Introduction 

The credit union industry faces a critical challenge in attracting and retaining younger generations, Millennials and Gen Z. These demographics, born between the early 1980s and late 2000s, have unique values, expectations, and behaviors that require tailored strategies. This white paper explores the factors influencing their financial decisions and presents actionable insights for credit unions to effectively engage with these younger members. 

Understanding Millennials and Gen Z 

Millennials and Gen Z are digital natives who grew up in a technology-driven world. They prioritize convenience, personalization, and transparency in their financial relationships. Unlike previous generations, they are more likely to seek financial advice from online sources and are less trusting of traditional financial institutions. Gen Z's spending is expected to grow sixfold by 2030, making them a crucial demographic for credit unions to engage. With more Gen Z members moving into higher-paying jobs and big-ticket purchases, the financial needs of this generation are rapidly evolving. A key factor in engaging these demographics is leveraging data effectively. Credit unions must invest in a robust data activation platform to analyze member behavior, preferences, and financial habits. This data-driven approach enables personalized experiences and targeted marketing campaigns. 

Challenges Faced by Credit Unions 

• Digital Disruption: The rise of fintech companies and mobile banking apps has created a more competitive landscape. Credit unions must adapt to these technological advancements to remain relevant. 

• Changing Consumer Preferences: Younger generations have different expectations from financial institutions. They value personalized experiences, convenience, and transparent pricing. 

• Limited Trust: Many Millennials and Gen Z members have a distrust of large corporations, including traditional banks. Approximately 40% of Gen Z members switch financial institutions within a year if their needs are not met. This is significantly higher than Baby Boomers' 4% switching rate. Trust and innovation are key drivers that credit unions must address to retain Gen Z members(CUNA Strategic Services) Credit unions must build trust and demonstrate their commitment to their members' financial well-being. 

• Lack of Unified Data: The lack of a unified data strategy can hinder credit unions' ability to understand and address the needs of younger members. A data activation platform can help combine data from various sources, providing a comprehensive view of member interactions. 

Effective Strategies for Acquisition 

• Digital Marketing: Leverage social media, content marketing, and email marketing to reach younger audiences. CivicScience data show that 90% of Gen Z adults aged 18-24 report they use social media.  

• Mobile-First Approach: Ensure your website and mobile app are user-friendly, accessible, and optimized for mobile devices. A study found that 81% of Gen Z consumers expect seamless digital experiences, especially through mobile banking apps. This generation prioritizes convenience and ease of use, with 79% citing ease of use as a deciding factor when selecting financial institutions​ (PYMNTS.com). Mobile-first approaches, offering real-time account updates, and intuitive interfaces are critical for attracting and retaining them.​ 

• Partnerships: Collaborate with other organizations that appeal to younger generations, such as universities, community groups, and local businesses. 

• Referral Programs: Incentivize existing members to refer their friends and family, tapping into their social networks. 

• Targeted Promotions: Offer promotions and discounts specifically tailored to the needs and interests of Millennials and Gen Z. With the generation on technology even into the night, as seen in the chart from 99Firms.com, this enhances marketing time and the opportunity to capitalize on reaching the target market of Generation Z.  

Strategies for Retention 

• Personalized Experiences: Use data analytics to understand individual member needs and preferences and tailor your offerings accordingly. 

• Financial Literacy and Education Programs: Financial literacy is crucial for Gen Z, with 62% expressing interest in learning more about managing personal finances. Credit unions can capitalize on this by offering financial education tools and apps. Case studies like Diamond Credit Union's partnership with Zogo reveal that engaging educational platforms improve member engagement and retention, especially when paired with rewards programs​. 

• Community Engagement: Support local initiatives and causes that resonate with younger generations. 

• Loyalty Programs: Reward members for their loyalty with exclusive rewards, discounts, and benefits. 

• Feedback Mechanisms: Actively seek feedback from members to identify areas for improvement and address their concerns. 

• Data-Driven Retention:  Utilize data analytics to identify at-risk members and proactively address their needs. Measure the effectiveness of retention strategies and make fact-based adjustments. Personalization is key to engaging Gen Z, with 75% of Gen Z members saying they expect personalized financial advice and product offerings. Data-driven insights from platforms like data activation tools can help credit unions tailor products to individual preferences and financial habits, improving loyalty and satisfaction​(McKinsey.com). 

