Why Credit Unions Are the Best Banks for Gen Z

By Ashley LaBombard, Marketing Associate, Sharetec
January 17, 2024

Of course, we realize credit unions are not banks; however, it is the term often used in place of “financial institutions.” To understand why credit unions are the best banks for Gen Z, you’ll first need to learn more about what motivates Gen Z, Gen Z financial habits, and financial planning for Gen Z.

Understanding What Motivates Gen Z

Despite popular opinions, there is actual data to show what motivates Gen Z in different areas of their lives. Three major motivators for Gen Z are technology, community impact, and transparency.

Gen Z and Technology

According to a mobile/app behavior report by Ypulse.com, 79% of Gen Zers between 13 and 20 years old say they can’t live without their smartphones. Needless to say, this generation wants to have access to everything possible via their phones, including social media, shopping, and banking.

Not only do the best banks for Gen Z need to be accessible via phone, but they also need to incorporate the most up-to-date, user-friendly technology. Gen Z is used to getting things done quickly and efficiently. If your mobile banking app requires multiple steps, they might not stick around. Unlike other generations, Gen Zers aren’t ones to settle out of loyalty or lack of motivation to switch financial institutions. If they can’t pay their bills, manage accounts, or move their money around via their phones, you are not the credit union for them.

Along with regular banking abilities, Gen Z members are excited by any additional technology you can provide. They care about their financial standing and purchasing ability, which means they want to keep track of their accounts and credit reports.

Gen Z and Community Impact

As a credit union, you already have the community aspect covered. With your motto being “people helping people,” this generation will see that your goal is about more than making a profit. However, if you’re not advertising your community outreach initiatives via the proper channels, how are people going to know credit unions are the best banks for Gen Z?

The next time you plan a community event or financial education opportunity, be sure to advertise on Instagram, Twitter (X), and Facebook. Consider incorporating video ads so you can utilize YouTube and TikTok, as these are popular amongst the majority of Gen Zers.

Gen Z and Transparency

For Generation Z, it’s all about trust and open communication. They want to know that you stand by your word and follow through on promises. Likewise, if something happens where you can’t follow through, you’d better communicate it clearly and effectively if you want to keep your Gen Z members.

So, what’s the best way to communicate with Gen Z? Well, it’s certainly not by snail mail (hopefully, you’ve completely eliminated or highly limited your print mail at this point in the banking game). If it’s an urgent message regarding online banking access, you’ll want to send out a message via various mediums.

While an email, website popup, and Facebook post might suffice for your Baby Boomers, Gen X, and millennial members, you’ll want to think outside the box for Gen Z. In this case, in-app push notifications are the way to go.

Gen Z Financial Habits

Gone are the days of “young people are financially irresponsible.” Well, at least for the most part. Studies have shown that Gen Zers are generally careful with their money. They care about saving for the future and spending only what is necessary for a service. These habits can be greatly attributed to the fact that this generation has had to deal with major inflation. According to recent research, Gen Z college graduates earn 10% less than their parents due to inflation.

The best banks for Gen Z will provide financial education and resources to help them combat price increases. According to an investing survey by Bankrate, 35% of Gen Zers have stock or stock-related investments. As a credit union, be sure to promote your interest-bearing savings accounts and investment opportunities via in-app push notifications and social media.

Homeownership is another one of the Gen Z financial habits that may be surprising to financial institutions. According to a recent Rocket Mortgage survey, 71.5% of Gen Zers intend to purchase a house within the next six years, and 37.2% plan on buying in one to three years. So, what does this mean for credit unions? It means you should be advertising your competitive mortgage rates to this generation.

Financial Planning for Gen Z

As was mentioned earlier, Gen Z financial habits have a lot to do with the inflation they’ve unfortunately faced. This generation, perhaps more than others, will need financial education and guidance. Financial planning for Gen Z should involve promoting automatic transfers to a savings account, starting and building an emergency fund, exploring investment opportunities, and learning to use credit cards responsibly.

Saving

According to a Bank of America Survey, 56% of Gen Zers don’t have enough money to cover three months’ worth of expenses. You can help with this aspect of financial planning by encouraging an automatic monthly transfer from a member’s checking account to their savings account. Also, write blog articles and create social media infographics highlighting the importance of an emergency fund.

Investing

As a credit union, your investment options are among the best. Be sure you’re advertising them in ways that resonate with Gen Zers, and not just with your older members. A great way to promote products like your Roth IRA is by writing a blog article highlighting the benefits and how it’s encouraged to start saving for retirement young. You should also create infographics for social media and even host a webinar specifically geared toward Gen Zers and why they should begin saving for retirement now.

Credit

Let’s face it: credit cards make the world go round, and there’s nothing wrong with that, as long as they’re used responsibly. Consider scheduling an in-school presentation each year for graduating seniors about the importance of responsible credit card usage. Also, host webinars, write articles, and create engaging social media posts. Not only will you assist with financial planning for Gen Z, but you’ll also be promoting your credit union and its services.

There are many reasons why credit unions are the best banks for Gen Z. Make sure you’re utilizing all the resources available to you, including your core processor’s technology solutions and integrations, to prove this fact to current and potential Gen Zers in your field of membership.

About Sharetec

Sharetec is a cutting-edge technology company providing the latest in core processing software. Sharetec’s robust, yet easy-to-use, web-based core includes everything needed to run credit union operations and create an effective digital experience for members.