How Credit Unions Can Win the Millennial Market

The Center for Financial Services Innovation (CFSI) describes itself as “the authority on consumer financial health, leading a network of committed financial services innovators to build better consumer products and practices.” The organization does a lot of research and consulting — and idea generation — in the financial services arena, especially as it applies to the underserved.

CFSI agreed to let me analyze the results of a consumer survey it recently conducted to focus specifically on credit union members, and how the financial health — and more generally, the financial lives — of credit union members differed from other consumers, and what that all meant to credit unions.

After digging into the data, it was clear to me that the real story to tell was about Millennials, not the general population. Cornerstone Advisors (where I work) and CFSI have jointly published a report titled Competing on Financial Health: How Credit Unions Can Win the Gen Y Market.

If your first reaction is either “Ugh, not another study about Millennials,” or “Hey, wait a second, Shevlin… weren’t you the guy who called for a moratorium on Gen Y research?” I feel your pain. Suck it up, and let’s move on.

Key Findings

1) Gen Y credit union adoption lags older generations. Just 27% of the nearly 79.5 million Millennials in the US are credit union members, in contrast to nearly half of adults over the age of 36. When asked why they aren’t members, many Millennials admitted to not knowing much about credit unions. Considering older generations probably didn’t know much about credit unions when they were younger, and adoption rates are higher for those older consumers, you might conclude that low membership rates among Millennials will fix itself over time. You’re probably right. If you (and your credit union) are willing to wait that long for that to happen, no need to read the new report. Your call.

2) Millennials in the market for financial products equally prefer a big bank as they do a community bank or credit union. Please stop listening to the uninformed pundits who say young consumers hate big banks. That’s so 2008. In its latest survey, JD Power found that Millennials’ satisfaction with big banks now exceeds that of regional and mid-sized banks.

3) Gen Y credit union members are bigger users of credit cards than Gen Y non-members. From Cornerstone Advisors’ Credit Union Performance Report, we know that, at the median, credit unions have put their credit cards in the hands of just one in five members. And that’s members overall — the percentage of Millennials may be much lower. This points to the cross-sales opportunity that credit unions have.

4) Gen Y credit union members are financially healthier that Gen Y non-members. CFSI’s prior research categorized consumers by their financial health based on attitudes and behaviors. Are credit unions the cause of superior financial health among their members? Can’t say that. But we believe that consumers who are healthier financially are more engaged in managing their financial lives, and therefore make more informed decisions about who to do business with, and therefore, choose to do business with credit unions. Leveraging this can be a point of differentiation for credit unions.

What Should Credit Unions Do to Win Millennials?

1) Create a new payments experience. With — at best — one in five members holding a credit union-issued credit card, credit unions have a cross-sales opportunity with Gen Y members. Articles from and, however, suggest that credit unions’ card rewards programs under-perform the market. So much for that cross-sell opportunity — unless credit unions create a new payments and card management experience. Gen Y credit union members want a credit card with the features and benefits of a debit card.

2) Provide life stage mobile apps. Why are credit unions running silly TV commercials (during shows *I* watch) with semi-literate Millennials saying they couldn’t get a loan anywhere but XYZ Credit Union?

Fact: Credit union members, on average, have higher household income, more stashed in retirement funds, and an equal amount of liquid funds, as non-members. And that’s true for Gen Y credit union members, as well. More Gen Y credit union members have a mortgage than Gen Y non-members. The key to winning their business isn’t appealing to their desperation to get a loan — it’s providing tools to help them manage the home buying and mortgage selection/application process.

Another fact: One in four Gen Y credit union members got married in the past five years at an average cost exceeding $26,000.  What are you doing to help them — and Gen Y non-members who plan to get married — manage their wedding expenses? Geezeo recently released a wedding planning app that can be white-labeled by credit unions. And with a quarter of Gen Y credit union members getting married, it shouldn’t be surprising that nearly a quarter of Gen Y members had a baby in the past five years. Check the Apple iTunes store for baby planning apps.

3) Deploy member referral programs. If you’re looking to grow your Gen Y membership, and you don’t have a member referral program, I think there might be something wrong with you. Check out the section of the report on referral programs to see why this is so important.

