The Single Best Way to Attract Gen Z to Your Credit Union

Ask any credit union marketer, and they will likely agree that attracting and retaining Gen Z members is a long-term priority. Since their parents, the Baby Boom generation, account for 75% of credit union deposits, bringing more of this younger demographic onto the membership rolls is critical for future growth. However, just as credit unions found in past efforts to get the attention of their older millennial siblings, convincing this generation to join a credit union will be no easy task.

Gen Z: The Basics

Gen Z is defined as those born between 1996 and 2012. Currently 12-28 years old, this group makes up about 20% of the U.S. population (70 million) and possesses buying power of $360 billion. It is the first 100% digital generation with little concept of life before the internet. How does Gen Z compare to older age groups?

• Higher high school graduation rate
• More diverse ethnically and racially
• More ethics and personal values conscious and distrustful of established institutions
• Want jobs with both good pay and work-life balance

Of course, Gen Z, as digital natives, gets most of their information from online sources, mainly social media.

Finally, those in Gen Z worry about their long-term financial prospects. Having seen their families go through the 2008-2009 financial crisis and then, years later, enduring the COVID-19 pandemic and subsequent inflation, these young people have ample reasons to feel pessimistic. According to a 2022 McKinsey and Company survey, compared to other age ranges, people in this group are less likely to believe they will ever own a home or be able to retire. As sad as this sounds, it points out how much credit union products and services can help Gen Z.

Marketing to Gen Z: The Challenges

Despite this group’s buying power, marketers targeting Gen Z struggle to reach them. Here are a few reasons why.

• Digital Saturation—Gen Z is overwhelmed by a relentless torrent of information from multiple sources. Social media, streaming services, and other online media offerings compete for their attention. Some experts suggest that Gen Z has reached the saturation point, making it even more difficult for credit unions to reach them.
• Ad Avoidance – Gen Z has developed a keen ability to avoid advertisements. A recent report found that nearly all Gen Z respondents said they skip ads, and two-thirds used ad-blocking software. Also, an Interactive Advertising Bureau study found that Gen Z will pay the most for ad-free content compared to other generations.
• Building Trust—Gen Z is distinctive for its commitment to making important life decisions based on social values. They tend to be suspicious of conventional marketing appeals, preferring to associate themselves with brands they perceive as demonstrating a genuine social consciousness. With this in mind, credit unions will likely not build trust with this group through advertising alone.

Solution: Leveraging the Power of Parental Influence

Unsurprisingly, as masters of the digital landscape, nearly 80% of Gen Z turned to social media for financial information. However, many experts agree the quality of this information varies greatly.

The good news is that Gen Z also values advice from parents. In a 2023 survey of college students, 64% said they seek financial advice from a parent or other family member. This finding presents a massive opportunity for credit unions to cultivate deep relationships with existing members who have Gen Z children. The aim would be to encourage, empower, and educate these parents to recommend credit unions as a positive means to financial progress. Specific approaches for doing this include:

• Financial Socialization—Parents are their children's primary financial teachers, whether they know it or not. When growing up, kids observe how money is handled in their families, setting the stage for their future financial habits and attitudes. If parents have a favorable experience with their credit union, their kids will likely share this positive view. However, to reinforce this, credit unions must actively encourage parents to talk to their children about money and provide resources to support this effort.
• Shared Financial Goals—As children mature, they are more able to share in accomplishing family financial goals like saving for college, purchasing a car, or planning vacations. Whether it's purely informational or they contribute financially to the goal, kids will learn from real-life examples in which they have a stake. Credit unions can offer products and services that support these shared objectives, appealing to both generations simultaneously.
• Empowering Financial Independence – According to a 2024 Savings.com survey, 47% of respondents with adult children said they provide them with some level of financial support. The average monthly amount was $1,384, which, sadly, was more than twice as much as these parents save monthly for their retirement ($609 on average).  Of the adult children living at home, 61% didn’t contribute to household expenses, and 46% of parents providing financial assistance paid for vacations and other non-essential spending.
  
  Parents in this situation are strongly motivated to guide their adult children toward financial independence. Credit unions can help by providing informational resources to educate and encourage parents on how to break the cycle of dependence.
• Playing the Nonprofit Card—Many parents join credit unions because of their affinity-group connections. Since then, the industry has evolved to appeal to a more general audience, but credit unions remain nonprofit entities. Parents may find this appeals to Gen Z's social values consciousness, making it an easier “sell.” Credit unions can help by providing targeted information that reinforces this angle.

There are many good reasons why credit unions want to attract Gen Z and other young people to membership despite the challenges of effectively messaging this information-saturated group. Fortunately, credit unions have an opportunity to educate and motivate members with Gen Z children so they can educate their kids on how membership can help them achieve their financial goals.