America Gets a Makeover

Demographic shifts are transforming the U.S., requiring CUs to connect with a more diverse populace.

January 26, 2012

While the U.S. established its reputation as a melting pot centuries ago, the nation is more diverse today than ever before. And with this mélange emerges credit unions’ latest challenge: reaching and engaging a more diverse populace.

America Gets a Makeover


  • Offer products and services that meet the needs
    of minorities  , youth, and wome
  • Target your marketing efforts to your local demographics.
  • Board focus: Make it a strategic goal to replace baby boomers’ business as they retire

The most significant demographic trends influencing credit unions:

  • Baby boomers retire. The U.S. population is aging, and the first boomers reached their 65th birthdays in 2011;
  • Generations X and Y move into adulthood. These folks represent credit unions’ “peak” and “future” borrowers, respectively, and few of them know much about credit unions;
  • Increasing numbers of Hispanics, largely due to a higher average birth rate; and
  • The changing American family. Women are gaining financial clout, and the number of unmarried couples, same-sex couples, and multigenerational households are growing.

Appeal to youth

The largest segment of the U.S. population is made up of baby boomers—those born between 1946 and 1964. They own more than 70% of U.S. consumer assets, according to CUNA’s 2011-2012 Survey of Potential Members.

Even though boomers continue to borrow, they’ve moved out of their peak borrowing years (ages 25 to 44). Some have retired, but many have postponed their retirement plans and are trying to mend their recession-ravaged 401(k)s.

As boomers make the transition to retirement or preretirement, credit unions must offer relevant products and services to help them. It’s also important for credit unions to recruit younger members to replace lost loan demand.

Enter Gen X (born between 1965 and 1980) and Gen Y (born between 1981 and 2000). Credit unions must capture a significant share of these consumers’ business to ensure future loan growth.

Gen Y’s earnings are expected to exceed boomers’ income by about $500 billion within eight years, according to CUNA Mutual Group. Their service needs and expectations are different than those of their parents, so credit unions will need to stay in tune with their younger members to remain relevant.

The challenge of increasing awareness among younger consumers is significant. Nearly 70% of nonmembers between ages 18 and 24 are “not at all familiar” with credit unions, according to CUNA’s 2011-2012 Survey of Potential Members. But it’s not because they’re disinterested.

“One of the biggest misconceptions about Gen Yers is that they don’t care about their finances,” says Tia Anderson, Gen Y engagement specialist at $1.1 billion asset Public Service Credit Union in Denver. “Gen Yers have grown up in a failing economy and some have watched their parents make financial mistakes. I think now, more than ever, the younger generation realizes the importance of financial responsibility.”

Credit unions should ride the wave of antibank sentiment and explain their not-for-profit business model to younger consumers. Once members of Gen X and Gen Y understand the fundamental differences between banks and credit unions, they’re far more likely to choose credit unions.

Next: Knowledge & trust

Knowledge & trust

Working with minority communities is another way to attract new members and lower the average age of membership. The Hispanic population, on average, is more than 10 years younger than non-Hispanics, according to Advertising Age. By 2020, 40% of the U.S. population age 30 or younger will be nonwhite.

It’s estimated that 40% to 55% of Hispanic Americans don’t have formal financial institution relationships, according to the Selig Center for Economic Growth.

Hispanics are just beginning to discover and use credit unions, says Adelina Gomez, business development specialist at $119 million asset Beacon Federal Credit Union, La Porte, Texas. It hasn’t been easy, however, to gain their business, she says.

“Most don’t know what a credit union is,” says Gomez. “It’s also difficult to get them to trust credit unions. But we’re starting to gain that trust and their friends’ trust.”

Hispanic households tend to be larger than white households, so when one minority member joins a credit union, several family members often follow suit.

Another ethnic group credit unions should be aware of is the Asian-American demographic. Today, 14.5 million Asians live in the U.S., according to the 2010 U.S. Census. This group has a higher percentage of young adults between ages 20 and 39 than the overall U.S. population, the Census reports.

Asian-Americans are unique in that they have higher average household income and education levels than any other ethnic group in the U.S., says Erick Orellana, CEO at $68.5 million asset Nikkei Credit Union, Gardena, Calif.

Plus, Asian households are more likely to include married couples and children than white, non-Hispanic households (35% versus 21%), according to the 2010 Census.

They’re also more likely than whites to live in multigenerational households. Capturing business from the Asian-American community might help credit unions gain their relatives’ business, too.

About 95% of Nikkei’s members are Japanese-American. Attracting new members can be difficult, Orellana says, because Japanese-Americans live in less centralized areas than other Asian-Americans and are more likely to marry outside their ethnicity.

It’s important to be culturally sensitive when marketing to ethnic groups, he says. “When you market or present a product or service, you have to be aware of certain cultural sensitivities you might otherwise overlook if you’re not part of that ethnic group.”