The Role of Technology 

• Mobile Banking: Offer a robust mobile banking app with features like peer-to-peer payments, budgeting tools, and financial education resources. 

• Data Activation Platform: A data activation platform is essential for extracting insights from member data and driving personalized engagement. 

• Artificial Intelligence (AI): Utilize AI-powered chatbots to provide personalized customer support and recommendations. 60% of Gen Z prefers interacting with AI chatbots over human representatives for basic banking needs, especially when it leads to faster, more efficient service. AI-driven chatbots can provide personalized recommendations and automate customer service, enhancing the member experience​ (PYMNTS.com). 

• Biometric Authentication: Offer secure and convenient login options using fingerprint or facial recognition technology. 

• Open Banking: Embrace open banking initiatives to provide members with greater control over their financial data and access to innovative financial products. 

Additional Articles: 

Case Study of Zogo’s Partnership with Diamond Credit Union 

Key Points from the Case Study: 

• Gamified Financial Education: Zogo's app uses game mechanics and rewards to make learning about personal finance fun and engaging for young people. 

• Diamond Credit Union's Goals: The credit union aimed to increase financial literacy among its members, particularly young people, and improve their overall financial health. 

• Successful Partnership: The collaboration between Zogo and Diamond Credit Union resulted in a successful financial education program that met the needs of young members. 

• Positive Outcomes: The partnership helped Diamond Credit Union to: 

• Increase member engagement: Zogo's app's gamified approach makes it more appealing to young members. 

• Improve financial literacy: Members who used the Zogo app demonstrated improved knowledge of personal finance concepts. 

• Strengthen member relationships: The program helped Diamond Credit Union build stronger relationships with its younger members. 

Credit Unions Look to Connect with Gen Z 

• The article underscores the increasing importance of attracting Generation Z members to credit unions. While this demographic stands for a significant market with substantial future spending power, credit unions often struggle to meet their evolving financial expectations. Gen Z consumers, renowned for their tech-savviness and brand-agnosticism, prioritize innovative products and services. Many credit unions, however, have not fully adapted their offerings to align with these preferences, leading to potential challenges in keeping and acquiring Gen Z members. Many credit unions are not currently offering the types of innovative features that Gen Z consumers are looking for, which causes credit unions to integrate high-quantity FinTechs into their companies to attract growth.  

Thinking Forward: Making Gen Z the Credit Union Generation 

The article from the Filene Institute offers valuable insights into credit unions seeking to attract and retain Generation Z members. It emphasizes the importance of leveraging member insights to drive business impact. Key takeaways include: 

• Understanding Gen Z: Credit unions must recognize Gen Z's unique values, preferences, and behaviors, which differ significantly from previous generations. 

• Prioritizing Innovation: Gen Z expects innovative financial products and services. Credit unions should focus on developing digital-first solutions, personalized experiences, and financial education programs. 

• Leveraging Data: Utilizing data analytics can help credit unions understand Gen Z members' needs and tailor their offerings accordingly. This data-driven approach can also inform marketing strategies and improve customer service. 

• Building Relationships: Gen Z values strong relationships with their financial institutions. Credit unions should focus on building trust and providing personalized support. 

• Embracing Social Responsibility: Gen Z is more socially conscious than previous generations. Credit unions should prove their commitment to social and environmental responsibility. 

By implementing these strategies, credit unions can position themselves as attractive and relevant financial partners for Gen Z, ensuring their long-term success. 

Conclusion 

Attracting and retaining Millennials and Gen Z members requires a proactive and strategic approach. By understanding their unique needs and leveraging technology to enhance the member experience, credit unions can position themselves as trusted financial partners for these younger generations. "In addition to the strategies outlined in this white paper, credit unions must prioritize investing in a data activation platform. By leveraging data-driven insights, credit unions can create personalized experiences, improve member retention, and build stronger relationships with younger generations. Investing in a data activation platform can help your credit union unlock the full potential of personalized engagement.