HOW FINANCIAL INSTITUTIONS CAN ATTRACT YOUNGER CUSTOMERS

What you'll learn:

1. Understanding Millennial and Gen Z Demographics

2. What Do Millennials and Gen Z Want from Their Financial Institutions?

3. What are Younger Consumers' Goals for the Next 5 Years ?

4. Gen Z’s Growing Interest in Learning About Investing

5. How Banks Can Attract Younger Customers

6. How Credit Unions Can Attract Younger Customers

7. Why financial institutions should partner with KidVestors to attract the next generation

In today’s rapidly evolving financial landscape, attracting younger customers is no longer just a goal—it's a necessity. Financial institutions, whether they are banks or credit unions, must rethink their strategies to engage millennials, Gen Z, and even Gen Alpha, who will soon be making their financial decisions. Let's take a closer look at the changing trends and how financial institutions can step up their game to capture this next generation of customers.

Membership Growth in Banking and Credit Unions

As financial institutions strive to remain competitive, attracting younger customers has become more important than ever. Recent 2024 data reveals interesting trends in both banking and credit union membership

The growth in membership among credit unions signals a shift toward more personalized and accessible financial services. According to the latest data from the National Credit Union Administration (NCUA), credit unions with assets exceeding $1 billion have seen notable membership growth, a trend that’s expected to continue. However, credit unions with assets under $1 billion are struggling with declining membership growth.

On the banking side, while traditional institutions have seen mixed results, they are increasingly investing in digital-first solutions to capture the attention of millennials and Gen Z. Both sectors are recognizing that meeting the demands of younger customers—who prioritize convenience, transparency, and social responsibility—is key to their growth moving forward.

As we explore how financial institutions can effectively engage these younger generations, understanding their unique needs and preferences is essential for future success.

So, how can struggling financial institutions attract this younger demographic, which is not only more diverse and digitally savvy but also more socially conscious than ever before?

The Millennial and Gen Z Demographics

Understanding the age ranges and characteristics of millennials and Gen Z is the first step in tailoring products and services that will resonate with them.

• Millennials are currently between 27 and 42 years old, with the oldest turning 43 in 2025 and the youngest approaching their mid-20s. Many are in their prime earning years, balancing student loans, saving for homes, and managing family budgets. They are looking for flexibility, convenience, and services that align with their values.

  
  

• Gen Z is younger, ranging from ages 13 to 26 as of today, with the oldest Gen Zers turning 27 within the next year. This generation is entering the workforce, exploring career options, and becoming more financially independent. They are digital natives and expect technology to play a central role in their financial services.

But let’s not forget the importance of Gen Alpha—those born after 2010, with the oldest being around 14/15 years old. While they are still children and teens, it's important for financial institutions to start laying the groundwork for brand loyalty at an early age.

Studies show that brand recognition starts as early as age 3, brand loyalty can begin at age 7, and financial habits can form by age 7 as well. Getting in front of Gen Alpha is vital because they will be the future decision-makers when it comes to financial products and services.

What Do Millennials and Gen Z Want from Their Financial Institutions?

When it comes to millennials and Gen Z, understanding their needs is key to creating attractive financial services. According to recent studies, here’s what they look for:

1. Convenience and Digital Solutions: Both millennials and Gen Z value digital-first solutions. A seamless mobile banking experience, online account management, and 24/7 access to customer support are highly sought after.

   
   

2. Transparency and Trust: These generations are highly skeptical of traditional financial institutions. They want transparency when it comes to fees, interest rates, and how their money is being handled. Financial institutions need to be open and honest about their policies and operations to build trust.

   
   

3. Personalization: Gen Z and millennials want products that reflect their unique financial goals. Customizable financial tools, such as savings and investment options, are becoming increasingly important. Whether it's helping them plan for their first home, pay off student loans, or start a business, personalized solutions are highly valued.

   
   

4. Social Responsibility and Sustainability: Millennials and Gen Z tend to support businesses that are socially responsible. They are looking for institutions that align with their values, particularly around environmental sustainability, ethical investments, and community involvement.

Younger Consumers' Goals for the Next 5 Years

When considering what these younger generations are aiming for in the next five years, we see a blend of financial ambition and a desire for security.

