Not Your Father’s Member – How to Best Serve Today’s Members08.12.2019
The financial services landscape continues to evolve at a rapid pace, and members’ behaviors and preferences are changing along with it. Credit unions must be able to truly know their members and their financial habits to best serve them through all stages of life. In today’s highly competitive environment, credit unions that can consistently provide personalized and seamless experiences will strengthen member relationships, support their communities and positively impact their own bottom lines.
Studying generational characteristics and trends can help credit unions better understand their members’ mindsets. The current economic, political and technological climate have impacted members’ relationships with their finances. For example, Millennials and Gen Z face a higher cost of living and greater student loan debt than their Gen X and Baby Boomer counterparts did at the same age. As a result, they are budgeting and spending differently than their parents and grandparents before them.
Millennials are also waiting longer in life to purchase homes. According to industry data analyzed by Freddie Mac, reported by The Wall Street Journal, median home prices rose 21% after adjusting for inflation from the end of 2000 to the end of 2017. At the same time, inventory has dropped. These factors have made the home buying process more difficult and stressful, so Millennials are likely to welcome advice from their trusted financial institutions. Credit unions can help these members learn about and navigate mortgages, interest rates and pre-qualification requirements which can, in turn, establish greater member loyalty.
As Gen Z grows older and looks to join the workforce, this group is likely to seek more comprehensive financial management solutions than previous generations. According to a study by OnlineSchoolCenter.com, 41% of Gen Zers plan to start their own business. If credit unions provide value and build trust with Gen Z early, these young entrepreneurs are more likely to turn to their credit unions for loans and small business banking services instead of pursuing relationships with alternative lenders or third parties. Helping small business owners grow and thrive in their communities is a true embodiment of the credit union ‘people helping people’ mission and can positively contribute to credit unions’ bottom lines.
Baby Boomers represent another area of opportunity for credit unions. Thousands of Boomers are retiring by the day and attempting to manage their finances post-career. The U.S. Census Bureau data shows that the current average retirement age in the United States is around 63 and the average retirement length is approximately 18 years. Many of these Boomers have never gone without a steady paycheck or regular income for even a fraction of this length of time, so credit unions should be offering resources to help this group with budgeting and financial wellness, starting well before their last day of work.
While understanding macro generational trends provides valuable insights into member behavior, credit unions should be careful about making assumptions about individual members’ preferences based on their ages alone. For example, just because a member is a Boomer doesn’t mean that he’s not digitally savvy or that she doesn’t want an intuitive digital experience. Conversely, just because a member is a Millennial or Gen Zer doesn’t mean they don’t want to visit the branch and speak face-to-face with a credit union employee for certain situations.
The data element at an individual level is another key to optimizing member service. Regardless of what channels members are leveraging, they will expect all interactions with their credit union to be efficient, seamless and personal. By mining and analyzing relevant data, credit unions will be better positioned to provide customized offerings at appropriate times to cater to members’ specific needs. For example, proactively sharing pre-approval paperwork with a member searching for a home or sending information around auto loan rates to members that are in the market for a new vehicle are ways to strategically leverage data for better service. This requires both modern, flexible technology and a personal connection.
With the intensifying competitive landscape, it’s more important than ever for credit unions to facilitate an elevated experience in all aspects of members’ financial lives. By observing generational trends and leveraging individual member data to provide personalized offerings and exceptional service, credit unions can better anticipate today’s members’ needs and support them through every season of life.
Larry Nichols is president and CEO of Member Driven Technologies (MDT), a CUSO that provides technology solutions to credit unions.