Tech Time: Attracting Younger Members With Digital Wealth Management

woman tapping smartphone screen to sell or trade stocks
By Ben Soppitt

3 minutes

Credit unions can provide a starting point for members to develop healthy financial and investment habits.

In 2020, the World Council of Credit Unions included key demographics in its annual Statistical Report. The survey revealed that the average age of a CU member is 53 years old, and most membership demographics skew older and male. The data is confirmed by GOBankingRates, reporting that Gen Zers and millennials are more likely to bank at a national bank or with online banks than with credit unions. These generations are quickly taking over the economy; they will be inheriting roughly $61 trillion 2042. This is cause for an alarm over the future of the credit union industry.

Many credit unions are seeking ways to keep the generational transfer of wealth within their institution. Not to mention, younger generations will need help investing and saving in the future. The average age to start saving for retirement is 32, and less than 30% of millennials have invested in the stock market, which means they have already lost a decade of compound growth. Credit unions need to consider these generations as a valuable part of their membership and offer investment services to support their financial health and wealth-building journeys.

Redefining Investment Services in a Digital World

Strategically building or revamping wealth-management offerings for younger members requires credit unions to think beyond how they’ve narrowly defined investment services, which is more than likely stocks and mutual funds. Traditional investment services support individuals with $500,000-$1 million in assets under management and often don’t have a plan to support the younger and less affluent up-and-comers. While these members may not have a high AUM now, they are the future.

Non-bank providers have started to capture this market and disintermediate relationships, empowering consumers to explore a wide range of investments. The problem with these providers is they typically only solve for specific problems (cryptocurrencies, active investing, robo-investing, equities, etc.) This leaves consumers juggling multiple apps and relationships in order to manage a healthy and diverse portfolio of alternative assets and traditional equities. To solve this fragmentation, credit unions can embed these services into their digital banking experience, unifying both investment and money management apps.

Credit unions can provide the platform through which members explore in a diverse range of investments. Offering both traditional and non-traditional investments suits the credit union mission because it meets members’ interests and needs as well as protecting the health of their investment portfolios. Plus, credit unions can make these investment opportunities available fractionally and commission-free to lower risk and cost; this all helps members invest and experiment more responsibly.

Credit unions can also assist members with niche investing interests. For instance, providing opportunities to invest in wine, collectibles, gold coins and sports memorabilia can keep members of all generations interested and engaged in their wealth-build journeys. Hybrid investing supported by robo-advisory services, especially in the absence of in-house (human) investment advisors—can help members easily build custom portfolios based on their risk tolerance and interest. It’s all about providing a safe and affordable starting point for members to develop healthier financial habits by investing incrementally over time.

Making wealth-building solutions more accessible and appealing to younger generations can help support long-term wealth-creation and preservation. Credit unions can tap into this opportunity by leaning on their decades of established trust and relationships to offer more forward-thinking, digital solutions that support the next generation of wealth-builders. Successful credit unions will find this boosts loyalty, drives engagement and helps solidify new member relationships.
Ben Soppitt co-founded Unifimoney, a turnkey digital wealth management platform for community banks and credit unions, in 2019 and continues to serve as its CEO. Unifimoney’s platform offers a comprehensive digital wealth management platform with trading of over 70 cryptocurrencies, passive and active investing in thousands of stocks and ETFs and precious metals.

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