Growing relationships with young adults is a matter of survival for credit unions everywhere. As legacy members age, success in attracting the 18–35 age group will be crucial to every credit union's future.
According to the World Council of Credit Unions, the average age of credit union members in most countries is mid-to-late 40s. In the U.S., it is 47, while in Canada it is 53. As these members approach retirement and deserve maintained loyalty and service, credit unions must expand their market to younger generations.
The World Council of Credit Unions says the credit union community stands at 208 million members worldwide. They are challenging the industry to add 50 million new members by the year 2020.
To support this goal, they outline a series of strategies in a 25-page technical guide entitled, “International Lessons for Young Adult Membership Growth.” The report explores a dozen ideas credit unions can implement to reverse the decaying age trend among members.
Strategy #1: Digital Delivery of Core Services
Convenience and ease of use primarily drive success in attracting young adults. They will use all channels for delivery of service: mobile, online, ATM and branch, with frequency of use in that order. To consider using credit union financial services, young adults expect to use online and mobile technology to manage their finances, just as they use these channels for information, entertainment, social and payment services.
Strategy #2: Respond to Millennials’ Payments Expectations
Young adults tend to have more experience making payments than engaging in financial services. If there was ever a generation primed to bid farewell to banking’s physical instruments — checks, debit cards, cash — Gen Y is it. They often use- and are comfortable with ecommerce payments systems such as PayPal or Google Wallet. Millennials also like to split bills, so look to offer various mobile peer-to-peer payment solutions. When credit unions provide these online and mobile bill payment services, their relationship with Millennial members becomes stronger and allows puts them on a more even footing with big banks.
Strategy #3: Design Products for Life Transitions
Young adults undergo life transitions as they pursue their education, start careers, get married, buy a home or have children. These transitions pose opportunities to offer financial services that can support Gen Y through their life events and design products based on members’ goals. Young adults express gratitude toward credit unions for giving them their first loan. Credit unions need to continue making borrowing easy and accessible to Millennials.
Strategy #4: Differentiate with Social Responsibility
While Gen Y tends to question, “What’s in it for me?,” they also have a strong sense of community that aligns well with credit union values. Young adults prefer to belong to institutions with ethical reputations that pride themselves on ‘doing good.’
Strategy #5: Create a Culture that ‘Wows’ Millennials
According to a study, 71% of Millennials say they would rather go to the dentist than listen to what banks are saying. That means their expectations are pretty low… which should be good news for credit unions, because providing a more intimate, personal experience is where they typically excel.
Strategy #6: Turn Millennials Into Your Ambassadors
It’s much easier to understand Gen Y — and attract Millennial members — if you have employees who reflect the target audience. They like to share their experiences. So when young employees clearly understand the credit union difference, they can become ambassadors for your organization. Here is some advice from a young employee: “Develop an ‘elevator speech’ to ensure all your staff can articulate the credit union difference in 30 seconds or less,” recommends Christopher Morris, Director of Communications at the National Credit Union Foundation.
Strategy #7: Get Millennials on Your Board
A2014 World Council survey found that the median age of credit union board members varies between 40–60 years old. In the U.S., a 2005 study by the Filene Research Institute found that only 6% of credit union board members were under the age 40, while 42% were 60 and older. If credit unions are serious about serving young adults, are today’s leaders and board members ready to listen to a younger voice, and are young adults represented in the boardroom?
Strategy #8: Embrace Diversity
The U.S. Census Bureau say Gen Y is the most ethnically diverse generation in history. According to the United Nations, 232 million people (or 3.2% of the world’s population) are international migrants, compared with 175 million in 2000 and 154 million in 1990.” Accordingly, product design and delivery must be tailored to a variety of different communities — examples include Millennial immigrants, indigenous populations, and young adults who need an Islamic financial provider.
Strategy #9: Motivate Millennial Word-of-Mouth
Use a marketing and service strategy that rewards young adult members by enlisting their natural tendency to connect and bring in new members through peer recommendations.
Strategy #10: Initiate Incentive Programs
Young adults are entering their major borrowing years and incentives need to respond to the needs of first-time borrowers as they get on their feet. Loans can be a negative experience for young adults due to lack of savings, access or not fully understanding the process due to lack of experience. Due to their frequent social connectedness, young adults tend to rely more on references from one another than on institutional reputations. By creating incentives that not only provide lower rates but also improve the entire borrowing experience, young adults are more likely to be long-term loyal members and spread the word about the service.
Strategy #11: Engage on Social Media, Don’t Just Post
As the high tide of digital communications around the world continually turns, young adults have the ability to make connections that previous generations could only dream of. As a result, credit unions have a distinct opportunity to be a part of young adults’ connections through social media. Credit unions around the world communicate with their members through multiple social media platforms. However, no matter the platform, just communicating is not enough — building a community of engaged, loyal members who will share their experience with others is key.
Strategy #12: Make Millennials Smarter About Money Matters
Bring financial education and advice to where young adults are—on social media, online and mobile devices. Social media offers virtual consulting and financial advice. In online forums, young adults post questions about financial matters.
On mobile devices, credit unions provide personal financial management (PFM) tools for members to see and manage all their financial accounts and transactions in one place. This online/mobile software details how members spend, save and manage debts, which helps credit unions advise in members’ best interests.
Download the Complete Strategy Guide
You can download the full 25-page report directly from the World Council of Credit Unions’ website. Look in the section for technical guides and you’ll find links to download a PDF version of “International Lessons for Young Adult Membership Growth” (instant access, no registration required). The report includes a number of real-world case studies illustrating how their Millennial member growth strategies have been deployed.