It’s no secret that one of the keys to long-term success for credit unions lies in their ability to connect with the next generation of members. After all, there are more millennials than there were baby boomers.
But there is another demographic reality that may be worthy of consideration that would suggest a contrarian strategy that might work well for some credit unions.
Take a look.
ACTION ADVICE: Engage your planning team in a discussion about the strategy of delivering more services focused on the aging demographic. Consider the options that may be available for you to deepen your relationships with this group and create new products and services that meet their evolving needs. Don’t forget to ask how you can leverage their loyalty to bring in their extended family and friend networks as new members.
It’s Your Turn…What do you think about this idea? Does it make sense, or would it be a serious mistake for a credit union to consider it? I look forward to your thoughts…
Good twist, Michael, on the view of generations for strategic planning and what the Boomer generation still contributes to the credit union’s bottom line. Last year I did a webinar entitled, “Don’t Forget the Boomers” for many of the reasons you mentioned.
Today’s membership is a balancing act that requires the concept of the Lifetime Value of a Member. Your message is a good reminder to “make new friends but keep the old, one is silver and the other gold!”
Well said Nicky…it is a balancing act and one that needs to be managed effectively. The other point that I am making here is that there are services that the “old friends” need as they grow older…from long term health care insurance to managing funds for aging parents to handling health care costs for aging parents…that may well fit as a strategy for CUs seeking new sources of revenue. It’s time to really consider what CUs can provide for their members as benefits that may produce revenues when they don’t need to borrow money anymore because of where they are in their lives, but are still loyal and interested in helping support the success of the credit union.
Doesn’t this strategy essentially forgo lending? What kind of lending appetite do those over 55 have? If you pursue a Boomer strategy, don’t you essentially become a deposit wholesaler?
Maybe, maybe not. It depends upon how you view your membership and what you can do for them that others can’t. My sense is that there is room to differentiate some credit unions by putting together packages of services that support the financial success of their aging members who are no longer borrowing money. They have needs, they trust their CU, and they have a right to expect their credit union to find ways to help them meet the financial challenges they face as the move through their lives into the next phase. Just because they no longer borrow doesn’t mean they cannot contribute and benefit from CU offerings that help them manage their money, insure their future, and so forth. It’s not a strategy for every CU, but it makes sense for some that have strong, loyal membership bases who look to their credit union to help them beyond just deposits and loans.
People of all ages are weird about the deposit side of banking. They think that because they are handing you a pile of cash that it shouldn’t cost anything. It could be tough to create a fee/pricing structure that Boomer consumers would swallow.
Generally we agree: find a niche centered around a narrowly defined audience, and zig when all your other competitors are zagging.
Good point. I guess I am really trying to push CU folks to think beyond the deposit-lending model and expand their business models to better serve their members real needs. With loyal aging members whose needs are changing and who are not likely to be borrowers in the future, i.e., that there may be opportunities to serve them with new products and services.
I completely concur with your second point which is another of my objectives…to get people to think about doing something different than what everyone else is doing. And my ideas sometimes stem in part from my own experience and desires. Let me share an example.
Like many boomers I am dealing with aging parent issues and looking for solutions to help with some potential down the road challenges that are likely to emerge. If my credit union truly values me as a member and wants to help me with my financial well being, then it seems logical to me that they should have some solutions at hand for managing finances, dealing with long term care, and so forth…it fits their reason for existence and their general belief in helping people.
But I see few CUs doing this. The deposit-lending model seems to box in thinking and limit offerings…with many essentially writing off the aging population as being net depositors (I frequently hear that said in the strategic planning sessions I facilitate) and not investing any energy in looking how they can provide services and support these folks need.
That was my main motivation in writing the post and suggesting the idea of doing some contrarian thinking…which is, I believe where we really agree.
Thanks for sharing your comments and expanding the discussion…I appreciate it and hope you will continue to do so in the future.