How Credit Unions Can Attract Younger Members & Loans

2025 is already proving to be a very interesting year for credit unions. The arrival of the new Trump administration has led to talk about deregulation, elimination of the CFPB as well as independent agencies, like the NCUA, and there’s plenty of digital competition credit unions have to contend with, especially when it comes to attracting younger members. How can credit unions compete with Chime, Dave and other neobanks and fintechs that are scooping up all the Gen Zs and millennials?

Host and co-founder of The Credit Union Connection Sarah Snell Cooke sat down once again with Union Credit Co-Founder and Chief Revenue Officer Barry Kirby to discuss what credit unions can expect in 2025, from how credit unions can attract younger members where they are to how to better compete with other digital lenders.

Read the full transcript:

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Sarah Cooke 00:00
Thanks, ready. Hello. My name is Sarah Cooke of The Credit Union Connection. I'm here today with Barry Kirby yet again. How are things going today?

Barry Kirby 00:20
Good. It's, it's getting a little bit warmer here in Charlotte, North Carolina, so no complaints. I'm ready for spring.

Sarah Cooke 00:26
Yeah, we just had this big snow in Conway, South Carolina, and it is going to be 60 today. So very ready for that.

Barry Kirby 00:34
Yeah, our big snow in Charlotte was like a trace, and the kids are out of school for three days, so that's pretty typical for the cells.

Sarah Cooke 00:34

It was, it was two inches here, and I didn't believe it, having come from Maryland, that they actually don't touch their roads, but they actually don't touch the roads. It's, it's nuts. Okay, well, we got the weather talk in. So Barry is the Chief Revenue Officer for Union Credit, and wanted to check in with you about what's going on for you and Union Credit in 2025.

Barry Kirby 01:06

Yeah. So yeah, things have been going well. We closed out last year with roughly 55 credit unions that were part of the Union Credit network. We're only a year out of the gate, so that's really good. And then we released some recent stats. I think we'd onboarded somewhere in the neighborhood of just north of 20,000 new members across our credit unions that were part of the marketplace. So, so far, so good, and they're all trending to the younger generations, which is what we're trying to do, which is we're trying to help guide in that next generation of member into the credit unions to keep the life and the blood going. So, so far so good. Plenty of work though left to be done.

Sarah Cooke 01:42

Oh, yeah, absolutely. I was just talking with somebody about, like, Dave and Chime and how they get the younger members in a lot of the times with those cash advances, or payday advances that are super cheap, or the no, no fee overdrafts and so, you know, we need credit unions to make it quick, fast and easy for to get members too. Gotta be able to compete, yeah.

Barry Kirby 02:07

Absolutely. I was talking with somebody recently, like the trend used to be, say, 10, 15, years ago, before the Dave and the Chimes of the world, you would notice the most of the payday and the cash advance places are near bus stops or they're in other types of communities. And, you know, lower income communities, because they're primarily targeting those, those younger generations, or the people who take mass transit. And it was always fascinating to me. It was like, if credit unions could just focus on those areas, that's the population we're supposed to be serving. And so really, the Daves and the Chimes of the world have kind of transitioned from, say, the bus stop type of location to now moving to that digital space because, well, most people all have a smartphone these days.

Sarah Cooke 02:46

Right, right. And especially, I grew up near Fort Detrick, and you could just see the payday loan shops and title lenders all around the corners there. So this year, we have a pretty major shift in the administration, and not to get political, but we are expecting deregulation from this, from the Trump administration. So, what could this mean for credit unions and what they're doing as far as their overall strategies and lending in particular?

Barry Kirby 03:24

I think it's, there's gonna be a couple of things that I think could happen. I think, obviously this is all speculation. One, I think deregulation is going to allow the non traditional institutions like the Daves and the Chimes of the world to start offering more aggressive products, as well as move into spaces that have been very hard to get into, just due to the regulatory compliance, you know, mortgages and offering other types of loans in specific states. There's lots of licensing and brokerage processes that go on. So, deregging will allow, obviously, those fintechs and those providers to move more aggressively into those traditional banking product spaces, which I think could present even more of a challenge for credit unions than what we already have with them. The other thing that could happen on a positive note is for some of the larger credit unions that are starting to approach the CFPB guidance, which is 10 billion in assets, this could be a breath of fresh air for them if, for some reason, there's some impact or deregulation around that. So it's a little bit of kind of wait and see. I think, from a credit union's perspective, if I was in their boardrooms, I would really just urge them to stick with what their mission is, which is focus on the community. This next generation is very community focused. They go to local breweries, they shop locally, but they don't bank locally, and a lot of that is just due to the fact that we haven't done a good job of letting them know that that we're here and we are local, and yes, we offer the same digital services, but we're local to your institute, you know, to your community.

