Many younger adult credit union members have yet to select a primary financial institution. As a result, their loyalty is up for grabs, and a credit union’s credit card offerings and values might be a powerful tool to securing it.
Competitive reward products are not necessarily the deciding factor for Gen Z and millennials. They prize digital experience and an organization’s values and community involvement higher than other generations. So much so that many leave financial institutions because of misaligned social values or disappointing experiences.
Inflation, student loan debt, and other factors put enormous pressure on Gen Z and millennial members. Credit unions that acknowledge these pain points and help young adult members manage their financial goals to meet life-stage milestones will stand a better chance of winning their loyalty.
Millennials (born between 1981 and 1996) and Gen Z (born between 1997 and 2012) hold an average of two credit cards, and their allegiance to card products is likely to shift based on opportunity and financial need. These cohorts are using credit cards as a tool in their efforts to combat challenges such as housing costs, day-to-day expenses, and pandemic consequences.
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- In the second quarter of 2022, credit card balances for younger people increased by 30%.
- More than 40% of Gen Z and millennials plan to apply for new credit or refinance existing credit within the next year.
- 42% of millennials would move their accounts to a different financial intuition that is more engaged with charitable giving, triple the rate of baby boomers.
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Despite the prevailing financial uncertainty — or perhaps because of it — credit unions have an enormous opportunity to attract and secure these younger adult members.
In an ever-changing economy, credit cards are a key tool for credit unions to connect with the younger generations as they grow into the life they desire. Products targeted to meet needs in milestones, such as college and home-buying, will help credit unions build stronger relationships with these generations of members.
Gen Z and millennials are also particularly interested in obtaining automated financial guidance or virtual assistants to help manage their finances. They want a high-touch, personalized experience that delivers financial education on affordability (especially with home-buying), long-term savings plans, and repayment modeling to help them better understand the implications of purchasing decisions.
Overall, these members want their credit union to clearly understand their financial pain points and offer solutions proactively. For example, 57% of millennials indicated they want to improve their credit score. Tailored experiences and credit card products will prevail over a generic menu of services.
Credit cards offer many of the conveniences and services Gen Z and millennial members want. However, connecting effectively with these cohorts, and winning their loyalty, involves a multi-layer approach.
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- Presenting a brand that authentically mirrors their social values.
- Offering a combination of high-touch and low-touch experiences.
- Integrating real-time and personalized services.
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Timely, competitive services, targeted incentives, and a demonstrable commitment to causes young adults care about are reasons Gen Z and millennial members will reward a credit union with their loyalty. By partnering with Elan, you obtain access to our expertise, tools, and resources that minimize your risks and maximize your efforts to build long-term relationships.
Download the full whitepaper for more trends and insights on Gen Z and millennials. To learn more about our outsourced credit card program, and how it can help you reach these young adult members, visit www.cupartnership.com.
Sources available in full whitepaper.