Remember, they’re not simply ‘new millennials,’ but members of a generation with unique characteristics.
Contrary to popular belief, members of Generation Z can’t simply be looked at as the “new millennials.” This generation of young people, born between 1997 and 2012, according to Pew Research, is unique and distinct from any generational group that precedes them. Because they have witnessed a unique set of real-life lessons—like the War on Terror and the 2008 stock market and housing crash—Gen Z has been dubbed the "throwback” generation and has differentiated itself from millennials in more ways than one.
Credit unions must take a step back in their approach to marketing to this generation. Long gone are the days where credit unions can treat every member the same. While their members may belong to the same community, understanding this generation is critical in winning them over as loyal members. In today’s competitive market, credit unions will need to go the extra mile, realizing their Gen Z members have a unique set of financial needs and are looking for more from their financial partner than the traditional services that might have won over members in the past.
Understanding the ‘Throwback’ Generation
This generation is more conservative with money and certainly more interested in making smarter, more long-term financial decisions and increasing their savings. In addition, members of Gen Z largely emphasize traditional values, such as work ethic, prudence and financial stability while also being at the forefront of evolving consumer demands, like digital-first expectations.
While their ideals and values may seem more traditional, their digital tendencies are certainly not. Recent articles explain this generation’s distinct difference, “Technology is important to both Millennial and Gen Z consumers, but for Gen Z that attitude is ‘digital-first,’ not digital as (a) supplement to other channels.”
A practical explanation of the difference would be to note that the millennial experience entailed renting a movie from Blockbuster Video and watching it on a DVD player at home. However, a similar experience for members of Gen Z means instant gratification—quickly and easily streaming their choice of movie from the platform of their choice to the device of their choice, aka a smartphone, tablet, laptop or smart TV. This generation is completely unfamiliar with the concept of a service or experience requiring them to call someone or, worse, go to a physical location.
So, it’s no surprise that members of Gen Z expect a similar Amazon-like experience when they choose where to turn for their financial needs. An Oracle study shows that “younger consumers are seeking digital banking solutions that enable them to make relevant money choices in the moment—without having to personally sort through paperwork or spend a lot of time talking to someone.”
Gen Z is also going to be the beneficiary of the greatest wealth transfer in history when their baby boomer parents pass away. Many Gen Zers are woefully unprepared for this transition. Credit unions are in an ideal place to support and help them, with the added benefit that these assets can be retained in these institutions.
Unfortunately, credit unions have mostly overlooked this crucial generation. Yet, the timing is critical now—to develop relationships before the young people in this generation begin their career journeys and accrue the wealth of their careers. Reaching this generation before the height of their banking needs is critical and can be the key to long-term success for credit unions.
The Opportunity to Fill Gen Zers' Financial Needs
While Gen Zers remain impressionable, it is critical not to dismiss them. While members of the most technologically-savvy generation yet, they are still reliant on others when making important decisions and often use peer reviews, internet searches and sources they trust as factors in their decisions on financial literacy and management—often crowdsourcing, asking their parents or mentors, or looking to social media for financial advice.
Proactive credit unions are uniquely positioned to fill this crucial need Gen Zers have for advice. If credit unions handle this need well, they can become trusted financial wellness advocates that provide reliable information through consistent messages—delivering the right message to the right person at the right time in their financial journey. It’s critical to be engrained with modern technology solutions that can help deliver consistent, personalized communications. Gen Zers expect a banking experience that offers convenient, digital-first solutions—while also providing personalized relevant advice, supporting their financial goals and life’s biggest financial decisions. Data suggests that younger members seek “personalized tools, calculators and content to help them make the most of their savings and reach their goals, such as buying a home or a car, which naturally sets up a future offer of vital credit.”
To make the most of this opportunity, credit unions must focus on what they do best: providing an exceptional member experience. Reaching this generation means going beyond just filling their current needs. It means anticipating future needs and proactively communicating services and offers that can help fill those needs. Credit unions should focus on delivering consistent, frequent and meaningful messages that are personalized to each member. This means more than traditional, outdated or general marketing efforts advice for financial wellbeing, relevant offers and service options, competitive rates and more.
Here are some specific topics of interest to Gen Zers that your credit union might want to consider. Some are traditional, some new:
- Helping Gen Zers with their first auto and mortgage loans
- Investing for retirement—why they need to start early
- How to save and care for ailing parents, particularly if they are far away
- Assistance in settling a parent’s estate
While connecting with this generation might be challenging for credit unions that use a more traditional marketing strategy, effective communication that reaches these members on the digital platforms where they already interact is pivotal. Avoid trying to be “trendy” and instead simply deliver an engaging and informative user experience across the credit union’s digital channels—with content that will grab their attention and add value when they are making critical financial decisions.
There is little question that this generation represents a crucial part of a financial institution’s future. Taking the time to understand the “why” behind this generation’s digital-first outlook and learning how to design marketing campaigns that will really reach them gives credit unions the useful insights needed to effectively connect and engage with Gen Z members. Ultimately, credit unions must become that trusted source for financial literacy guidance for this generation (digital-first, of course!), while also providing innovative and comprehensive digital services.
Preetha Pulusani is CEO of DeepTarget, a fintech company developing and deploying an open, data-driven customer engagement and cross-selling platform for credit unions and banks.