Sarah Cooke 05:02

Mm, hmm, absolutely. And you know, when you're out in the community, this is all like, my number one pet peeve is the 100 years of non-brand awareness for credit unions and being able to, one, be in the community in front of their eyes, but then also, you know, having that data to say, we raised X dollars, we rebuilt X homes. We you know, whatever it is you're doing in your community that you can identify and track and detail it for your lobbying efforts too, because obviously, you know, the other thing that's kind of that has come up of recently, it's in the budget package is to potentially eliminate the credit union tax exemption, as well as reducing the CDFI Fund for those particular credit unions. So you know, being able to demonstrate your brand only helps, not only lobbying, marketing, brand, you know, there's so many things that it can do for a credit union, and we really need to to work harder on that. But now I'll get off my soapbox for a second, unless you want to join.

Barry Kirby 06:09

Well, no, I was just gonna say, I mean, on our, from our consumer research, when we were building out Union Credit, one of the things that we found was a big challenge was a lot of the folks in these communities don't understand what becoming a member of a credit union means. They they literally view the word union like, oh, I don't work at Coca Cola, so I can't join Coca Cola Credit Union. And it's like, actually you can, because you live in that area. And so one of the things that we really focused on early on was, can we just eliminate the memberization process altogether? And so that's one of the things that's been successful for us, which is, stop asking a consumer to fill out a membership application. Just memorize them yourself, because otherwise you're creating inertia that doesn't exist with the Chimes and the Daves of the world. So that's been, so you know, the brand obviously, is very, very important, but it's also important to help not make yourself look like the difficult party to work with when you're vying for their services.

Sarah Cooke 07:01
Exactly. I like that word, memberize.

Barry Kirby 07:04
Yeah, memberization. I don't know if that's a real word, if I've made it up.

Sarah Cooke 07:08

It is now, man.

Barry Kirby 07:09

Yeah.

Sarah Cooke 07:10

I've declared it so!

Barry Kirby 07:12

There we go. Perfect!

Sarah Cooke 07:14

So, you know, as a part of that, of course, the credit unions are going to be balancing growth and managing risk when they've got, you know, a little bit higher delinquencies, or at least trending that way. And so with embedded finance and data driven strategies, can credit unions attract those new members? Can they also manage that risk when a lot of, especially younger people, have thin or no credit files to begin with, and just keep keep those portfolios in check?

Barry Kirby 07:42

I think so. I mean, credit unions have been doing embedded finance for well over 20 years. It's, it was just referred to as indirect auto lending then, which is basically just offering finance at the point of sale. Um, credit unions still apply and stuck to their credit practices and their underwriting guidelines. So I think it's, it's, this isn't rocket science. It's offering financing at the point of sale and then sticking to whatever you and your alco committee and what your underwriting criteria are. And so, yeah, if they're thin files, and that's something you guys do, fine. I mean, I wouldn't tell them that you need to do anything different as far as an underwriting and risk perspective. I think they need to stick to what they know. But I think these, we got to start meeting though, these consumers where they are, and stop expecting them to walk into a branch or to find joviacu.org, like it's just a name that they're not randomly going to be out there Googling. And so you got to start meeting them where they're at. So if that's in an app, if that's it's on a local wedding site, if they're at a local brewery. I mean, it's, it's all about finding these consumers and the places they are, and then meeting them in those places.

Sarah Cooke 08:45

Yeah, and supporting those local businesses. Getting back to, like the the younger people like to support the local businesses. And, so one credit unions being local businesses should be a prime choice. But also, you know, if they're seen as supporting the local businesses, I mean, even I think it was Chase, the other day, I heard an ad they were talking about being a part of the community, and I was like, uh huh, interesting.

Barry Kirby 09:09

Yeah, exactly. That's super interesting. Yeah. I mean, if you walk, I use this analogy all the time, if you walk up to somebody who's younger than maybe you or I, and just ask them, have you heard of this local credit union? Or do you know the name like SoFi? There's almost guarantee they know the name SoFi. And that's a big problem. If you're a community institution, that in your own local community, you're not a recognizable brand. And that's, that's really a big problem, and the challenge with that is it's, they're not listening to Pandora, they're not listening to local news and TV. You know, they're on podcasts, they're on demand, they're in these apps. And you've got to start finding different ways to start connecting with that generation, or we're just, the Chases that are going to become the main, primary source of all that business.

Sarah Cooke 09:53

Which is not good for consumers, because without having the competition, then that's part of the governor, governing, governing of prices and things like that, you know, once, especially as we move toward deregulation and probably throwing out some of those recent CFPB rulings. So anyway, so you were talking about engaging the younger members, and how can credit unions modernize engagement? Because it's not, how you doing, Bob, why don't you come into the credit union with me? I mean, sometimes it is, nothing wrong with that, because even the younger members need that guidance, you know, as far as the steps to take in buying a new house or prepping for a new baby or whatever it is, but yeah, how can credit unions modernize their engagement to connect with the more digitally savvy members?

