How are parents recommending credit unions to their children?

This is an article for credit unions interested in parents and children members (the Millennials and Gen Zs!). 

If your members love your service, surely they will tell their children to join credit unions too, right? Research surprisingly shows otherwise.

The burning problem credit unions try to ignore

We found that 90% of credit union parent members out of 500 interviewees, actually DO NOT actively recommend their children join the credit union.

As a result, the number of young people below the age of 25 dropped by 20%, and the average age of credit union members has climbed to 47 years old.

We see that credit unions are losing touch with younger members, and a major reason is because existing parent members are not encouraging their children to join! Why is this?

Before answering, let me introduce myself. My name is Chester Szeen, the Co-Founder of Mellow and a Forbes 30 Under 30 Founder. Our team is passionate in promoting financial literacy for children and parents. 

I will share the unique insights we’ve learnt about educating and engaging children through working with MetLife’s Digital Accelerator and Zurich Insurance.

The parent and children member interviews

Along our journey, we learned about credit unions’ struggle to attract young members. We interviewed a few members to find out why:

From the parents aged 35 – 50 with children aged 6 – 15: 

• “The age of credit union members are getting older, I’m not sure if my credit union will have the right products or digital service that fits my children. They might think it is too old-fashioned.” 
• “I know my credit union has great initiatives holding financial education workshops at schools, but it’s not something that clicked with my kids. They wanted something fun instead of extra work.”
• “I don’t mind letting my son choose another banking service. My son and I didn’t have a lot of interaction together with the credit union’s services – I am the one engaged with the credit union usually. So I don’t have a huge desire or need to keep him at the same credit union as I am in.”

From children aged 15 to 22 on their childhood:

• “When I was small, I didn’t really hear about credit unions regularly, so I don’t think I have built much loyalty or anything. My mom uses it though.  It wasn’t until recently that I knew how they are different from banks.”
• “I like how credit unions promote financial wellness to their members, but I didn’t know about this when I was small, so I got a bank account instead when I was old enough. Actually, thinking back, I wouldn’t be interested in reading about financial literacy anyways.”

The solution to the problem

We found that the major reason behind credit unions’ failure to attract younger members is the lack of exposure and regular engagement with children when they are young – around 6 to 15 years old. Building children’s loyalty early is important – credit unions need to realize that children are decision makers on who to bank with when they grow up too.

Achieving daily engagement through the lens of financial education is a strong approach, because it appeals to parents – but content-based learning no longer fits the millennials and Gen Z. From our interviews, we see that to attract children and to have parents recommend credit unions’ services, credit unions must start engaging both parents and children at the same time. However, parents and children usually have very different incentives.

We discovered that financial education is usually not a topic children will beg to learn about. So, it’s important that the education isn’t forced on the child, but rather layered on existing activities and experiences of their daily lives to foster their habit and knowledge.

There needs to be a better way to motivate children in this process of engagement. We at Mellow found that the best motivation for children are rewards, mini-achievements, and collaboration with their parents, which can all be wrapped around financial education. 

We found that children learning hands on remember and perform 20% better than those that learn with just content; and gamified learning increases retention by 12% and overall performance by 7%. We also figured that parents want to be involved in their children’s learning, especially in financial education – because the family background greatly customizes their personal finance style.

The best financial education tool, and the best engagement tool for credit unions with family members and the young segment, must try to fulfill as much of the above to maximize effectiveness.