Digital Innovation Opens Doors for Credit Unions to Broaden Membership

Credit unions (CUs) face a critical juncture that threatens their long-term viability.

Baby boomers dominate CU membership, making up 39% compared to 31% for millennials and Generation Z combined, and the average CU member age stands at 53 — older than the U.S. average of 38.5. This puts CUs at risk of losing ground to other financial institutions.

To gain younger members, credit unions must focus on digital and mobile offerings, according to the PYMNTS Intelligence report “From Aging to Z: How CUs Can Capture Younger Generations,” a collaboration with Velera.

Attracting younger members is not merely about growth; it is vital for survival and maintaining relevance in an evolving financial landscape. A primary reason for this generational gap is that many millennial and Gen Z consumers are gravitating toward digital-first banks. For credit unions to close this gap and secure their future, prioritizing sophisticated mobile and digital products and services is not just an option, but a fundamental necessity.

Gen Z lags behind older consumers in credit union engagement. A key obstacle is a lack of familiarity with credit unions as a banking option. The report found that 30% of Gen Z consumers are unaware that CU membership is even an option, and only 20% report having had some contact with a CU, compared to 33% of baby boomers. Gen Z consumers are 53% more likely than baby boomers to cite this lack of familiarity as a reason for not joining.

Additionally, more than half of Gen Z and millennial consumers rank modern digital tools as their top requirement when choosing a financial institution, and 8 in 10 say digital banking is central to their experience. Their frequent use of peer-to-peer (P2P) payments, budgeting tools and credit monitoring underscores their high expectations for 24/7 digital access. They specifically demand features like digital payments, seamless authentication and app-based credit card management. The report found that 21% of Gen Z consumers want mobile card management apps from their financial institutions, more than any other innovation.

However, many credit unions still lag behind banks in offering seamless mobile experiences and simplified onboarding. This digital gap is a factor, as younger consumers associate value with mobile areas where banks and FinTech companies already excel. The report found that 49% of Gen Z credit union members think their CU offers strong value, compared to 60% of those at big banks.

For credit unions to stay competitive and relevant, generational outreach must go hand in hand with digital innovation to meet younger consumers’ expectations. While digital-first strategies are essential, they may not be sufficient to convert this generation without meeting them in the channels they frequent. CUs must modernize digital offerings, prioritizing competitive digital innovation that aligns with or surpasses banks and FinTech competitors. This includes essential features like mobile functionality, biometric authentication and spending controls.

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