What Gen Z Really Wants From a Financial Institution

Key takeaways:

• Prioritize relationship-based, value-driven marketing over product- or rate-focused advertising: Instead of solely promoting products and fees, credit unions should focus on building relationships and explaining the benefits of banking with a credit union in an educational and relatable way. 
  
  
• Invest in advanced digital experiences but don’t sacrifice the human touch: Gen Z expects sophisticated digital tools and experiences similar to those offered by fintechs. An example is DCU's "goals-based banking experience," which allows members to set and track financial goals. 

But also, don’t forget that even this digitally native generation still values human oversight and support. Keep the focus on technology-enabled humanity, which is not the same as human-enabled technology. It keeps the humanity front and center.

• Meet Gen Z where they are through targeted partnerships and channels: Credit unions need to reach Gen Z audiences through channels they actively use and trust. This involves strategic partnerships with platforms relevant to Gen Z. Also, part of meeting Gen Z where they are involves not defaulting to stereotypes and taking the time to truly understand the full spectrum of their interests and needs. 

Read the transcript:

Katie Stone:
Welcome to another episode of the Remarkable Credit Union Podcast. We created our podcast to help credit union leaders think outside of the box about marketing, technology, and community impact.

The Remarkable Credit Union is brought to you by PixelSpoke, a digital marketing agency that works with credit unions to create user-friendly, high-converting, and award-winning websites. As a B corp and an employee-owned cooperative, we believe that business can and should be a force for good.

Each episode we bring on expert guests from the credit union and broader cooperative movement for conversations about the intersection of marketing and social impact. Our goal is to challenge your preconceptions about business as usual and provide you with actionable takeaways that you can use to grow your membership, improve the financial health of your cooperative, and better serve your community. I'm Katie Stone, CEO and co-owner here at PixelSpoke.

Kerala Goodkin:
And I'm Kerala Goodkin, also a co-owner at PixelSpoke and the Director of Marketing and Impact. We are so excited today to welcome Sue Burton, who is the Senior Vice President of Member Experience and Marketing at Digital Federal Credit Union, also known as DCU. She was hired specifically to lead member-centric digital transformation. Before DCU, Sue worked in multiple high-level roles for nearly a decade with a lot of experience in the financial services industry and one of my all-time favorite fun facts about any of our guests, she was also a stand-up comedian for seven years and used to co-host her own radio show called Get A Life with Loretta LaRoche, who's a PBS motivational humorist. Sue, thanks so much for joining us.

Sue Burton:
Thanks for having me. Great to be with you.

Kerala Goodkin:
And we're going to ask your help today in answering our big question, which is why do so few Gen Zers know about credit unions and how can credit union marketers authentically reach and connect with this rising generation? Katie and I both have Gen Z children. So, I'm particularly interested to hear how I can raise credit union awareness within this age group. I'm curious, Sue, as I alluded to in the intro, you spent many years with Bank of America before joining the credit union movement. So, you've been on the inside at both types of financial institutions. I'm just curious, how would you describe the fundamental differences that you see between the big banks, the ones we all know about, the Chases and the Banks of America and credit unions?

Sue Burton:
I would describe it as the difference between organic and processed. I feel like credit unions are just so elemental. It is a group of human beings who come together and pull their resources for the benefit of the collective. Everyone is a peer, everyone's a member, owner together. That is distinctly different, I think, from a lot of a larger bank environment where you're balancing different constituencies, shareholder's need for profitability, drive to sell more product.

Not that we don't like to do that at credit unions, but I just think that credit unions are a little bit more purely purpose-driven in that space. I think where we differ and are catching up to banks, I think, are investing in data and insights and technology that really allow us to scale and meet the digital expectations of both Gen Z and other consumer cohorts.

Kerala Goodkin:
I'm just really curious about your credit union. DCU surveyed over 1,000 people within Gen Z, which is I think around 13 to 28. My daughter's almost 14. So, she's right on the tail end. It's not super surprising to me that they found that credit union awareness amongst this demographic was low. So, now, you've made your general pitch for credit unions and now I'd love to know more specifically how would you pitch credit unions to Gen Zers, particularly as viable alternatives to the big banks?

