Financial institutions — and credit unions (CUs) in particular — are facing a generational divide.
Studies have found that as recently as last year, less than half of Generation Z and millennials surveyed used the same financial institutions (FIs) as their parents in 2021. Younger consumers, of course, must be front and center and top of mind for FIs as they craft their product and service roadmaps, Brian Scott, senior vice president and chief growth officer at PSCU, said in a recent conversation with PYMNTS.
After all, as these individuals make the leap from school to careers, as they grow up and establish families of their own, their financial needs change, and their financial standings (hopefully) improve. Through the years, the FI can position themselves as “essential” partners along life’s milestones. Having those strong relationships in place earlier rather than later also means that FIs can reduce customer churn and subscriber acquisition costs.
To bridge the generational divide, said Scott, “FIs — and especially credit unions — should stop looking at someone’s age to define who they are.” Age is just a number, in other words, and what really matters is where someone is on their financial journey in life.
There are at least some indications that CUs are recognizing the need for a new approach. Scott recounted his own experiences as of late, where he set up accounts for his pre-teen and teenaged children with his own credit union; that CU has now been sending materials (including educational materials) directly to Scott’s kids.
Starting that level of engagement early equates to a smart strategy, said Scott, down the line.
“If you’ve already been in front of those consumers for five years, it’s easier for them to ‘stay’ there and feel engaged,” he told PYMNTS.
None of this is to say that CUs can divert their attention solely to members’ children.
He noted that many parents are moonlighting with a variety of financial services providers themselves — including neobanks and various FinTechs — and need to be kept in the loop, too.
Fortunately, Scott said, traditional FIs have an inherent advantage over these digital-only upstarts. They can create a range of offerings and points of engagement across a variety of channels that create a connected experience. The neobanks, by way of contrast, have only a single online channel.
“Phone can be a great channel across which to interact and have a personal conversation. It could be text, and then things can move to the branch on the way to creating that connected experience. It feels the same, no matter the channel,” said Scott.
The CUs, he said, would be well advised to consider services and offerings that include burgeoning asset and payments vehicles, such as crypto. Though CUs can’t actually hold crypto for members, he said, they can offer digital asset management services through third-party providers that allow them to buy, hold and sell them — and even redeem rewards points for crypto.
“The CU is a jumping-off point — and there’s trust in the credit union that’s ‘plugging’ us into those services,” he added.
Looking ahead, as CUs pivot toward tailoring their messages and product suites, they need to make sure that members are engaging with these FIs in a “fun” environment.
To that end, he noted that in some cases, CUs have been hosting special events at branch locations such as food trucks (along with educational programs) to engage with members. In other examples, CUs have long hosted “shredding” days for members to safely dispose of sensitive documents — a personalized, convenient touch that a digital upstart simply can’t match.
“Engaging with these members face to face is a way to make it fun and to build that trust,” he said.
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