October 10, 2022
As I go into our local Smoothie King to get a giant mango smoothie, I see younger and younger faces working behind the counter. I noticed one of the workers was 14 years old. I spoke to him, and he told me he works about 7-8 hours weekly after school and on Saturdays. I see the same thing at other local shops that I visit. Many young individuals (Who fall into the Gen Z category) are starting to work much earlier in life in order to earn extra cash to buy the hottest shoes or gear or even save up for a car. I remember back when I had to deliver newspapers and walk around during the summer to cut grass for the neighbors or shovel snow in the winter. I didn’t get my first real job until I was 16 and I thought that was early, but I could never imagine working at 14 and making up to $15/hour! With the demand for workers, many businesses are more than happy to pay $15+ per hour to get help.
I understand many young workers do not have an institution that they work with. Many either use their parents’ bank accounts or just open an account with the CU or bank their family has always been with. Do you know why this is? It is because they are not educated on the best options for them and they are not seeing any advertising geared towards them and their needs. This is something that happened to me. When I got my first job at 16, I wanted a car and I opened my first bank account with a big large bank because that is where my parents had an account. I also needed the help of my parents since I was only 16. But what if I was educated and saw enough positive messaging from my local credit union to consider doing business with them instead? My parents never forced me to work with the big bank that’s just something I did because I didn’t know of any other options. I thought this was the only bank I could work with. Let me tell you, I did not like the big bank and they truly did not care about the young adult that was a very small number to them. I hate to say it, but I stuck with that bank for many years just because it was easy and that’s all I knew. Once I decided to make the switch, because the messaging finally was relevant to me, I knew I made the best financial decision to work with a local credit union. They had better options and better security and one big thing I really liked. I don’t carry a lot of cash with me and I go to ATMs quite often. My BIG BANK had very few ATMs in our city and they did not reimburse for ATM fees and that was just a big pet peeve of mine. Having to pay those $2-$10 fees were ridiculous. One of the biggest things my CU does is reimburse all ATM fees which was a huge deal for me among other things that they offer.
What is really important here is the need for credit unions to capture this valuable audience. Although the amount of income and activity will be low, you must look at it as an investment towards the future. Working 7-8 hours per week making $10-$15/hour is not much but you are capturing that member at the very beginning of their financial journey and as they grow, so will your relationship with them. There will be time for their first car, for their first personal or business loan, for their first mortgage or home equity loan. They may get married and have kids and grandkids and that is really where the relationship matters. If you keep them satisfied as a member, their family will do business with you through the years. As you nurture that relationship and educate the member early on in their journey, they will build trust with your institution and they will bring you more business. Are you capturing the younger demographic as early as possible during their financial journey? Or are you just focusing on the members that will bring you more immediate value? While immediate value is important and matters to the current state of the credit union, the most successful CUs in the country understand that they have to focus on long-term planning and long-term success so they understand the need to nurture the future demographic of their credit union.
By Farbod Salman