Sue Burton:
Well, I would say for Gen Z and really for all of us, everyone loves a cheat code. Everyone loves a life hack. How do you get a better value? How do you get a better service that's going to help you go further in your life? That's what credit unions are. I think the challenge we have as a collective is one of generalized awareness, like credit unions feel like a club. If you don't know about the club or the club hasn't reached out to you, you just assume that's not for me. I think Gen Zers feel this way. Truth be told, I've been in financial services my entire career. I also felt that. I didn't understand.

I thought if I worked for a specific employer or I lived in a specific town, maybe a credit union was for me, but otherwise, there was a barrier to entry. So, it was not for me. I also had a misperception that credit unions were maybe not as good as bank products or FinTech products. It was like a little bit loving hands at home and not necessarily going to be a real lean forward, digital first, exciting experience that has all the bells and whistles and features we've all come to expect.

Kerala Goodkin:
So I started working at PixelSpoke over seven years ago, and I knew absolutely nothing about credit unions and really had that same perception that you mentioned that it was a club that I probably didn't qualify for and didn't really concern me. I also think that even seven years is not that long, but it seemed like credit unions were really at the beginning of their digital transformation journeys, if you will, back then. There's obviously still ways to go for a lot of credit unions, but I do think that perception that they don't offer viable online or mobile banking is actually not as accurate now as it was when I started.

Sue Burton:
I agree. You know what credit unions do that is a little bit more advanced than I would say larger financial institutions is they partner. They partner with one another. You look at with credit union service organizations and partnership with FinTechs, they're scrappy. We are a scrappy, resourceful bunch who share with one another. That's the magic of the cooperative model. So, often we can even leapfrog over what larger, more established banks or financial institutions are doing through that power of partnership and just being curious and willing to try new things and take bets on emergent startups. So, that's a superpower we have.

Katie Stone:
Yeah, I 100% agree with that. We talk a lot about PixelSpoke, the fact that we're an employee-owned cooperative, how much more agile that allows us to be. We've got buy-in from the team when we make collective decisions, and it lets you just pivot a lot faster. So, I'm super excited about this next question because I spend a lot of my day speaking with credit union clients and prospective clients. A question that I often ask is, who is your competition? More and more, I'm getting answers that are FinTechs.

In fact, I would say these days they probably present more competition to credit unions than banks based on what I'm hearing from our clients. Along these lines, I know you're on a mission to create a digital forward member experience at DCU to really challenge and meet what the FinTechs are bringing to the table. So, I'd love to hear a little bit more about what that means in practice and particularly how you might leverage that to better engage with Gen Z. That's something else I hear a lot about, is credit unions wanting to attract that younger membership.

Sue Burton:
Yeah, absolutely right. So, DCU, well, we've got digital in the name. Our origin was as the Employee Credit Union of Digital Equipment Corporation, but I think increasingly we see a huge amount of organic search that comes to us just from people in the world Googling or maybe ChatGPT-ing Digital Credit Union and finding their way to our door. We are one of the youngest and fastest growing credit unions. We are a little bit different that we have members coast to coast, nationwide. More than half of our membership are outside of our branch footprint area. So, they are digital only. I would say that DCU has had a history of being very lean forward when it comes to technology in part because of that membership.

We were the first credit union to have our own FinTech accelerator where we accelerated and incubated a number of technologies, including our proprietary digital banking platform called Project Finance. That's our mobile app as well as our online banking capability. So, we take our inspiration, I think, from a lot of these upstarts and disruptors. I'm also a parent of two Gen Zers, a little bit on the older edge of the cohort. They love a disruptor. They love Robinhood, they love SoFi, they love Ally Bank. They love FinTechs and banking institutions, credit unions that feel like they are disrupting and shifting the model. So, that's what we're looking to create with our experiences.

So, very specifically within our digital banking experience, we created something that was a very specific goals-based banking experience. So, often you've got goals-based experiences with investing, but we created a goals-based banking experience that really allows our members unbelievable flexibility in setting small and large goals, aligning savings products against it, naming their goals, making them their own. We have seen extraordinary uptake of this. We have more than 150,000 members today that have about that many goals and half a billion saved against their goals. You could see that the research shows that people who have goals save twice what other members will in fact save.

