By Ray Birch
MILWAUKEE—More than eight in 10 young Americans now name one of the nation’s largest banks as their primary financial institution—and fewer say a credit union is their main provider than say the same about fintechs.
That finding, drawn from new consumer research by Raddon, underscores what its chief economist says is one of the most pressing strategic challenges facing credit unions today: younger consumers are increasingly gravitating toward big banks and digital-first providers rather than cooperatives.
“The influence of the largest banks is growing, not lessening—especially among younger demographics,” said Bill Handel, chief economist at Raddon, a Fiserv company.
Among Gen Z and Millennial consumers, Handel said roughly eight out of 10 identify a major bank as their primary financial institution. Even more concerning for credit unions, he said, is another trend emerging in the data.
“The percentage of young people who say a credit union is primary is actually less than the percentage who say a fintech or online only bank is their primary,” Handel said.
A Divided Consumer Landscape
The findings come as broader consumer sentiment remains deeply split.
Raddon’s research shows a relatively small portion of the population feels very confident about the economy and their finances. About half of consumers say they are not particularly comfortable with their financial outlook, while roughly 30% fall somewhere in the middle.
That uneven financial confidence is shaping how consumers evaluate financial providers—and how they decide where to place their primary banking relationships.
But for credit unions, Handel said the bigger issue may be structural rather than cyclical.
Large national banks and fintech firms have steadily strengthened their position among younger consumers, even as credit unions continue to emphasize traditional competitive advantages such as pricing.
The Limits Of The Rate Strategy
For decades, credit unions have leaned heavily on rates—better loan pricing or higher deposit yields—as their primary value proposition.
Handel said that approach is increasingly out of step with what younger consumers actually value.
“We as an industry have grown up on the notion that the value we provide is around interest rates,” he said. “But I don’t think the younger generation thinks about it that way.”
Instead, younger consumers are prioritizing convenience and simplicity.
Ease of interaction—opening accounts quickly, making payments seamlessly and navigating digital channels without friction—is becoming the dominant factor shaping financial choices, Handel said.
“What they’re looking for is ease of interaction, ease of doing business, ease of payment,” Handel said. “They don’t want friction. They want as little friction as you can possibly get in financial services.”
Fintech companies have excelled in delivering that experience, Handel reminded. Many allow consumers to open accounts in minutes, instantly provision digital cards and make payments without the traditional delays associated with banking.
Big Banks Playing The Long Game
Bill Handel
At the same time, the largest banks are leveraging enormous technology budgets and marketing reach to maintain their advantage with younger consumers.
Handel said credit unions should not assume they can win an arms race on technology spending with institutions such as JPMorgan Chase or Bank of America.
“It’s hard to outspend Chase. It’s hard to outspend Bank of America,” he said, adding that instead, credit unions will need to rethink how they define and communicate their value.
A Different Value Proposition
Handel believes the industry’s strongest differentiator may lie in financial wellness and trusted guidance.
As artificial intelligence and digital tools expand access to sophisticated financial insights, consumers will increasingly expect personalized advice combined with technology-driven analysis.
That combination—advanced tools paired with trusted relationships—could represent a natural advantage for credit unions, Handel said.
“What people will look for from a financial institution is capability, but they also want that level of trust,” Handel said.
In that environment, he argued, credit unions should position themselves as partners in members’ financial health rather than simply providers of competitive rates.
That includes helping members navigate major life decisions, manage risk and improve long-term financial outcomes.
“Credit unions should make it clear they are members’ partners in financial wellness,” Handel said. “That’s what their job is.”
Messaging The Cooperative Difference
For credit unions, the challenge may ultimately come down to brand clarity.
Handel said cooperatives must rethink how they communicate their value proposition in a marketplace increasingly shaped by digital convenience and large-scale technology investments.
Rates will remain part of the equation, but they are unlikely to be the primary driver of consumer choice for much of the next generation, Handel concluded
“The value proposition has to be something other than rate,” he said.