By 2045, Baby Boomers[1] and the Silent Generation will transfer $72 trillion to their heirs,[2] creating one of the biggest opportunities for credit unions over the next two decades. However, the generational gap in credit union membership presents a challenge that cannot be ignored. A survey by GOBankingRates featured in Nicole Spector’s February 2022 article, “Gen Z and Millennials Favor National and Online Banks – Survey Shows – What Does That Mean for the Future of Credit Unions,” highlights the gap. Among those surveyed, 60% of individuals ages 65 and older belong to a credit union, followed by 54% of individuals ages 55-64. The percentage for younger generations drops to 19% for ages 35-44 and 14% for ages 25-34.
For credit unions to make the most of this opportunity while overcoming this challenge, it’s not enough to simply gain insights into the characteristics, values, and preferences of the largest segments of the inheriting generations born between 1965 and 1996. Credit unions must truly position themselves as financial partners of choice while deepening consumer trust, leveraging local knowledge, and aligning solutions with consumer needs and preferences to create hyper-personalized digital experiences.
Estimated Cross-Generational Wealth Transferred by 2045:[1]
By 2045, Generation X stands to inherit nearly $30 trillion. Millennials are right behind them and expected to have more than $27 trillion in assets transferred to them in the coming decades.[1]
With insights from a Curql Collective fintech partner, Flybits, we will examine how harnessing contextual data and building trusted digital experiences can make all the difference in creating connections that endure across generations.
Savvy Strategies For Credit Unions
According to Flybits Chief Growth Officer Chris Pinkerton, “To remain competitive and relevant in the eyes of the overall inheritor population of more than 200 million people[1], the first order of business is for credit unions to invest in their IT infrastructure and digital banking capabilities.”
Some of the digital priorities required for credit unions to position themselves with the inheriting generations effectively are seamless omnichannel experiences, enhanced user experiences, and hyper-personal financial management. All three digital priorities rest on the institutional trust younger members hold with their local credit unions, a tremendous market differentiator when competing for cross-generational wealth transfer. “Failure to do so most likely means losing out to larger national banks or neo banks and not even being at the table to compete for the trillions of dollars younger individuals are set to inherit during the next 25 years,” he adds.
Credit unions hold a unique asset within the retail banking sector by being more mature in the trust lifecycle than digital first neo banks and large retail banking providers. By anchoring local trust within their communities, credit unions can leverage their member relationships to deliver highly personalized, participatory, and meaningful digital banking experiences. They achieve this through the use of contextual intelligence.
“Developing contextual intelligence requires that credit unions lead with data but keep the member at the center,” explains Pinkerton of Flybits. “By deepening trust and co-creating digital experiences, credit unions can create long-term value for members.”
Transforming Tomorrow
In addition to leveraging contextual intelligence, credit unions need to focus on the following as they position themselves for younger members and strengthen the trust in their digital offerings:
- Data Privacy and Security: The inheriting generations expect robust cybersecurity measures to protect their personal and financial information.
- Transparent and Fair Practices: Younger generations value financial institutions that are transparent about their fees, terms, and conditions; avoid hidden charges; and provide easily understandable disclosures.
- Authenticity and Accountability: The inheriting generations seek a banking relationship with authentic communication and prompt resolutions to their concerns.
Younger generations also highly value social causes and environmental sustainability. As with many of their purchasing decisions, they seek out commercial service providers that align with their values and actively contribute to the betterment of people and the planet. In this light, credit unions have another powerful advantage. Their decades of local presence and commitment to community development position them as a responsible, trusted local institution. By promoting sustainable and socially responsible practices, credit unions have the opportunity to demonstrate their local impact to attract and retain the inheriting generations as members.
By embracing technological advancements, co-creating offerings, and emphasizing social and environmental responsibility, credit unions can adapt to the changing banking landscape, foster loyalty among the inheriting generations, and secure their role as trusted pillars within local communities.
Connect with Curql to learn more about how your credit union can benefit from contextual intelligence from a partner like Flybits and other emerging fintech supporting a dynamic digital offering.
[1] https://www.pewresearch.org/short-reads/2019/01/17/where-millennials-end-and-generation-z-begins/
[2] https://insurancenewsnet.com/innarticle/gen-x-make-it-gen-84t-set-to-funnel-to-younger-set
[3] https://insurancenewsnet.com/innarticle/gen-x-make-it-gen-84t-set-to-funnel-to-younger-set
[5] 72 million Millennials and 67 million Gen Z in 2019