4) Compete on financial health. You know the story of David and Goliath, right? How the little guy beat the big guy? The real lesson of that story is that, in order to slay the big guy, the little guy changed the rules of the game. That’s what credit unions (and, for that matter, community banks looking to grow their Gen Y customer base) need to do. Focusing on measuring and competing on financial health is the way for credit unions to change the nature of marketing and competition in banking.

For a copy of Competing on Financial Health: How Credit Unions can Win the Gen Y Market, click here.

Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Check out more of his ideas and research on Cornerstone's Insight Vault. And don't forget to follow him on Twitter at @rshevlin.

This article was originally published on February 9, 2016. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.


  1. Greg Shaver says:


    I downloaded your report and it was full of great information and analysis. I really like the concept of life stage mobile apps.

    For years CU’s have claimed they were better for their member’s financial health but could never prove that it was because of what they offered their members. I think now too many CU’s have become reliant on NSF/Courtesy pay fee income to provide the net income they need, at the expense of their members. A new business model is necessary for our movement to continue as margins erode and technology becomes a major factor in the younger generations decision process. We must embrace the change that is occurring and create value for our members through differentiation, or we are doomed to die a slow death. I see many CU’s out there adapting to the current marketplace, but I see many more CU’s slow to react.

    Thanks for the research, I plan to dig deeper and try to find a mix that works for us.

  2. Question: Has the overall Credit Union difference, advantage, or whatever you want to call it, been usurped by:

    – BankMobile: They have eliminated ALL fees
    – Banks and credit unions who adopt FinTech from the FinTech vendors who serve banks/credit unions: Geezeo has launched life stage apps in addition to its other programs
    – Credit Unions who contract with the Young & Free program from Currency Marketing
    – The Neo-Banks
    – The savings focused FinTech apps like Qapital and Hip Money

    Wat are your thoughts?

  3. Greg: Thanks for the kind words–greatly appreciated. Could’t agree more about the need for a new business model–specficially, finding new sources of revenue that consumers actually see value in.

    David: My answer to your questions is no–I don’t believe that any of the things mentioned have “usurped” the CU “advantage.” I do believe, however, that some of the sources mentioned are chipping away at that advantage.

    Savings-focused fintech apps are little more than nice features that appeal to limited segments of consumers. To succeed, they need to integrate into broader banking platforms and solutions–like what CUs need to offer.

    Some neo-banks have done interesting things with PFM-like tools, but don’t appear to address the borrowing needs that so many consumers have–and that CUs are positioned to provide.

    I don’t believe BankMobile is really anything other than a traditional bank pulling the wool over the banking media’s eyes.

  4. We talk about how huge a referral program is for Millennials too Ron…its an audience custom built for that kind of product. You have research behind your opinion? Might be interested in chatting some more!

  5. Ron,

    the financial tools available and currently being developed are more than chipping away at the ole’ Credit Union advantage. Who says these products need to do everything? They do not. The FinTech savings tools do a great job helping people save. The average credit union doesn’t? The CU may tell you what to do via financial education but you have to do everything manual. The FinTech savings apps just do it. Does it matter that they do not lend? No! Do neo-banks lend money? No! Moven has preferred partners for lending. In the traditional cu and banking world, many consumers get a loan from one bank or CU while their checking and savings accounts are at more that one bank too. Millenials have many great apps to choose from that will give them the financial products and services that they need. This grouping of FinTech apps is chipping away at what CUs used to excel at. Would it be great if a person could get all that from one source? Yes. Sadly, that one source is not the industry norm, it is the exception. Think USAA as an exception.

  6. Whoa…hold on a second here. We can’t have this “discussion” without first having a clearer definition of what the credit union “advantage” is and isn’t.

    I don’t disagree with anything you said in your comment, yet you seem to be disagreeing with my assertion that none of the things you listed in your earlier comments were usurping the credit union “advantage.”

    The advantage that I was thinking of was the advantage of consumer trust.

    Now, many credit unions may believe that their “advantage” is great service and great people. But as you (David) and I know — as well as many other community bankers — there is no shortage of community banks that provide as good (or better) service and have as great (or better) people than any credit union.

    The credit union advantage isn’t tangible — it’s intangible. None of the things you listed in your earlier about (BankMobile, neo-banks, savings apps) are cutting into consumers’ perceptions of credit unions as a trusted provider.

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