Call it the ultimate FOMO: fear of missing out.
As credit unions begin their strategic planning sessions for 2017, leaders of state CU leagues across the country are emphasizing the importance of reaching out to the next generation.
While that's not a new trend, a host of credit union leaders told Credit Union Journal there is an increased sense of urgency to reach Millennials before it's too late.
"It's urgent that credit unions enact strategies now to attract the next generation of members," said Michael Wishnow, SVP of communications and marketing at the Pennsylvania CU League. One way they can do that, he pointed out, is by modernizing delivery channels and spending money to ensure that the institution has the member-facing technology necessary to keep it relevant with younger consumers – a demographic that's rapidly growing and that continues to demand increasingly sophisticated technology from financial institutions.
Staff at the New York Credit Union Association took a similar tack, pointing out that strategic plans should be focused on acquisition and retention of new and younger members.
"Strategic community charter expansions are one avenue credit unions should consider," said RJ Tamburri, communications manager at NYCUA. "It's also critical that credit unions stay up to date on – or better yet, ahead of – new and emerging technologies. For some credit unions, it might make sense to consider shifting the focus away from more traditional programs (such as card programs) to other services (like internet lending)."
He added that generating non-interest income and maintaining a strong net-worth position are always important for any credit union's strategic plan.
"Technology is moving so fast that it is no longer plausible to be planning new fintech [financial technology] out over the next three to five years," said Tamburri. "Credit unions must be in a financial and logistical position to offer new, relevant tech products as soon as they are available."
Younger Boards Needed, Too
"Millennials are the future," said Karen Houston-Johnson, vice president of OnBalance, a unit of Credit Union Resources, which is a wholly owned subsidiary Cornerstone Credit Union League, which serves CUs in Texas, Oklahoma and Arkansas. "They are now the largest component of the workplace."
Houston-Johnson pointed to research from both CUNA showing that 71% of millennials are unfamiliar with CUs, and said that Cornerstone's own research has shown that credit unions.
Cornerstone's own research, she added, "shows that credit unions need to lead the conversation with this demographic with the positive differentiators of credit unions – member-owned; return money to members through fewer fees, higher interest rates on deposits, and lower interest rates on loans; clear focus on and commitment to the community; and not-for-profit, which can serve as indicator of greater trustworthiness."
According to Paul Gentile, president and CEO of the Cooperative Credit Union Association, which serves CUs in Delaware, Massachusetts, Rhode Island and New Hampshire, many CU leaders right now are focused on succession planning – not just at the executive level, but at the board level.
"Finding new, willing board members is a challenge for many credit unions," Gentile said in an email. "And many boards are concerned that too much new blood will upset the positive governance their boards having going on. I urge credit unions to consider advisory boards as training ground, and to not always look for the same type of person or skill set. Too many similar viewpoints can weaken the strategic approach of a board."
Time to Diversify
But it's not just getting younger that's important, noted Paul Stull, president and CEO of Credit Union Association of New Mexico. It's just as crucial that credit unions make inroads with minority communities and other demographics that haven't traditionally been targets – not just at the member level, but with boards and management as well.
"Hispanics/Latinos are now the majority ethnic group in New Mexico and they are the fastest growing group in many other parts of the country," Stull noted. "This population growth presents a tremendous opportunity for credit unions to capitalize on."
Credit unions should also enact policies to attract other groups as well, including the LGBT community, women and new immigrants. "Many of these people need access to the mainstream banking system and the credit union industry could fulfill this need," he added. "They are no longer 'niche' segments of the population, rather they are becoming part of the mainstream."