Still, Asian-American populations are dense only in certain areas. Three-quarters (76%) of this group’s population growth between 2000 and 2010 occurred in the South or West regions of the U.S.

Changing circumstances

In addition to ethnic changes, the U.S. is undergoing dramatic social changes.

The traditional family largely is a thing of the past. Credit unions need to adapt their products, services, and marketing materials to stay current with social changes.

These changes include:

  • Fewer traditional households. Only 48% of U.S. households were headed by a married man and woman in 2010, compared with 78% in 1950, the U.S. Census Bureau reports. And only 20% of U.S. households contain married couples with children, down from 43% in 1950.

Homosexuality is increasingly accepted in the U.S. Six states and the District of Columbia now allow same-sex marriages, and several others have legalized civil unions or domestic partnerships.

And more mothers are raising their children alone. About 40% of children now are born to single mothers, according to The Wall Street Journal.
Men and women are marrying later or not at all. The average age of marriage for men is 28 compared with 26 for women, according to the Pew Research Center.

  • More multigenerational households. Job loss and home foreclosures have led many adults to move in with their parents.

In 2009, the recession caused about 12.5% of consumers ages 22 to 29 to move back into their parents’ homes after living on their own. And 37% of those ages 18 to 29 are either unemployed or out of the work force—the highest percentage among this age group in almost 40 years, according to the Pew Research Center.

Also creating more multigenerational households was the dramatic growth in minority households. Asians (25%), African-Americans (23%), and Hispanics (22%) are significantly more likely to live in multigenerational household than whites (13%), Pew reports.

  • The advancement of women. Despite a setback from the recession, women make up 49% of the work force and 59% of low-wage workers, according to The New York Times. Families are increasingly dependent on women for their well-being. Today, 40% of mothers are the primary breadwinners in their households.

Women also own 7.7 million of the nation’s 27 million small businesses—up 20% from 2002, Forbes reports. Women-owned businesses are expected to create one-third of new jobs by 2018.

Women will likely continue on their forward trajectory in the work force thanks to emerging technology, says an Intuit report. New developments in mobile and Internet technologies will allow women to run businesses remotely.

Serving the changing American landscape will require credit unions to be technologically agile and adept in the use of social media platforms.

Next: America’s changing landscape

America’s changing landscape

These demographic shifts are changing the face of America. As white consumers age, younger minorities are establishing themselves as mainstays in society.

Credit unions must identify local demographic trends and determine how to meet the needs of current and future members.

Doing so will help secure your credit union’s future. Reaching out to new groups with culturally sensitive messages can ensure future loan demand and a vibrant field of membership for years to come.

“It’s just a matter of getting the word out there,” Gomez says.

LIBBY VERTZ is an intern in CUNA’s business-to-business publishing department. Contact her at 608-231-4096.

 'Lost Generation' Faces New Obstacles

While attracting minorities can lower the average age of your membership, credit unions must then meet their unique needs. Generation Y (those born between 1981 and 2000) faces a multitude of obstacles baby boomers never faced, earning them what Business Week calls “lost generation” status.

According to Demos, these obstacles include:

  • Poor job prospects. The jobless rate among 18- to 24-year-olds (17.3%) is roughly double the nation’s average. The unemployment picture is especially grim for young African-American and Latino men without college degrees.
  • High levels of student debt. The average public school tuition is almost three times higher today than in 1980. Two-thirds of students graduate with student loan debt, averaging $24,842. And student default rates have increased 31% over the past two years.
  • High cost of living. About 41.3% of consumers ages 25 to 34 who don’t live with their parents spend more than 30% of their income on rent.
  • A lack of insurance. In the past decade, the number of employees ages 18 to 24 who were covered by employer-sponsored insurance plans declined 12.8%. The rate of decline was 8.5% for those ages 25 to 34.
  • Poor financial security. Most young adults call their personal financial situations “fair” or “poor.” Only one of 16 rates their financial situation “excellent.”

Credit unions can reach young adults by emphasizing their strengths. When choosing a primary financial institution, Gen Yers most value financial stability, safety and soundness, reasonable charges and fees, and trust in the institution to do what’s best for them, according to CUNA’s 2011-2012 Survey of Potential Members.

“They want to know they won’t get charged for accessing their money and they want the security of knowing their money is in a good place,” says Tia Anderson, Gen Y engagement specialist at $1.1 billion asset Public Service Credit Union in Denver. “Gen Yers want to do banking on their terms.”

Younger consumers also value convenience, she adds, which increasingly involves access to mobile banking, e-statements, and 24/7 access to accounts.

“They want to be able to get answers immediately,” Anderson says, “and get on with their lives.”























1. 2011-2012 Survey of Potential Members
2. 2011-2012 National Member Survey