“OK boomer!!”
Yes, we can thank boomers for the fact that, today, credit unions’ average member age is 53, according to a McKinsey & Company report. While boomers remain the financial foundation for credit unions, their impending exit makes engaging younger members mission critical as younger generations are turning to fintechs, digital banks, embedded financial apps and even traditional banks that can deliver and better match their digital expectations.
Credit unions must attract younger members – especially Gen Z (born 1997-2012), who are now entering their prime earning years. They are the world’s largest generation (second only to millennials in the U.S.) – and, globally, Gen Z could be the wealthiest generation reaching $74 trillion in income by 2040, according to Bank of America Institute research. Yet for now, they are weighed down with affordability issues, struggling with debt and, according to the research, often “overeducated and underemployed.”
That may not make them ideal members today, but their long-term potential makes Gen Z critical to credit unions’ future. Credit unions already lead all financial institutions in trust – attracting Gen Z early can convert that advantage into lifetime loyalty.
But today’s Gen Z is indifferent to credit unions and focused on digital banking – and largely overlooked by credit unions. Eighty percent say digital banking defines their experience, only 23% even hold credit union memberships and just 14% consider one to be their primary financial institution. In fact, 37% say they’re likely to leave within the next year – more than twice the rate of older generations, according to a PYMTS Intelligence/Velera study. Let that sink in – credit unions are only capturing a small percentage of the next most powerful generation’s focus.
The Stakes: A Membership Math Problem
The challenge isn’t just reaching Gen Z – it’s keeping them. Many credit unions still rely on products designed for long-term ownership rather than short-term flexibility. Marketing may get them in the door; but, clearly, many of today’s credit union products fall short of keeping them there.
Membership growth now hinges on attracting younger households faster than older ones retire their accounts. Gen Z is more than twice as likely to churn as older members, and 82% of potential switchers say they’d choose a bank or fintech for better technology, convenience and tools, PYMTS Intelligence/Velera found.
What can credit unions do to keep them once they have walked in the door? Create products that fit Gen Z's financial reality – flexible, digital and low commitment.
Why Traditional Products Miss the Mark
With home ownership out of reach for most Gen Zers, auto financing becomes one of the few attainable ways to build credit and independence – but even that is changing. The majority believe renting is smarter than owning and increasingly put less value on owning a car, according to research from Entrata & Qualtrics and Statista.
This generational disinterest in financial ownership commitments is reflected in their borrowing habits: They are more likely to use Buy Now, Pay Later (BNPL) than credit cards, favoring structured short-term pay-offs over revolving debt, according to a J.D. Power survey.
About 29% of the average credit union loan portfolio is auto, and another 46% is mortgage related (source: Callahan & Associates, Q2 2025) – two categories that appeal the least to Gen Z. So, roughly 75% of what credit unions do does not appeal to Gen Z – a big problem because credit unions don’t have the fancy financial products banks can offer to diversify revenue.
For decades, credit unions have excelled at long-term, ownership-driven lending: 60-84-month auto loans, 30-year mortgages and high-limit credit cards. But those assume the financial predictability Gen Z lacks. For this generation, access and experience matter more than ownership.
They rent, share and upgrade rather than own forever. They expect instant onboarding, mobile transparency and zero hidden fees. Paper forms and branch visits are dealbreakers.
Gen Z Retention = Shifting Strategic Priorities
1. Modernize to match the app-based convenience (Venmo, PayPal and Zelle) Gen Z expects. Every digital touchpoint – from website to app to the in-branch experience – should feel intuitive, transparent and current. AI-driven tools like personalized recommendations or chat support can enhance the customer experience, making it more interactive and personalized.
2. Rethink products that appeal to this generation and don’t require a major overhaul to implement.
3. Flexible Financing: BNPL/Microlending
Structured and finite financing tools that offer predictability and a clear pay off horizon are right in the Gen Z sweet spot. Think about repurposing traditional payday lending into responsible, short-term, low-fee microloan products with transparent terms.
4. Student Lending: Investing in Future Homeowners
Offer a student loan program, including refinancing options, that helps address one of Gen Z's key pain points – college debt – and the chances are good they will stick around for a mortgage.
5. Vehicle Leasing: The New Mobility Mindset
Rising vehicle costs and Gen Z aversion to ownership make vehicle leasing, with its flexibility and lower monthly payments, the ideal short term car “loan” for Gen Z – in fact, they are two times more likely to lease than millennials, as reported by The Zebra. Nearly 20% of Gen Z's budget goes to transportation, and they are perfectly happy to visit a dealership for their first purchases, seeking guidance rather than doing it all online, according to a Stagwell Global survey. With auto lending representing roughly one-third of every credit union's portfolio, indirect leasing offers a strategic, flexible alternative that aligns with Gen Z’s lifestyle – affordable, upgradeable and digitally managed.
A Call to Action: Modernize or Miss the Moment
Credit unions have earned trust across generations by doing what banks can’t – putting people before profit. Sustaining that trust now means evolving both the experience and the products themselves. By modernizing digital touchpoints and introducing flexible offerings like microlending, student loan financing and vehicle leasing, credit unions can meet Gen Z where they are – financially uncertain, digitally native and craving control – and build a pathway to long-term membership. As this generation’s financial capacity grows, credit unions that supported them early will be the ones they stay with for life. Those who fail to do so risk losing their next big opportunity once the last boomer’s account closes.
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