By Roy Urrico
Finopotamus aims to highlight white papers, surveys, commentary and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.
Ninety-five percent of U.S. credit unions (CUs) are now courting prospective Gen Z members, according How Credit Union Innovation Can Drive Gen Z Engagement, a report from PYMNTS Intelligence in collaboration with Velera (formerly PSCU/Co-op Solutions). The study drew on survey data from more than 200 credit union executives and 4,525 U.S. consumers.
Attracting Gen Z members comes with risk, according to the study. Gen Z consumers are 2.5 times more likely than their Gen X counterparts to have switched primary financial institution (FI) in the past year, while less than 4% of baby boomers and seniors recently switched.
So, why are CUs so keen on bringing these younger consumers into the fold? “One reason is that they are poised to transition into higher-paying jobs and careers in the years to come, which will drive additional spending,” the PYMNTS Intelligence/Velera report noted. In fact, it is projected that by 2030, Gen Z consumers will increase their spending sixfold, meaning they will likely need access to more sophisticated financial products.
The report revealed that Gen Z members use more products and features currently than any of the other generations surveyed — and they would welcome even more if additional features were on the menu. “The average Gen Z consumer has used 10 products and features in the past year and would use another 18 if offered, reaching a total of 28 products and features,” the report found. For comparison, the average Gen X consumer has used about eight CU products and features in the last 12 months and would use another 12 if offered.
“The product innovations CU members want the most include Zelle and young adult debit cards, while credit card apps, budgeting tools and QR codes top their list of desirable features,” according to the report.
If credit unions are determined to persuade Gen Z consumers to become members, they need to have an innovation roadmap in the works — one designed to retain current younger members while attracting new ones, suggested PYMNTS Intelligence/Velera report.
InvestiFI CEO Reacts to Gen Z Survey
Kian Sarreshteh, CEO of InvestiFi, which focuses on providing investing solutions to financial institutions for their accountholders, reacted to the PYMNTS Intelligence/Velera Gen Z report. “Credit Unions must embrace access to investing solutions or risk losing increasingly fickle accountholders,” advised Sarreshteh.
“Gone are the days of choosing a financial institution simply because it was the most secure. Accountholders now want to see the most exciting and innovative offerings from their financial institutions. For credit unions to keep hold of their members and deposits, integrating user-friendly tools holds the key to ensuring they are not attracted by the offerings of a competitor,” he added.
Sarreshteh noted the industry is witnessing a growing trend amongst consumers who want the latest innovative and potentially most financially rewarding features when choosing a financial institution. “These features could be in the form of retail trading, crypto or an array of advisory services. Accountholders today want more value from where they store their capital.”
In addition, “Popularity amongst retail trading offerings has soared in recent years,” said Sarreshteh. This provides members with the autonomy to securely invest their money in businesses they have personally chosen. “Accountholders are more likely to remain with a financial institution if they are offered this level of autonomy and the funds remain within the financial institution’s ecosystem once invested.”
Credit unions have a unique advantage of having built generational trust with their member base, especially on a local level, proposed Sarreshteh. “As such, credit unions have the first crack at making the next generation use them as their primary financial institution, but need innovative digital solutions to ensure they maintain these generational relationships.”
Sarreshteh concludes: “Customer behaviors and priorities are constantly shifting. For credit unions and other financial institutions, investing in the latest and most engaging tools for accountholders will improve loyalty amongst their member-base, once again, helping to cement these relationships. Providing the latest financial tools for accountholders who are increasingly demanding financial freedom and autonomy when it comes to their capital is crucial to success.”