Barry Kirby 10:45

Basically, I think there's kind of two, you have to break them up into two silos. One is, we have a younger member now, how do we serve them with new technology and more in a better digital strategy? And then the second silo is, how do we actually engage a non member who's in the younger generation? How do we start attracting them in? And so on the attracting side, because that's really what we focus on at Union Credit is helping them to drive new members in the door. I mean, the things we found is you got to meet them where they are. So for example, we're inside of Bankrate and all these other different apps, and we're able to engage with them there. Again, another important thing for us is really calling attention to the fact that these institutions are basically all non that, you know, they're not for profit, they're all community focused. A lot of consumers aren't aware of these things, which is important to these younger generations, especially as they're more focused on using their money to drive better good things, better outputs, and so really calling that up to the front. And then for us again, the memberization, eliminating the fact that we almost always at a credit union, if you walk in the door, the first thing they're going to say is, fill out this membership application. This isn't Costco. They don't have to fill that out to buy something. The truth of the matter is, they can do the same thing. They can buy a car at the dealership, and they're not asked to fill out a membership app. The difference is the dealers doing all of that work for them, and so that's what we're doing, is we're handling all that to remove that inertia, and then just getting to the point where, once you've brought them in, then it's start to build that relationship with them. I think if credit unions wait until somebody's in the purchasing of a house, scenario, to your point, I know that was just an example. I think that relationship, you've already lost the chance to win them because somebody's already been banking them, and it's really hard to flip them once they've already been taken care of, for, say, the first five to 10 years. It's really important to catch them right as they're getting that job. They need that new credit card because they're traveling whatever it may be, or that new car. It's important to start building that relationship early on so you have that foot in the door.

Sarah Cooke 12:53

Right, and that's, it goes right to what every credit union just about has in their mission statement or vision statement, is superior member experience, and we aren't keeping up on what that actually, I mean the definitions changed, and so we aren't keeping up on what that necessarily means. Now, also to the point though, that a lot of smaller credit unions, they're operating on razor thin margins and things like that. So, then they, well, they have compliance, all kinds of challenges that people always talk about. So, you know, clearing this one way, I mean, 85% of purchases, I think, is the stat, begin online. And that's because, you know, and that's what I often talk to my consulting clients, about is, you know, people that your referral traffic and or your organic traffic is the most valuable, because they're the people already looking for what you offer. And so, yeah, by having a tool like Union Credit, where you're already doing that for the credit union, then the credit union can do the rest for the member.

Barry Kirby 14:03

That's what we've been doing. So we have our own privately labeled direct consumer brand. It's called Further and what we've found is we're actually what we started doing is started to engage local retailers. And so we're working with a large home improvement chain on the West Coast, though, who's primarily in the Bay Area in Northern California. They don't offer like the Synchrony credit card. They don't offer like the Chase Card, but it's a home improvement store, so like, people buying windows, and they're doing home improvement, but they would love to be able to offer a local credit union's credit card in that purchasing experience. And so that's one of the things we've been able to connect that tissue. Consumers putting in windows, they want to shop locally. Now there's a credit card being offered at a local, from a local institution, and where that connective tissue that brings them together, and then just building on that trifecta of we're keeping it all within that community.

Sarah Cooke 14:51

Yeah. Yep, I love that, because that's exactly you know why banks were put under CRA is because they weren't reinvesting in their own communities. Um, again, I won't get on that soap box, but, so Barry, as you know, as a thankfully repeat offender on the show you, you get final thoughts as we're as we're cutting to commercial. So what do you have to say for our credit union audience out there, as far as final thoughts, key takeaways from our discussion today?

Barry Kirby 15:26

I would, I'd say, stay the course. You know, there's all the talk of everything is AI this and AI that. I would say that there's also practicality that you just sit down and you say, You know what? Maybe I have, maybe some of my members have kids who are 18, 22, 24, maybe we have grandchildren. Whatever it is, start engaging with some of those, those people, and start asking them, like I asked my son, how would you buy a car? And he said, Cash App. And I was like, you have no clue. That's actually a real response. So like that helps you start getting into the mindset that they're not thinking the same way as we are. And then we gotta start thinking about, how do we then engage them, and how do we start meeting them? Because the one superpower I will say, for every credit union that we do have against the SoFis of the world is you have a telephone with a human being on the other side of it that can answer it and talk through something. And that is important. I know we we kind of like laugh at it, but you try calling SoFi, you're not going to talk to somebody on the phone, and that's a big deal.

Sarah Cooke 16:26
Yeah, and it's such a pain in the rear when they're automated things don't understand what you're trying to ask anyway. Not SoFi, but I went through that this morning.

Barry Kirby 16:34

Yeah, I actually went through that this morning too. So I thought it very timely to mention that as well, because it drove me nuts. I was like, customer support, customer support, my goodness, yeah.

Sarah Cooke 16:43
Yep. And then they tell you some stuff that's not even true. And yeah, again, third soapbox of the day. And it's pure...

Barry Kirby 16:51

No worries. No worries.

Sarah Cooke 16:53
Very well. Thank you very much for joining us. I appreciate it and...

Barry Kirby 16:57

Thank you for having me.

Sarah Cooke 16:58
Absolutely. Have a great rest of your day.

Barry Kirby 17:00
Yeah, you as well. I appreciate it.