Recently, Jessica Gamache, Filene’s new Head of Research, and I presented a breakout session at the EDGE Conference in Nashville.
Here’s what we talked about!
Credit unions have been unable to connect with younger generations of Americans as well as they did with their parents and grandparents. Our members are increasingly older than the average American.
And yet demographics is not destiny. Credit unions can reverse this trend.
At Filene, we are tacking this issue in two main directions: a top-down approach of insights into generational trends from our newest Center of Excellence The Next Generation of Member of Growth and a bottom-up approach of insights into individual member behavior from our new Member Voice program.
Between these two approaches, we hope to identify strategic opportunities, develop innovative products and services, and create messaging that resonates with members.
Leveraging Generational Trends
Let’s start with setting our definitions. We’re following the definitions from Pew Research Center (seen below). While generations are necessarily broad and do not capture large degrees of differences within age groups, they can serve as useful starting points.
Think particularly of large-scale economic events. The Great Depression had an immense impact on the savings habits of the generations who lived through it.
Well, the last five years have seen enough financial upheaval to shake any generation’s confidence. And for many Gen Zs entering financial adulthood, that is their only experience:
And while Millennials have not seen the same financial chaos as Gen Z, most Millennials came of financial age in the aftermath of the Great Recession. The basic assumptions of long-term wealth that Baby Boomers and Gen X grew up with have been shattered for the younger generations.
In addition, Millennials and Gen Z have been flooded with financial options and opinions, giving them guidance. As a result, the two generations are just as likely to seek out advice from a “finfluencer” as they are from the website of a financial institution.
As younger generations attempt to control their financial futures, we find that multiple income sources is the rule, not the exception.
These trends are an opportunity for credit unions to rethink how they serve their members:
How can credit unions support young entrepreneurs?
When young Americans take on side hustles, they often become entrepreneurs overnight, compounding their lacking personal finance knowledge with lacking business finance knowledge.
At the same time, both younger Americans and small business owners are underrepresented as credit union members.
Two possible solutions:
- Small Business Bootcamp — Young entrepreneurs need advice and curation to guide their financial future. A specialized series of trainings for young entrepreneurs and side hustlers can help individuals learn and curate the right set of financial products and services for their knowledge level and needs.
- Local Finfluencer Network — Credit unions and local finfluencers have mutually beneficial needs. Credit unions need to show up where future members are looking and listening. They also want people to get sound financial information. Finfluencers need content to share and support with their business.
Homing in on individual member needs and motivations
Millennial and Gen Z members have different needs and motivations than older members. For example, when we surveyed credit union members in our Member Voice research last year, we learned that younger members are far more likely to struggle to cover all or most of their monthly expenses than older members, and far less likely to have money left over after paying expenses.
Their financial goals differed as well. While Millennial goals fairly well matched older generations’, Gen Zs are far more likely to want to buy a home and build or improve their credit score.
Filene’s Member Voice program identified five types of credit union members, based on needs, attitudes and motivations:
When we break down these Member Voice segments by generation, we discover a couple of fascinating observations. First and not surprising, Gen Z are far more likely to be Overburdened Bystanders, with Millennials also having more of this segment than older generations. This aligns with what the top-down generational research tells us: stressed and cynical.
Second, Millennials are more likely to be Solution-Oriented Shoppers than other generations. This aligns with the desire for expert guidance.
Third, both Millennials and Gen Z are less likely to be Comfortable Community-Seekers, but in both cases, the Community-Seekers still outnumber the Enterprising Experts.
The takeaway is that while top-down research identifies big trends like entrepreneurship, bottom-up approaches like Member Voice show us that younger members can be drastically different from one another in how they think about banking and that using too broad a brush will miss those differences.
So let’s put the two approaches together: Research tells us that credit unions have opportunities to deepen relationships with younger Millennials and Gen Z through embracing entrepreneurs. Member voice segmentation can help credit unions reach out to those entrepreneurs in language that will set them apart from other financial institutions.
By looking at national research and member data, we can find an opportunity to connect with a population that needs credit union solutions and keep us relevant for generations to come.
- See how to become an industry leader by sponsoring Filene's Center for The Next Generation of Member Growth!
- Learn more about how to activate insights into your members' needs, attitudes, and behaviors with Member Voice!
— CV
The Next Generation of Member Growth
