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With an estimated $360 billion worth of buying power and essentially zero loyalty to any specific financial institution, Gen Z is primed to significantly impact the financial sector as a whole. However, credit unions in particular are perfectly poised to become their financial institution of choice. There's just one problem. The current number of Gen Zers who use a credit union is fairly low, at about 19%. So why is this? And what can credit unions do to solve it?
A Surprising Disconnect
The biggest issue so far has been simple – miscommunication. Gen Z cares more than perhaps any previous generation that their personal views align with those of the companies they do business with. Think about it. Personalization, community consciousness, financial education – credit unions overwhelmingly share these views but have yet to find a way to tap into their shared perspectives.
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This can often be attributed to a common misconception found not just in the world of finance but across the entire marketing industry. And that misconception is this: Gen Z doesn't remember a time before the internet. Sure, they don't know a time before the internet, but it's more than that. Even many millennials don't remember a time before the internet. What makes Gen Z so different is that they don't remember a time when they didn't have 24/7 access to a thriving internet at their fingertips. They've grown up in a world that has not just adopted digital innovations but fully embraced them. For this reason, Gen Zers don't want their financial institution to merely offer the typical online necessities. Instead, they want a living, breathing, all-in-one online experience provided by a company that shares their values.
Credit Unions Vs. Banks
So, with all of this in mind, why does this put credit unions in a better position than traditional banks? Well, for one, the overwhelming corporate atmosphere of banks has proven to be a significant turnoff for Gen Z. This corporate, profit-driven stance also gives banks essentially no flexibility on things like fees, for which credit unions are known for their adaptability. This new generation doesn't want to trust their money in the hands of Wall Street or someone who only cares about their bottom line. They want someone who genuinely cares about them as an individual.
Even if you take the idea of corporate America out of the equation, credit unions still have major advantages over banks. For example, the sheer scale of many banks has made it incredibly hard for them to adapt to modern technological changes. Many banks still require their customers to go to a physical branch to do simple things like apply for credit cards, open accounts and take out loans, which 75% of Gen Zers find frustrating, according to a Lightico survey, accompanied by 73% who are frustrated by the idea of physical paperwork. Credit unions have proven much more willing to adapt to these technological advances, giving them a distinct edge regarding their members' ability to bank with them on the go. According to that same study, only 7% of credit union members were redirected to a physical branch during an online interaction.
Second, banks have a tendency to feel a bit stuffy, with customer service and interactions usually having a cold, distant tone. While previous generations have mostly learned to accept this, Gen Z often finds it to be a dealbreaker. In fact, 51% of Gen Zers have considered switching banks due to poor customer experiences, according to Lightico. That's double the rate of any other age group in the study. On the opposite end of this spectrum, credit unions are renowned for their memorable and personal interactions with members. They're often regarded as the most trustworthy and easy-to-use financial institution, with many employees even being trained to spot opportunities to help members during their interactions.
The Time Is Now
The buying power of Gen Z will only rise as they continue to get older, and at least at the moment, they are still young enough that they haven't had a chance to build any loyalty to a specific financial institution. So, they're more willing to switch to a better alternative if one presents itself. If that sounds like wishful thinking, consider that an overwhelming 82% of Gen Z respondents noted they would switch financial institutions if an alternative offered superior digital experiences.
The opportunity for this alignment in interests and values is immeasurable. And now is the time for them to strike while the iron is hot. By truly understanding what Gen Z wants and how perfectly it aligns with the mission of credit unions and adapting their marketing efforts and financial services accordingly, credit unions have a significant opportunity for growth and success for the foreseeable future.
David Metz David Metz is the CEO of the New York, N.Y.-based ad-tech company Prizeout.
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