We're really seeing that a huge percentage, more than half of our members are more than 75% of their way to the goal. So, we're really leaning into that and trying to find as many ways as possible to support our members on their journeys. What are they working towards? What are they saving towards? How can we give them the tools, technologies, and insights that are going to let them get there faster along with better rates? So that's really what we're focused on.

Katie Stone:
Yeah. That takes a couple of things that I think are really powerful and leverages them, right, gamification. Then we say a lot at PixelSpoke that if you're not tracking something, it's really hard to improve it. So, just creating that tracking mechanism sounds like it's really powerful too. So, my next question broadly is how are you getting the word out?

But more specifically, I want to ask, according to your survey, 55% of Gen Z would consider joining a credit union after learning about their benefits, but as you touched on, a lot of credit unions are more focused on product-driven and rate-driven marketing. So, I'm curious, are credit union marketers missing an opportunity here and what might a credit union education marketing strategy look like? How do you educate these Gen Zers about the benefits of a credit union?

Sue Burton:
Yeah, I think we are in some ways missing the boat. So, we all lean into products and fees because that's where you find the hand raisers, right? Everyone who's in market for a financial product is going to be out there searching for the lowest rate or the highest rate, depending on if it's a loan or a savings instrument, but you're missing the relationship opportunity. I think we really need to start earlier. So, some of that starts in our own membership. We've recently decided to offer Greenlight. I'm not sure if you're familiar with Greenlight, but it's a family financial education platform that allows parents to give their children pre-value stored debit card. So, you can take that to school, you can buy your lunch or the Scholastic Book Fair book that you want, or you can get a snack after school.

It just becomes a way for you to use money and parents can monitor the money habits as well as have financial education. So, I feel like it's in some ways starting young and making it a habit. More specifically, we've been doing more and more to do relationship-based marketing. So, I always say if you're selling a loan, it's really about rate. I don't think the member or prospective member has a strong proclivity for who's giving them that loan. Who's ever going to give them that loan at the best rate, they're going to take that offer. But when you're asking people to build a relationship or savings, you've got to have a little bit of a different relationship dynamic.

So, what we've been doing is very specifically segmenting our member base, creating member personas based on demographics, psychographics, just some audience attributes, and then working to meet them where they are. So, in the instance of Gen Z, that was doing a partnership, for example, with the Vox Media platform who are seen as a great news source by Gen Z and creating content that was not rate and fee-based, but it was really, "What's the value of a credit union? Why bank with a credit union versus another bank?" And having that play out through both our social channels and Vox's social channels and digital content, that was a way to reach an audience that we would not necessarily come across otherwise with our traditional tactics.

The other audience segment we've been focused on is we have a huge South Asian population, and so we focused very specifically on sponsorships of cricket matches. Our members who saw us in that forum said they felt seen, they were more likely to recommend to friends or family members, and they were more likely to buy more from us. That's a real opportunity. For DCU, member-to-member referral has been a huge growth engine, especially multi-generational. So, that's been another way to get that Gen Z audience, but we're always examining what are some great ways that we can reach our audience and our younger audience in novel ways.

We've seen more than a quarter of our new memberships coming in are Gen Z and our average age is about 10 years lower than the overall industry average. So, we're definitely making headway.

Katie Stone:
That's really, really impressive.

Kerala Goodkin:
I love meeting the member where they're at. I feel like we use personas as part of our website design process and I do think they're very useful, but there's a danger in just making assumptions about groups and it's so easy to stereotype about different groups and really just understanding, "Okay, where are people actually consuming or convening?" It's like, "Let's figure that out." You also mentioned Greenlight, which I use with my daughter, and it's been a very good financial education tool. She has signed up for some subscription services even I asked her not to do that, and she was all about having recurring subscriptions and how you have to go about canceling them. So, it's learning by doing.

Katie Stone:
Yeah, that's a valuable life lesson for sure.

Kerala Goodkin:
Yeah. Speaking of financial education, going back to your survey, I found that 61% of the respondents believed that schools should be responsible for financial literacy education. Here in Oregon, where Katie and I live, there's actually legislation passed at the state level around financial education in high school, which I was really excited about. I learned a lot in high school. I don't remember most of it, and I never learned about what a credit score is or what compound interest means. That would've really served me as a young adult.

