BOSTON–With its own data showing 95% of credit unions are chasing prospective Gen Z members, a new report has found it’s a “fickle” generation—but it’s also ripe for using more products from credit unions.
The new report, “How Credit Union Innovation Can Drive Gen Z Engagement, from PYMNTS and Velera, found that over the past year 42% of Gen Z CU members switched their primary financial institution.
“To put that propensity to switch in perspective, Gen Z consumers are 2.5 times more likely than their Gen X counterparts to have switched their primary FI in the past year, while less than 4% of baby boomers and seniors recently switched,” PYMNTS/Velera stated.
The Question
The question, PYMNTS/Velera said in its analysis, is that if Gen Z is so temperamental, why are credit unions so keen on bringing these younger consumers into the fold?
“One reason is that they are poised to transition into higher-paying jobs and careers in the years to come, which will drive additional spending,” PYMNTS said. “In fact, it’s projected that by 2030, Gen Z consumers will increase their spending sixfold, meaning they will likely need access to more sophisticated financial products.”
High Churn, High Expectations
However, the PYMNTS/Velera analysis added, Gen Z’s high churn rate suggests they have high expectations from the FIs that get their business, according to the PYMNTS/Velera report, which is based on responses from 200 CU executives and 4,525 U.S. consumers.
“Should a financial institution fail to deliver these expectations, these digital-first consumers have no qualms about taking their business elsewhere,” the companies said. “If CUs are determined to persuade Gen Z consumers to become members, they need to have an innovation roadmap in the works — one designed to retain current younger members while attracting new ones.”
Additional Features ‘Welcome’
Gen Z members use more products and features right now than any of the other generations we surveyed — and “they would welcome even more if additional features were on the menu,” PYMNTS/Velera stated.
The companies noted the research shows the average Gen Z consumer has used 10 credit union products and features in the past year, but would use an additional 18 if offered, meaning they would be comfortable juggling nearly 30 different products and features.
‘Can’t Come Soon Enough’
“For comparison, the average Gen X consumer has used about eight CU products and features in the last 12 months and would use another 12 if offered,” PYMNTS/Velera stated. “Baby Boomers and seniors have used about six in the last year and could envision using seven more if offered.
“This generational difference starkly illustrates what credit unions — and all FIs for that matter — will need to accomplish to meet the needs of younger consumers — and their notably large appetite for innovative products and features,” the analysis continues. “Data shows they are already comfortable switching up their primary FIs, so the new features can’t come soon enough.”
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