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Millennials don't trust banks - Are credit unions the answer?

Millennials are not fond of big banks, which means credit unions have the opportunity to attract them.

Attracting and keeping millennial members is a big concern for many credit unions. No matter how well a particular credit union performs in that area, it could always be better - and some credit unions struggle to reach out to the younger generation. Some issues include the millennial emphasis on technological advancements, which some credit unions don't have yet, and the culture gap many people perceive between boomers and millennials. Some credit union leaders despair of capturing millennial market share, but new research shows they may want to think again.

Millennial sentiment about big banks
The Millennial Disruption Index from Scratch/Viacom Media Networks found banking is at the biggest risk of disruption from millennial consumers - above tech, retail and household goods. Millennials don't feel positively about banks, the study found - 53 percent said their banks offer nothing different from other banks. Remarkably, 71 percent would rather go to a dentist than listen to what banks say. This level of antipathy has a kernel of opportunity in it for credit unions, though. One in three millennials are open to switching banks in the next 90 days - and that's where credit unions need to step in and show themselves to be a great option.

Millennials don't see much of a difference between banks at all, and all four leading banks are among the top 10 least loved millennial brands. Credit unions have a shot at positioning themselves as the ideal option for millennials, particularly in opposition to what big banks offer in terms of services and reputation.

National Journal spoke to Jill Castilla, president and CEO of Citizens Bank of Edmond outside Oklahoma City. Castilla believes credit unions can gain millennial market share in a big way.

"We're in the position to attract millennials more than any other type of bank," Castilla told the Journal. "They love to be part of a movement that's local. Where else are they going to be able to tweet at the bank president at midnight on a Saturday and get a response the next day? They can't do that with Jamie Dimon [CEO of JPMorgan Chase]."

What do millennials want?
While credit unions are in a great position to attract millennials because of the generation's antipathy for big banks, it's also necessary to understand what they value and how they behave financially to get a larger market share. There is an endless stream of reporting on what millennials really want and what they do, so it can be hard to sort through all of it to find the valuable insights. To start with, here are a few:

  • Millennials treat money differently. A survey from UBS Investor Watch found millennials use their money differently from other generations. For example, over half of the generation keeps its assets in cash. Fewer than one-third of millennials invest in stocks.
  • Their attitudes about money are also very different. Almost half of the millennial respondents to the UBS survey said their main financial goal was simply freedom. Only 15 percent are concentrating right now on providing for future generations, and only 14 percent are concerned with being compensated well for their work. Millennials see good relationships and experiences as the hallmark of success, rather than impressive salaries or assets. Credit unions would do well to keep this in mind when attracting millennial members.
  • Relationships are valuable. Millennials place a lot of importance on relationships and transparency, and this applies to where they choose to do business as well as to their personal lives. Credit unions should leverage their opportunities to have someone to work closely with on financial matters, as millennials may see this as a great asset.