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Slaying Your Credit Union's Digital Dragons

Adrian Moise, CEO & Founder,Aequilibrium Software

Aequilibrium Software

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Slaying Your Credit Union's Digital Dragons

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Digital Banking and Financial Wellness


In today's hyper-competitive financial landscape, Credit Unions (CUs) are not just racing against traditional competitors like banks, fintechs, and the emerging neobanks. They're up against digital dragons—tech behemoths like Google, Facebook, Amazon, and Apple. These giants, equipped with vast resources and unparalleled digital prowess, have begun to carve out their niches in the financial sector. Apple's credit card, Google's mobile wallet, and Amazon's "Buy Now, Pay Later" are just a few examples. Known for their impeccable user experience, these digital dragons have won consumers' trust and are setting new standards for financial service delivery.

Further exacerbating the pressure, the 2022 American Customer Satisfaction Index delivered a stinging blow: CUs, traditionally hailed for their community-centric approach and personalized service, now rank below banks. Many perceive CUs as old-fashioned, lacking the digital finesse of their competitors. This perception is particularly worrisome as CUs strive to serve an aging membership base (with an average age of 53) while also aiming to appeal to younger generations.

Enter Generation Z (Gen Z – those born between 1997 -2012), a cohort soon to command substantial economic power. Their digital-first lifestyle necessitates reimagining the banking experience - CUs must adapt to the demands and preferences of Gen Z, which will soon become a significant portion of their clientele. However, addressing the demands of Gen Z means not only catering to their immediate needs but also aligning with their values, which reflect a shift towards more transparent, authentic, and personalized experiences.

Here's a list of the GenZ’s Top Ten Demands from Credit Unions (CUs):

  1. Digital-First: Gen Z grew up in the age of the internet and smartphones. CUs must ensure seamless digital experiences, whether it's account creation, money transfer, or customer support. A mobile app isn't just a 'nice to have'; it's essential.

  2. 24/7 Accessibility: Gen Z expects services to be available round the clock. This includes customer service, which should be available via seamless and glitch-free chatbots, live chats, or helplines at any time.

  3. Personalized Services: "Treat me like you know me." Gen Z wants CUs to utilize data non-invasively to provide tailored services, offers, and advice.

  4. Transparency and Authenticity: No hidden fees, no complex jargon. Keep it simple, be upfront, and maintain an open line of communication.

  5. Financial Education: As digital natives, Gen Z grew up in an age of self-education. They appreciate CUs offering online resources, tutorials, or webinars about financial literacy and planning.

  6. Ethical and Social Values: Many Gen Z’ers deeply care about social issues. They prefer institutions that align with their values, whether in terms of sustainability, diversity, or community involvement.

  7. Fast and Frictionless: Whether it's payments, loans, or any other service, Gen Z expects processes to be swift and hassle-free.

  8. Safety and Security: While they are tech-savvy, Gen Z is also aware of digital threats. They rely on their financial institutions to safeguard their data and money.

  9. Innovative Offerings: From cryptocurrency to AI-driven financial advice, Gen Z is more open to novel financial products and services. CUs should be at the forefront of these innovations.

  10. Community Engagement: Even in the digital age, community is crucial. Gen Z values CUs that engage with and give back to the community, whether through local initiatives, sponsorships, or events.

CUs have historically been community-centric and trustworthy institutions, but the digital revolution poses new challenges. By understanding and meeting the demands of Gen Z, CUs can not only fix these 'broken experiences' but also pave the way for a future where they remain as relevant and cherished as they have been in the past. To meet these demands and stay relevant, CUs must undergo a profound transformation. Kevin Kelly's Generatives—Immediacy, Personalization, and others—provide a roadmap. It's time for CUs to transition from mere digitization (converting analog information into digital formats, like taking paper-based member records and converting them into electronic files, making information more accessible and easier to store) to genuine digitalization (a holistic change, encompassing technology, culture, and leadership, to use digital technologies to transform business processes, enhance member experiences, and create new digital business models).

The rise of AI and the burgeoning Metaverse further underscore the need for innovation. VR training, for instance, offers a blend of cost-efficiency and enhanced engagement, making it a compelling tool for CUs to elevate and increase productivity and engagement for their staff. Embracing technologies that boost collaboration, enhance staff capabilities, create member stickiness, and foster innovation is essential for CUs who want to become more resilient and to innovate, differentiate, and grow.

To truly reinvent, CUs should explore new business models and services, shifting from conventional offerings to pioneering areas like embedded banking within the Metaverse. Partnering with fintechs and niche digital agencies can further amplify their capabilities.

In conclusion, while challenges abound, so do opportunities. By recognizing and addressing the evolving demands, embracing technological advancements, and forging strategic partnerships, CUs can not only navigate the digital rapids but chart a course toward a promising and vibrant future as well.

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