Millennials are focused on saving for their future—whether that means buying a home, investing in the stock market, or paying off debt. Gen Z (and eventually Gen Alpha), on the other hand, is starting to enter the workforce and is looking to establish financial independence. Some of their primary financial goals include:

• Paying off debt (especially student loans)

• Buying a home

• Saving for retirement

• Investing in stocks or other assets

• Starting a business

  
  

Financial institutions need to offer solutions that cater to these aspirations, whether through low-interest loans, investment options, or financial literacy resources.

Gen Z’s Growing Interest in Learning About Investing

When it comes to financial knowledge, Gen Z is ahead of the game compared to previous generations. They are actively seeking out information on investing and personal finance in ways that earlier generations did not. Unlike millennials, who were just starting to grasp the concept of investing during the aftermath of the 2008 financial crisis, Gen Z has grown up in a world where investing is more accessible and widely discussed. This shift in interest is driven by several factors, including the influence of social media, the rise of fintech tools, and a desire to take control of their financial futures.

Credit: World Economic Forum

The Rise of Fintech and Investing Apps

One of the most significant drivers behind Gen Z’s interest in investing is the rise of fintech apps like Robinhood, Acorns, and Stash. These platforms have made investing more user-friendly and less intimidating for young people who are just starting out. With low or no fees, easy-to-use interfaces, these platforms empower Gen Z to begin investing with as little as a few dollars. This kind of accessibility is a game-changer. It means that a generation raised on smartphones and apps can access stock markets, ETFs, and other investment vehicles right from their pockets.

Additionally, the gamification of investing, a hallmark of many fintech apps, appeals to Gen Z’s preference for interactive and engaging learning experiences. The ability to track investments, see growth, and compete with friends in virtual portfolios makes learning about investing feel like a game rather than a daunting task.

Social Media and Financial Literacy

Social media, particularly platforms like TikTok, Instagram, and YouTube, has also played a major role in fueling Gen Z’s interest in investing. Known as "FinTok" on TikTok, influencers and financial educators are providing bite-sized, accessible financial advice, often focusing on stock market trends, investing strategies, and how to start trading with little capital. The videos are short, engaging, and easy to understand, which has made them highly appealing to Gen Z.

In fact, recent surveys show that 8% of Gen Z turns to TikTok for financial advice. This platform has become a hub for financial influencers who break down complex investing concepts into digestible snippets, using relatable language and real-world examples. With the help of these influencers, many young people are gaining confidence in their ability to manage and grow their wealth—something that may have been more intimidating for earlier generations.

But it’s not just TikTok. YouTube and Instagram are also brimming with influencers and educators who teach everything from stock trading to cryptocurrency and personal finance. The accessibility and vast amount of free resources available online have democratized financial education, making it easier for Gen Z to access investing knowledge than ever before.

The Desire for Financial Independence

Gen Z has grown up in an environment where financial independence is both a goal and a necessity. With many coming of age during times of economic uncertainty—such as the COVID-19 pandemic and the resulting economic fallout—they are more motivated than ever to take control of their financial futures. Unlike millennials, who may have been hesitant to invest due to the aftermath of the 2008 crisis, Gen Z is embracing investing as a means to build wealth and secure their financial independence.

Many in this generation are drawn to the concept of passive income and are actively learning about investments such as stocks, real estate, and even newer avenues like cryptocurrency and NFTs. They see investing not just as a way to grow wealth, but as a potential pathway to financial freedom, a desire that is reflected in their increasing interest in side hustles, entrepreneurship, and unconventional investment vehicles.

Breaking the Stigma of Investing

Historically, investing was seen as a complex and sometimes intimidating process. Previous generations were taught that investing in stocks, bonds, and other financial products was something reserved for the financially savvy or affluent. However, Gen Z is breaking down these barriers, viewing investing as an essential part of their financial toolkit, rather than a luxury for a select few.

Through education on social media, digital investing tools, and peer-to-peer learning, Gen Z has been able to change the narrative surrounding investing.

They are not only learning how to navigate stock markets and bonds, but are also seeking alternative investment opportunities like peer-to-peer lending and cryptocurrency. This generation is less afraid to take risks when it comes to their financial futures, largely because they feel empowered by the information available to them.

Why Financial Institutions Should Take Notice

Financial institutions have an opportunity to tap into this growing interest in investing by offering accessible educational resources, tools, and platforms that make investing more approachable for Gen Z. By providing educational content, low-cost investment products, and mobile-first platforms, banks and credit unions can meet the needs of this digitally native generation. They can also build trust by partnering with financial influencers or creating engaging social media campaigns that speak directly to Gen Z’s unique interests and preferences.

