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.
The most significant demographic trends influencing credit unions:
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.
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