information they could desire, the average Gen Zer is not yet financially literate—although, perhaps as a symptom of their natural financial concern, they do seem cognizant of that knowledge gap. There’s really no time to lose for CUs to inform and proactively guide Gen Z members through their financial journeys.
“Kids as young as 3 are either a saver or a spender,” she says. “And if you aren’t helping them develop healthy money habits early, you’re going to be breaking bad habits later.”
According to Hood, CUs are taking notice of the need for earlier, primarily digital, interventions.
“I’ve been blown away by several forward-thinking credit union CEOs that I’ve met,” she says. “They’re ... challenging the way that they’ve thought about financial education and youth programming. I believe in the next couple of years, it will be the norm for thriving credit unions to have embraced digital financial education programming for Gen Alpha who follow Gen Z.”
The Diverse Generation
Technology, marketing, perks and education will mean nothing if CUs fail to acknowledge, understand and embrace what is perhaps the most defining aspect of Gen Z: Beyond digital nativism, this is the most multiculturally diverse generation in the country’s modern history.
For 2010 to 2020, the U.S. Census Bureau reports multiracial population growth of 276%. Latinos are the fastest-growing racial demographic in the U.S. Put simply, CUs cannot thrive alongside Gen Z if they are not representative of it.
“The credit union system is becoming less homogeneous, but there’s a long way to go until we are, as a movement, more representative of today’s membership,” says Renée Sattiewhite, president/CEO of the African-American Credit Union Coalition.
“A person’s race, culture and ethnicity can define certain financial expectations and behaviors, so as the nation becomes more multicultural, we have to respond to those changes,” she adds. “Better yet, we need to proactively position ourselves for growth. I know as a boomer, for example, that my organization and the credit unions we partner with need to bring that generational knowledge in-house. We need to make sure that Black and Brown Gen Zers are not just represented but are influential within the system because they are literally the voice of tomorrow’s membership.”
Can’t Afford to Lose
This is a pivotal moment for CUs. The average age of a member remains in the upper 40s, while the U.S. Census puts the average age of a Hispanic American at just 30. The most recent two generational cohorts in the workforce have a combined CU membership penetration of less than 2.8% but a combined purchasing power of over $3 trillion.
Gen Z has been defined by social justice, by demanding a fairer, more equitable society by avoiding burdensome debt, seeking out financial education and being skeptical of traditional banks. These are principles shared with every founding member of a CU in this nation, In all, Gen Z may yet be the key to our system’s future success. cues icon
Sam Plester is the founder/CEO of Mission Brands Consulting, a brand and marketing partner for credit unions and other mission-driven organizations.