95% of CUs Say Attracting More Gen Z Members Is a Priority
As Generation Z comes into its own as a demographic sector to be reckoned with, financial institutions (FIs) of all stripes are eager to win their business. Credit unions (CUs) are especially enthusiastic: 95% of CUs tell PYMNTS intelligence they are now focused on boosting Gen Z memberships.
Why? As detailed in “How Credit Union Innovation Can Drive Gen Z Engagement,” a PYMNTS Intelligence report created in collaboration with Velera (formerly PSCU/Co-op Solutions), a growing percentage of Gen Z consumers are on the precipice of transitioning into higher-paying jobs and more rewarding career paths, meaning they will likely soon be spending more on big-ticket purchases, including automobiles and homes.
In fact, Gen Z consumers are projected to increase their spending by as much as six times by 2030. But it’s not only the potential for increased spending that has captured the attention of CU executives. As their incomes rise, CUs recognize that Gen Z consumers will likely need more sophisticated financial products and services.
These are only a few of the reasons CUs are wooing Gen Z consumers. According to exclusive data not included in our final report, CUs aim to convince these potential members to join their ranks for several other reasons.
As the accompanying figure illustrates, when asked why they are pursuing potential Gen Z members, 68% of CUs say the demographic represents a growing market, with 38% saying that is their most important reason. One-third of CUs say their pursuit is because Gen Z consumers are so connected, meaning they believe Gen Z might draw in other members. Thirty-one percent, meanwhile, say the values of Gen Z consumers align nicely with the overall mission of credit unions.
Interestingly, 37% of CUs believe that Gen Z consumers will make good members because they perceive them to possess a high degree of brand loyalty; however, PYMNTS Intelligence data suggests otherwise.
As our report shows, Gen Z consumers are somewhat fickle. Four in 10 Gen Z CU members we surveyed told us they switched primary FIs in the past year. (In contrast, only 4 in 100 baby boomers and seniors made similar switches during that period of time.)
Why are Generation Z customers so hard to please? Innovation – or lack thereof –appears to drive Gen Z to change FIs. Data shows Gen Z members are 2.5 times more likely than baby boomers and seniors to say they would switch FIs that fail to innovate.
The product innovations CU members want the most include Zelle and young adult debit cards, while credit card apps, budgeting tools and QR codes are also on their lists of desirable features.
However, even though many CUs recognize the importance of offering innovative features, only a small percentage of those we surveyed have plans to deliver them anytime soon.
Gen Z members are looking for tools and features that are absent from many of the CU product roadmaps we surveyed, yet nine in 10 CUs say they are focused on winning over this consumer segment. If CUs hope to compete with traditional FIs — who also have their eyes on Gen Z customers — they may need to quickly rethink those roadmaps and give Gen Z members a reason to remain loyal to their brands.
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