So, I heartily concur with the respondents of the survey. I know that credit unions alone, I mean credit unions are one piece of the puzzle, but I'm just curious where you think financial education efforts in their current state generally fall short and how can the credit union movement promote financial literacy in a more comprehensive way for teens and young adults?

Sue Burton:
Yeah, this is something I'm really passionate about. In a prior life, I worked for a nonprofit that helped families figure out how to pay for higher education without getting into too much debt. So, financial education has been throughline for me. I think the biggest challenge with financial education is that it's so passive. It is content or curriculum people get exposed to far away from when they're actually making a decision. So, I think the biggest thing is I think start early, like Greenlight does, right? It's like you're getting financial education as you're using a debit card and maybe learning a little bit between the difference of a debit or a credit card. So, you think about when you need to know about a FICO score or when you need to know about some of these things that are on your journey to make a decision or to prepare for something in your life.

So, how do we create an ecosystem? I think it's great to teach it in schools, but I think how do we create an ecosystem where you are exposed to content on an as-needed basis as you're on that journey to making a decision or setting up a habit? That is really, I think, where we're going to provide a lot of value. As credit unions, what we have as another superpower is our community partnerships. So, I think of, for example, we at DCU do a lot of partnership with Boys and Girls Clubs who run amazing afterschool programs. So, that is an area where I think we could do a lot of outreach and education in teaching students about money at a younger age, but teaching it in the context of what's of value for them.

Maybe they're just starting to earn with a paper route or babysitting or a slight entrepreneur. These days maybe they're coding on the side, but as they learn and as they start to earn, there's a few money skills you need. You don't need everything in the kitchen sink, but let's get you those money skills and then build on that. As you're in high school and you're earning a job, maybe you're saving for college, giving you those money skills. As you graduate and you're thinking about getting your first apartment, getting your first car, that's when all of these things are really starting to come together in terms of needing a FICO score, having enough income that could in fact compound. So, meeting you on that journey.

That's where I think credit unions can offer these capabilities in the digital ecosystem and through partnerships in community and other places because knowledge is only as useful as your ability to use it and unlock value. Another analogy I'll say that I think about from the credit union space, I think about a store. You could go to a sporting goods store or if you've ever gone to REI, which is a member collaborative. I feel like when you go to REI, they're not like, "What poles do you want?" They're like, "Where are you hiking? What's the terrain? I know about that. Let me help you. Here's a place where you could get cheaper used equipment here at REI, or we have a deal online."

They have your back and they immediately greet you with what your journey is versus let me tell you about all the products and tools that we have in our store. So, I think that's what credit unions can really do with financial education is help meet our members and potential members at the moments that matter and give them the right education for the moment.

Katie Stone:
I really like that analogy.

Kerala Goodkin:
Yeah, I'm thinking even on a small level in terms of what we do, which is building websites, we talk about financial jargon and just being really careful with that on your product pages. It's easy if you're in the industry to just assume everyone knows what that is. But I'll never forget when I was consolidating some student loans and my loan officer made a reference to how he was giving me an unsecured loan, and I had no idea what that meant. I was too embarrassed to ask because I was like, "I probably should know what that means." But there was just so many in context opportunities to break down that jargon and unpack exactly what it means.

Sue Burton:
And eliminate shame. You hit on there that it's like always allow people to drill down, ask a question, whether it's in a digital format or a live session. It's like that's the key is just not making people feel dumb.

Katie Stone:
Well, that is a great segue because at PixelSpoke, we talk a lot about both digital and human approach and really melding those two worlds. Your survey noted that Gen Z is eager for the potential of AI, but also values human oversight and support. So, I would love to hear, how do you think a credit union's marketing strategy can effectively balance promoting their advanced digital tools with highlighting the human centric community focused aspects of their brand? How do you do both those things?

Sue Burton:
Yeah, and I think technology-enabled humanity is the key. So, in this world, here we are talking to one another on a podcast, looking at each other on video. That is one of the fortunate outcomes from a pandemic is we all got so much more facile with video. So, it's not that you have to be physically proximate with another human being to have that human connection. I would say for Gen Z, when you're swimming in the ocean, you want a lifeguard on shore looking out for you. They have so much of an ability to be self-directed. We see so many Gen Z members and just Gen Z consumers really acting in sophisticated ways with their money beyond certainly what I know my generation did at the same age state. So, that's impressive.

