Banks Killing Credit Unions in Tech Tug of War for Gen Y Consumers

Millennials overlook their philosophical principles in favor of more sophisticated technology when selecting a financial institution.

Research based on thousands of millennial social profiles shows credit unions miss opportunities to recruit millennials because they put technology first ahead of any other priorities.

Other millennial misses for credit unions? This generation seeks financial advice on forums — not Facebook. Credit unions’ content marketing and social strategies are off-target with millennials’ digital behavior.

The bottom line, according to the study by Digital Fieldwork: credit unions are failing to engage millennials online. This is one of the main reasons why millennials are the least likely demographic to join credit union members, despite sharing common philosophical values.

The report’s findings debunk a commonly held belief that millennials’ consumer purchasing decisions are driven by their values. In financial services, digital convenience and pragmatism prevails over loyalty or belief-based decisions. This is primarily due to a lack of awareness about credit unions and a perception that they are not up on the latest technology.

“Millennials are very pragmatic and have high expectations around technology,” said Laurie Paleczny, co-founder of Digital Fieldwork, noting that the research examined thousands of online data points, including publicly available profiles on Facebook, Twitter and other social networks. “If convenience and functionality aren’t there, they’ll do business with banks even if they do not always respect their values.”

The study offers other important insights for financial marketers:

  • Money mobilized. Millennials want to do business on mobile devices and credit unions have opportunity to partner and integrate with popular mobile personal finance apps.
  • Positively confused. Online attitudes are highly negative toward banks and generally positive toward credit unions, but confusion persists about their differences.
  • Strangers, not friends. Millennials do not seek or desire financial advice on Facebook, and credit unions are more successful with member engagement through posts about local news, sports teams, charity causes or even financial literacy programs.
  • Giving Twitter the business. The majority of credit union followers on Twitter are industry stakeholders — not customers — which suggests it is not an effective way to court millennials.
  • Prefer to remain anonymous. Blogs and forums are far more influential with millennials seeking financial advice than Facebook or Twitter.

“Altimeter Group noted in their recent report on content marketing software that 67% of marketers identify audience identification and targeting as a top need, yet only 25% of credit unions were investing in this area,” said Paleczny. “It’s a big miss. Our research shows how credit union marketing tactics are mismatched to the behavior of a key audience, which reflects a common issue in marketing today.”

“Financial services providers in particular need to go beyond demographics to really understand their audience’s digital behavior,” added Paleczny, a former financial services executive. “It’s critical for them to learn how to participate in online channels and platforms where millennials are having financial discussions.”

The 53-page report, “Strangers in the Night: Credit Unions, Millennials and Digital Behavior,” is based on research conducted between January and April 2014 and provides a roadmap for financial services marketers to more effectively reach and engage millennials online. It was released on the Digital Fieldwork website on as part of an annual subscription.

According to a separate study from CO-OP Financial Services:

  • 81% of Gen Y credit unions members said that their institution provides an “outstanding customer experience” compared to 59% of bank customers responding so for their banks.
  • A total of 96% of Gen Y credit union members said they were very satisfied or somewhat satisfied with their credit union, while the figure was 88% among bank customers.
  • Gen Y credit union members are much stronger advocates for their financial institution compared to bank customers. The survey found a “net promoter score” (likely to recommend) of 38% among credit union members, with bank customers registering at only 16%.

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