Millennials continue to elude many financial institutions as a new survey by Accenture shows consumers ages 18 to 34 are turning their backs on the big banks.
In only a year, big banks have lost 16% of their millennial customers, leaving community banks to scoop up 5% and credit unions welcomed 3% of the mass exodus.
Why? Accenture cites some of these reasons:
Lack or no loyalty programs
Low high touch
No need for a physical branch on every corner
Credit unions are increasingly more attractive to millennials because these not-for-profit institutions are everything big banks are not.
When Aspire Mart recently reached out to the National Credit Union Association (NCUA), a list of credit unions that were doing an exceptional job of generating millennial memberships was shared. We wanted to find out how this list of credit unions met some of the reasons why millennials are making credit unions their primary financial institution.
Although physical branches are not a priority to millennials, having a base that is readily accessible to this age group is important. Central Florida Educators Federal Credit Union ($1.5 billion, Orlando, FL) is a credit union receiving the message through its university and high school branch network.
NCUA says after placing a branch on the University of Central Florida campus, CFE FCU is opening about 1,100 student accounts at UCF each year. In addition, CFE FCU holds the naming rights to the UCF Knights Arena. The credit union also holds financial literacy classes for students at UCF to help keep students out of debt.
CFE FCU is also building relationships with smaller feeder schools and local high schools, providing internships for the 20 students to work at each high school branch.
As a result, UCF FCU has been successful in lowering the average age of members to 41—seven years younger than the average age of members at other U.S. credit unions, NCUA says.
“CFE views its high school branch program as an innovative approach to business education, teaching student tellers working in the branch the basic principles and practices of the financial services industry,” says Linh Dang, senior vice president, member services and special projects. “Students learn and put into practice skills such as cash handling, new account opening, member service, teamwork, and the ability to build trust through confidentiality and professionalism. These skills enable students to effectively communicate to the administrators, teachers, faculty, students, and parents. Ultimately, the experience will increase the opportunity for the students to further advance their career in the financial services industry.”
Another credit union taking the branch to the millennial member is Apple Federal Credit Union ($2 billion, Fairfield, VA). NCUA says Generation Y members make up 36% of membership. The credit union attributes its success to opening student-run branches in middle schools and high schools, and promoting membership at universities.
Apple FCU’s market research indicates that Generation Y has “unprecedented power over their parents’ and peers’ purchases.”
“Our approach to reaching millennials is multi-faceted given their varying life stages,” explains Rebecca Palmer Browne, director of marketing at Apple FCU. “For younger Gen Y, we have dozens of student-run credit union branches in area middle and high schools promoting a strong foundation in financial literacy. We have a complete suite of student products – dividend-earning savings, checking, fixed-rate credit card, student loans – that assists them in the fundamentals of money management, and ultimately their pursuit of higher education. We also automatically transition many of their student accounts to regular accounts as they get older, to mitigate any hassle-factor that might drive them elsewhere.”
Whoever said credit unions don’t know technology hasn’t visited a credit union in the last five years. NCUA cites Family and Schools Together Federal Credit Union--FAST FCU ($123 million, Hanford, CA) has having an amazing online system that is prompting more young consumers to join a credit union.
Millennials are attracted to online systems, including FAST FCU’s Mobiliti mobile banking platform, virtual branch, online loan applications, and an Apple app. FAST FCU also maintains contact with millennials via Facebook and other social media outlets.
FAST FCU offers student agriculture loans for kids working with farm animals. The credit union also helps young borrowers with budgeting and managing cash flows throughout the life cycles of their animals.
NCUA reports the average age of members at FAST FCU is 40—eight years younger than the average age of members at other U.S. credit unions.
Young and Free Michigan is a cornerstone program at Michigan First Credit Union ($700 million, Lathrup Village, MI). The credit union created a special debit card for the Young and Free Michigan First Gear checking account, which provides rate reductions on loans, and rewards for signing up for electronic statements, for instance. This checking account even pays dividends of up to .10%.
The credit union provides a real sense of belonging through it’s Young and Free Michigan website, offering extensive financial information and insight geared specifically toward millennials, along with a bevy of contests and ways to win exciting prizes.
Michigan First offers mobile banking on most mobile devices including the Droid, iPhone, Blackberry, and other mobile devices. NCUA adds that the credit union also offers a 24/7-call center providing service for members anytime they want. This caters to millennials, who often want to talk to a live person immediately.
Another noteworthy credit union is Craftmaster Federal Credit Union ($9.5 million, Towanda, PA). More than half (52%) of the adult membership is comprised of Generations X and Y,” NCUA reports.By Gina Ragusa