If your credit union hopes to grow in the next few years, target millennials. These younger individuals are distrustful of large financial institutions, and have reached an age where loans are a necessary part of many life events. Large banks are ill-suited to court these young customers, who are likely to carry a significant student debt burden. This represents a huge opportunity for credit unions, as strong member services and a willingness to work with less-qualified borrowers could appeal to millennials who are disenchanted with traditional financial institutions.
A disenchanted generation
Millennials hit working age in the U.S. around the same time that the financial crisis consumed the global economy. The high unemployment rates that grew out of that recession have only recently begun to subside, and it's clear that many millennials remain wary of the economy. In a survey conducted by VantageScore, a credit scoring organization, almost half of the millennial respondents reported delaying home purchases or moving out of the house because of concerns brought on by the financial crisis.
"An opportunity to provide a positive financial management experience."
It's likely this wariness regarding additional debt is related to concerns stemming from student loans many millennials are struggling to repay. A Pew Research poll found 43 percent of household heads under 25 carried some amount of student loan debt. For many young people, this debt has fostered a disappointment with the banking system. Credit unions have an opportunity to provide a positive financial management experience for these individuals.
Differentiation for increased membership
It's clear that millennials want more engagement than their current banks are offering. In a survey conducted by Viacom subsidiary Scratch, 33 percent of millennials said they would be willing to change banks in the next three months. The study also discovered that over half of millennials see no difference between banks, which explains the lack of loyalty to one financial institution. If credit unions present themselves as alternatives to traditional banks, they have the potential to attract and retain millennial members.
Credit unions are able to closely monitor members' financials, which allows them to confidently make loans to higher-risk individuals. Many millennials already have student debt, and they may not have built up the credit necessary to take out loans from traditional banks. Credit unions should advertise their unique benefits and provide educational opportunities that demonstrate their approach as an alternative to that of large banks. Millennials are ready to take the next step in their lives, and credit unions have the potential to help them achieve their goals.