Capturing the Next Generation: A Guide for Credit Unions

The next generation is set to inherit $11 trillion by 2045, according to a report by Cerulli Associates. Unlike previous generations, their financial behavior is shaped by the intersection of technology, economic volatility and a baseline expectation for personalized, digital-first experiences. As digital natives, they expect seamless integration of technology into every aspect of their lives, including how they manage their finances.
 
Understanding the younger generation’s banking preferences, financial challenges and openness to innovation demand a proactive strategy from financial institutions. By combining high-tech solutions with personalized support, aligning with social values, leveraging social media driven marketing and building relationships that meet consumers where they’re at in life, credit unions can compete for younger generations’ trust and loyalty.

How Credit Unions Can Win the Next Generation

 
Research from Raddon, a Fiserv company, shows that younger individuals view financial institutions differently than older generations. Nearly six in 10 young consumers would prefer to use a mobile device for all their banking needs, and nearly all have loaded a card onto their mobile device. The mobile device has become the center of the financial experience for most younger consumers.
 
While younger consumers prioritize mobile banking and digital tools over traditional in-person banking, the branch still serves an important role. While the primary function of the branch for older generations may act as a transaction hub, younger generations view them as sources for advice and account openings. Building relationships are at the center of what credit unions do and their dedication to truly understanding their customers gives them an edge over big banks and offers the opportunity to earn trust from young customers. Furthermore, while generally optimistic about their financial futures, research has shown younger generations would like to have a better understanding of financial matters. Credit unions can help bridge that gap.
 
Credit unions have the opportunity to build on these initial touchpoints with younger consumers and build relationships that help them make decisions in the moment. For example, young consumers expect escalation pathways to human representatives for complex issues and account needs, paving a way for local banks and credit unions to do what they do best – provide a personalized customer experience and truly tailored solutions. 
 
Younger generations have grown up with, and may prefer, platforms like Zelle, Venmo, Cash App and PayPal for peer-to-peer transactions, with some also turning to online neobanks. Their preference for social media and financial influencers over traditional advertising or search engines represents a paradigm shift in how financial institutions should approach marketing. Young consumers prioritize authenticity, personalization and social responsibility in the brands they engage with. If they don’t feel connected to the institution, they won’t open an account. It’s as simple as that so, local banks and credit unions that can connect with their younger customers and leverage social media effectively will be more likely to break through.

How to Meet Younger Consumers Where They Are At

For banks, meeting the needs of the digitally immersed generation will likely require a change in mindset from a services mentality to a relationship mentality. Credit unions will need to leverage the data they have about their members to create meaningful insights that drive advice and guidance in the moment.
 
From a consumer perspective, we now expect to be able to order dinner, have groceries delivered, and shop for practically all goods and services in a curated environment. That’s the same experience that a consumer wants from their financial solutions provider. They want to see their cash flow, what bills are due, what it would take to buy a house and risks in the future.
 
For example, a bank or credit union that is able to identify customers/members who are just about to pay off a car loan should be able to reach out to those borrowers with suggestions on how to save for a home purchase, build an emergency fund or squirrel money away for retirement. That’s what it means to be able to drive advice and counsel in the moment.
 
The next generation faces a wealth of unique financial challenges, including record student loan debt, spiraling cost of living, and economic and geo-political uncertainty. This translates to greater financial vulnerability, with over half struggling to make ends meet and one-third burdened by debt. Inflation and the threat of recession exacerbate financial anxiety, prompting spending caution and a look to experts who can offer meaningful support. Financial institutions have an opportunity to provide financial wellness tools and financial education to assist this group while also building long-term loyalty and trust.
 
Credit unions need to innovate and offer competitive services. Integration with digital wallets, robust mobile experiences and products tailored to younger generations’ lifestyles are all opportunities to capture attention. Saving and budgeting are top priorities for the digital native generation, yet with many struggling to achieve financial stability, financial institutions that address their needs with practical, digital-first solutions can gain a competitive edge.