Credit Unions Aim for Gen Z Deposits and Loyalty

Traditional financial institutions, especially credit unions, are setting their sights on the youth market, particularly Generation Z, for future growth, as outlined in PYMNTS. However, the sentiment among FinTechs towards this demographic is more cautious, with many feeling that the effort may not yield significant returns.

According to PYMNTS Intelligence, which surveyed over 200 credit union executives and more than 100 FinTech executives, there’s a notable difference in how these providers view Gen Z, those born between 1981 and 1996 and now in their late 20s to early 40s.

Credit unions are highly interested in attracting more Gen Z members, with 95% of them considering it important due to the demographic’s growing market presence. In contrast, only 42% of FinTechs view attracting Gen Z as «very» important. The main reason cited by over 50% of FinTech respondents for the lower importance placed on attracting Gen Z is the perceived lack of deposit potential from these individuals. Additionally, 45% of FinTechs believe that even if Gen Z customers were to join, they would be quick to leave.

Despite the differences in strategy, there is an opportunity for FinTechs to tap into the Gen Z market, as 41% of these consumers have used PayPal as their primary digital choice, followed by Chime at 7% and Ally at 3%.

One area of interest is deposits. Only 18% of the 5% of credit unions less interested in attracting Gen Z cite insufficient deposits as a reason, highlighting a key difference between credit unions and FinTechs. Credit unions, with their substantial deposit base, are able to attract even the smallest depositors and nurture these relationships over time, as cited by nearly half of credit unions interested in attracting more Gen Z clients.

PYMNTS Intelligence’s research also reveals that over a third of Gen Z consumers would switch financial institutions for new innovations, including a wider range of payment options. Additionally, 59% of Gen Z customers are more interested in personalized rewards programs, and 49% prefer receiving offers through mobile apps. These preferences indicate the importance of innovative offerings and personalized experiences in attracting and retaining Gen Z customers.

While credit unions are aggressively pursuing Gen Z deposits and loyalty, FinTechs are approaching this market with caution. However, by focusing on innovation and personalized experiences, both types of financial institutions can effectively capture the attention and loyalty of Gen Z consumers.