Credit unions across the nation are witnessing an increasing dilemma as nearly 40% of their Gen Z members contemplate switching to traditional banks. This trend marks a crucial time for credit unions striving to retain relevance among younger members. Addressing this issue is vital for maintaining competitiveness in the financial landscape. With a significant number of members contemplating a switch, credit unions must reevaluate their strategies to curb this potential shift and sustain membership.
Reports from the past have highlighted the traditional appeal of credit unions, such as personalized services and community involvement. However, these benefits seem less appealing in the current context, where technological prowess is becoming more critical. The evolving preferences of Gen Z toward seamless digital experiences and comprehensive financial tools pose a formidable challenge for credit unions to address.
Why Are Gen Z Members Dissatisfied?
A major reason driving Gen Z members towards traditional banks is the desire for superior digital offerings. Credit unions lag behind in providing extensive digital capabilities, user-friendly access, and a wide range of services. These factors are pushing younger members to seek institutions better aligned with their digital needs. Improved digital engagement could be a turning point for credit unions in retaining this tech-savvy generation.
Will SMBs Also Transition to Banks?
Yes, small and medium-sized businesses (SMBs) exhibit similar sentiments. They express a growing interest in budgeting and card management tools, which are lacking in many credit unions. Reports reveal that former SMB credit union members are 131% more likely to demand these tools, emphasizing the need for financial institutions to upgrade their digital management offerings.
The push for smoother onboarding processes is not confined to individual members. Both Gen Z and SMBs highlight the importance of efficient digital onboarding, indicating that it’s an essential factor in their preference for banks over credit unions. As the demand for digital onboarding rises, credit unions must take decisive steps to improve their digital features.
“The Real Story Behind Member Churn,” a collaboration between PYMNTS Intelligence and Velera, surveyed over 15,700 consumers and nearly 2,000 SMBs to identify the root causes of credit union member attrition.
Looking forward, credit unions need to focus on enhancing their technological offerings and aligning with the digital expectations of modern consumers. Deepening engagement through digital innovation could be a sustainable way to build lasting relationships with members. By addressing these digital gaps, credit unions have the opportunity to reclaim their position as preferred financial partners for the emerging generations.
