Credit Unions Need to Look At the Numbers

by Robin Romano 0

It’s a common refrain among colleagues at credit unions nationwide: How do we attract younger customers?

What’s driving the discussion is the data. The average age of most credit union members is 48. This average age has been decreasing as it was 46 in 2010. Driving the debate is the realization these numbers indicate credit unions are not attracting younger members whom, over time, will become borrowers. Those borrowers are those who need that first car, money for a wedding, a family car, a home, and then college for children. You get the idea.

Refreshing your base of customers is a standard that all businesses understand. That said, the fact of the matter is making your financial institution attractive to a younger generation is not simple. Certainly, having numerous online and mobile applications available helps and frankly, may be a necessity. But consideration needs to be given to some key demographics that were at the heart of the CUNA National Member Survey – 2010-2011 and the FDIC 2011 National Survey of Unbanked and Underbanked Households. Consider these data points:

  • Between 2000 and 2010, the nation’s non-Hispanic white population grew 1.5% while the Hispanic population grew 43%.
  • The average age of Hispanic American is 27.
  • Among Hispanic households 20.1% are unbanked and 28.6% are underbanked.

This is interesting data that continues to perplex most financial institutions.

Industry focus over the last several years has been on maximizing technology that automates the basic transaction business such as the rapid expansion of online banking and mobile applications. With more traditional customers spending less time in traditional branches and more time online, we’ve all been looking for the right answer to how to stay relevant and continue to flourish. What’s interesting about these statistics is that they also speak to the unbanked and underbanked, a constant source of ongoing discussion. The reality is that the unbanked and underbanked are more than willing to go into a lobby for a title loan, payday loan or checking-cashing facilities. They look to ATMs as a trusted source of banking services, too. Why? They can get what they want and feel less judged and many times this is their only option. These individuals often do not have bank accounts because they feel they do not have enough money for any account, or because no one else in the family has an account. This is especially true in the Hispanic community.

So, what do we need to do to expand our customer base? We have learned that helping these potential customers make the transition from non-traditional money outlets into the lobby of a financial institution takes patience and a willingness to start small. It takes a teller line that speaks their language and is willing to offer an ATM card with a simple savings account or a no-frills checking with a debit card. It takes patience to educate and offer small lending products that meet month-to-month needs. Here is where easily accessible gift cards and reloadable prepaid debit cards can assist financial institutions in making that transition. These members want quick and safe access to funds and they want the modern conveniences of cards, debit and credit. But to move them from non-traditional to traditional takes time, education, good card options, and open acknowledgement that their small balanced accounts are important.

The future of credit unions remains strong. Credit union customers have a strong relationship with their institutions. Continuing to expand those relationships by better serving millenials and non-traditional customers, including the unbanked and underbanked, speaks to our strengths and a bright future.

Robin Romano is the CEO of MariSol Federal Credit Union. Since 1999, she has led the successful growth of the credit union, which has included nearly tripling its assets and expanding its member base. Prior to joining MariSol, Ms. Romano was the Senior Principal Examiner for the National Credit Union Administration in Arizona and New Mexico for eight years. Her experience includes Mortgage Manager for Western Horizons Federal Credit Union, REO Accountant and Financial Analyst for Sun State Savings and Loan, as well an Mortgage Underwriter and Escrow Officer for various organizations. In addition, Ms. Romano is active in several boards including the Tripartite Board for Mesa Community Action Network, Federation of Community Development Credit Unions, and a committee member of First Corporate Credit Union.

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