At the same time, the world is very complicated. Finances are complex, money is dematerialized now, and it's all digitized. Things move very quickly. So, there's more at stake. So, where so many Gen Z members are encountering financial decisions that are complicated for the first time, you want that sounding board. Gen Zers are like, this is the generation that texts their parents all kinds of things. I have a 26-year-old who is the chief compliance officer for an investment firm where he works at. He's texting me about, "Which is the best healthcare plan? What do I do? How do I pick?"

And it's like just because you're smart and savvy doesn't mean that you don't want a human that you can check in with and you don't have to be in the same room. So, as credit unions, because we have that purity of this organic model, talking about how we have that human component who has your back, are systematically available to you in your channel of choice wherever you are, I think that's where we can add a real lot of value.

Katie Stone:
That makes a ton of sense. I've been thinking a lot about this phrase, I saw it somewhere, innovation with purpose. It's not just about adding technology for technology's sake. It's to add technology in such a way that really supports the credit union's ultimate goal of supporting members.

Sue Burton:
Absolutely. I love that, innovation with purpose. Again, we talk about practical innovation too. You don't want to do something just because it's gee whiz cool. It's like, "To what end? How is this helping the members' experience?" And that'll be your North star.

Kerala Goodkin:
It's so easy to get caught up in shiny object syndrome and there's so many shiny objects to get caught up in these days. But yeah, it's fun to explore and then it's like, "Okay, well, how does this tie to our core values? How can we roll this out? Is this even worth incorporating and can we roll it out in a values aligned way?" Something we're certainly grappling with at PixelSpoke right now with AI. Talking about human oversight, I was actually surprised to see that 28% of the respondents on your survey said they chose their bank because of its physical branch access.

That's why I chose my first bank, but I was surprised that within this generation, it's not the majority, but it's still over one in four. It's just more than I would've thought for such a digitally native generation. So, I'm just curious. I know there's been a lot of talk about the death of branches and a lot of branches being closed down, especially bank branches. I'm just curious where you stand on this or how you think this data point around branch access might inform a credit union's marketing strategy to the up and coming generations.

Sue Burton:
Yeah, I think it's too soon to call the death of branches, but I think a re-imagining of branches is definitely where we're at. I think branches used to be the place where you came to do your transactions if you weren't comfortable working in the digital realm or if you had a problem that was too complicated. I think now branches will become that place where members are able to receive counsel on more relationship-based planning, handling things that are maybe more... It's a question that's spanning a few things. I'm looking at starting a business and I'm trying to think of what I should do with the pockets of my money. We, like many credit unions, offer both investing and banking. So, maybe it's a conversation about we're starting a family or I want to start to save for my future.

What are the different products and services that I can think about? You're having a more high-value conversation than just a transaction, but I think we're going to see branches get a little bit smaller. I think we're going to get them a little bit more repurposed to be a place where it is, where you're having conversations and not standing in a long teller line per se. So, they will be reimagined, but I think branches are still really important. An interesting data point from a marketing standpoint on ours is like when we are out there acquiring new memberships, we are finding that it is much more cost-effective to acquire them within our branch footprint.

I think that's familiarity. I think people like to see a branch, even if they don't go into it because they feel like you are a member of my community. I see you. You know me. You are a real organization, where so often many consumers have all kinds of businesses they can do business with. They only see online. Will you be here tomorrow? Are you known in my community? I think, again, you might take a loan from that entity, but if you think about really building a financial relationship, it gives you some comfort to know that you can see them across the cityscape. So, I think that that's still really an important part of the mix.

Katie Stone:
Like a long-distance relationship. It can, but it's a lot easier when you're both in the same city.

Sue Burton:
Yes, absolutely.

Katie Stone:
All right. Well, we have some rapid-fire questions for you, just for fun. The first one might be my favorite. What is your favorite Gen Z slang?

Sue Burton:
I think I love serving or giving. She's really serving Taylor Swift because everything reminds me of something else in that. I also love rizz for the same reason.

Katie Stone:
That's great. What's a place you'd like to visit that you've never been?

Sue Burton:
I am dying to go to India. I have always wanted to go since I was a child and I tell some of my board members and we have a huge South Asian cohort. My bucket list is to be invited to one of those three-day wonderful weddings in India. I'm here for all of it, so someday.