Ultimately, Gen Z’s growing interest in investing is not just a trend—it's a fundamental shift in how young people view and manage their money. As this generation continues to embrace investing as part of their financial strategy, financial institutions that can align with their values and provide the tools they need will be the ones who successfully capture the next generation of customers.

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How Banks Can Attract Younger Customers

Banks need to pivot if they want to capture the attention of younger customers. Here’s how:

1. Improve Digital and Mobile Banking: Younger generations want to be able to manage their finances on-the-go. Banks need to offer cutting-edge mobile apps that allow users to check balances, make transfers, set financial goals, and track spending—all from their phones.

   
   

2. Introduce Gamification and Rewards: Younger customers love earning rewards, especially when they’re tied to good financial habits. Banks can implement gamified savings programs, such as rewarding users for meeting savings goals, completing financial literacy challenges, or sticking to budgets.

   
   

3. Provide Financial Education Resources: Banks that offer free resources, such as budgeting tools, financial literacy courses, and investment guides, will stand out to millennials and Gen Z, who are eager to learn about money management.

   
   

4. Offer Low-Fees and No-Fee Options: Younger customers often have limited budgets, so offering no-fee accounts or low-fee banking options is a major draw.

   
   

How Credit Unions Can Attract Younger Customers

Credit unions are well-positioned to attract younger customers thanks to their community-focused model. To stand out, they can:

1. Emphasize Community and Social Impact: Credit unions should lean into their cooperative values and highlight their contributions to local communities. Gen Z, in particular, is interested in supporting institutions that make a positive impact.

   
   

2. Simplify Membership: Many younger customers may not know how credit unions work or how to become a member. Credit unions should streamline their membership process, offering easy-to-use apps and online tools to make joining simple and fast. This is where KidVestors can come in.

   
   

3. Offer Financial Tools Tailored to Gen Z and Millennials: Credit unions can provide savings programs, low-interest loans, and investment options that cater to young adults. For example, student loan refinancing, first-time homebuyer programs, and financial wellness workshops can be appealing.

   
   

4. Leverage Social Media: Like banks, credit unions should have a strong social media presence. They can use platforms like Instagram, TikTok, and YouTube to share educational content, promote their values, and build relationships with younger customers.

How Financial Institutions Can Attract Younger Customers ? By Partnering with KidVestors

So, how can partnering with KidVestors help financial institutions attract younger customers and their parents? KidVestors is an innovative platform designed to teach kids and teens about financial literacy, investing, and entrepreneurship through gamified learning experiences. Here’s how this partnership can benefit financial institutions:

1. Engage the Next Generation Early: By partnering with KidVestors, financial institutions can engage with Gen Z and even Gen Alpha before they begin making major financial decisions. Early exposure to financial concepts can help cultivate lifelong customers.

   
   

2. Build Trust with Parents: Financial institutions can create valuable relationships with parents (most of who are in the Millennial age range) who are looking for financial education tools for their children. This trust can translate into new banking relationships for parents, too.

   
   

3. Boost Financial Literacy: KidVestors helps young people understand the basics of saving, investing, and budgeting. Financial institutions that collaborate with KidVestors can position themselves as leaders in financial education, a value that resonates with millennials and Gen Z.

   
   

4. Drive Deposits: Through KidVestors' "Earn While You Learn" feature, financial institutions can see an increase in deposits from students as they engage with the platform.

   
   

5. Attract a Tech-Savvy Audience: The KidVestors platform is designed with digital natives in mind. This partnership will allow financial institutions to align their brands with a tech-savvy, future-focused generation.

   
   

6. Enhanced Brand Loyalty: By connecting with younger generations early and offering value-added resources like financial education, financial institutions can foster long-term loyalty.

Attracting younger customers is essential for the future of financial institutions. By understanding the unique needs and preferences of millennials, Gen Z, and even Gen Alpha, banks and credit unions can develop strategies to capture their attention and build lasting relationships. Offering digital solutions, financial education, and personalized products is crucial for success. And partnering with platforms like KidVestors can provide a strategic way to engage with younger generations and their families, paving the way for a financially literate and loyal customer base for years to come.