Katie Stone:
Awesome.

Kerala Goodkin:
Fun fact, I am named after a state in India. If you do go there, I would highly recommend visiting Kerala.

Sue Burton:
Excellent. I will.

Katie Stone:
All right, last question. What was your favorite childhood TV show?

Sue Burton:
I used to love Saturday cartoons. I'm aging myself that we only had cartoons on Saturdays, right? But I remember I used to love the Super Friends because you had a little bit of everything. My pop culture reference are all talk about the Wonder Twins and Wonder Woman and her invisible planes. So, I still think that stands up.

Katie Stone:
Oh yeah. My brother and sister and I used to... It got us out of bed on Saturday morning. Who would get the remote control and get to control the Saturday morning cartoons? Definitely.

Sue Burton:
Ooh, that's power.

Katie Stone:
Yup, it is. Yup.

Kerala Goodkin:
All right. Well, let's do our final take. So, just as a reminder, our big question today was why do so few Gen Zers know about credit unions and how can credit union marketers authentically reach and connect with this rising generation? So our ultimate challenge is in just a few sentences, Sue, can you summarize your thoughts on this?

Sue Burton:
I would say no credit union has a big bank budget. So, it is to partner together to create category awareness and then I would say that individual credit unions, knowing your members as deeply as you do, find ways to reach them in the channels that they use the most, reach them where they are, and from a relevant standpoint, how are you adding value to their life? It is not about your products and services. It is about how are you helping them achieve their goals.

Katie Stone:
That's great.

Kerala Goodkin:
Well said. Well and concisely said. Well, really enjoyed this conversation and thank you so much for joining us, Sue.

Sue Burton:
Likewise. Great topic and thanks for having me.

Katie Stone:
Yeah, really appreciated it. Thank you.

Kerala Goodkin:
Wow, so many insights from Sue there. If I had to distill those down into a few key takeaways, I think I would start with the importance of relationship-based, value-driven marketing, especially considering that over product and rate-focused advertising. Definitely have made this point before on this podcast, but always welcome an opportunity to make it again. I understand that sometimes credit unions need to promote their products, but really I would love to see more marketing strategies driven by a focus on building relationships and explaining the benefits of banking with a credit union, an educational and relatable way. I think storytelling is a great vehicle for that. I really love Sue's distinction between organic and processed when describing the benefits of a credit union.

It actually reminds me of a tagline I came up with a while back that I would love to see a credit union use, which is locally sourced banking. Maybe that resonates more in my hometown of Portland, Oregon, where there's a lot of buzz around locally sourced goods, but hey, it's up for grabs if anyone wants it.

Secondly, we understand the need to invest in digital experiences and we've certainly talked about that before on our podcast. So, let's not lose sight of that, but let's also make sure that we don't sacrifice the human touch along the way. Gen Z we know expects sophisticated digital tools and experiences similar to those offered by FinTechs. I love the example of DCU's goals-based banking experience, which allows members to set and track financial goals.

But let's not forget that even this digitally native generation still values human oversight and support. I love the way Sue framed it, technology-enabled humanity, which by the way is not the same as human-enabled technology. It keeps the humanity front and center. Lastly, just make sure to meet Gen Z where they are through targeted partnerships and channels. Credit unions really need to focus on figuring out which channels Gen Z audiences actively use and trust. So, this can involve strategic partnerships with platforms that are relevant to Gen Z. Sue mentioned Vox Media for news content, and I'm also going to add here that nothing is more cringy than a company trying too hard to be hip.

It's probably cringy that I'm using the word hip, but then trying too hard to appeal to younger generations. So, I think part of meeting Gen Z where they are really involves not defaulting to stereotypes and taking the time to truly understand the full spectrum of their interests and needs. Well, thanks for joining us today for another great episode. The Remarkable Credit Union is brought to you by PixelSpoke, a digital marketing agency that works with credit unions to create user-friendly, high converting, award-winning websites.

As a B corp and employee-owned cooperative, we believe that business can and should be a force for good. You can learn more and check out our work at pixelspoke.coop. That's pixelspoke, all one word, dot C-O-O-P. Until the next time, I wish you the best of luck in making your credit union remarkable.