How credit unions can combat aging membership through financial education for kids
As the savings rate dwindles and the age of the average credit union member is on the rise, it makes perfect sense to focus on educating the youth about financial stability and wealth building, from savings to being responsible about debt. Credit unions were founded to promote thrift, and given that April is National Financial Literacy Month, it's a great time for credit unions to revamp what they've been doing to ensure continued relevance and improved financial lives of their members.
The Credit Union Connection Co-Founder/Publisher/Editor-in-Chief Sarah Snell Cooke sat down with Greenlight's SVP of business development, Matt Wolf, to talk about what can be done long- and short-term to help steam this issue. Greenlight has created financial tools that incorporate real-life scenarios - like getting paid for chores and using a debit card - and games to provide kids and soon-to-be adults solid financial management principles.
Partial transcript below.
Note: Transcript is automatically generated.
Sarah Snell Cooke 00:33
It's really interesting, one of the things that credit unions have been talking about since, I mean, I've been in credit unions 20, some years and since I started, is how do we get more younger members, and it was millennials, and now it's kind of Gen Z, and also looking forward to Gen alpha. And also as the parent of to Gen Zer s, you know, savings in the US has been miserable. And, of course, credit unions there, they were created to promote thrift and provide credit, you know, responsible credit for every man and woman. So, you know, our savings rate kind of spiked during COVID. And then and dropped down back to us, usually even below to like, 3.9%. Right now, I was reading so well, what do you see as the issue here? With the savings?
Matt 01:48
Yeah, I mean, obviously, like we've, we've been through better times, right, in terms of the economy, and, you know, certainly a lot of Americans are, are feeling squeezed. What we see also just, you know, a lot of the families we work with, and a lot of the credit unions we work with financial education is really key, and maybe has never been more important. And it's a component that a lot of credit unions are increasingly focused on increasingly, investing, like you said, the whole reason for credit unions being founded when they were, you know, was was to help, you know, financial futures of, of their members. And certainly, we think financial education can really help, you know, Americans with that, and obviously, savings being one of those things. But we've see, frankly, and it starts, you know, when people are in school, the schools really fall short. I think, you know, there's been an increased focus on financial education in schools over the last few years, but still only I think, about 24 states or So, David, to be taught, you know, in their states, you know, and certainly, you know, when we think about, you know, financial education, helping, you know, create smarter and savvy or, you know, credit union members, we had done a nationwide survey of working parents earlier this year, and 93% said, they expect their financial institution to be the one responsible for providing financial education to their children, but only 16% said that their financial institutions actually doing it. So there there seems to kind of be be a disconnect that probably is having an impact on reduction and savings, as you alluded to.
Sarah 03:48
Yeah, well, 93%, and only 16% actually offer it, which is astounding.
Matt 03:55
The respondents said that they believe their financial institutions aren't offering it. I believe, if you actually look at those over 1000 respondents, my guess is almost all or all of their institutions offer some sort of financial education, but for whatever reason, it doesn't resonate with the member. And they're not utilizing it and taking, taking advantage of it for whatever reason, right.
Sarah 04:24
Yeah, no, and I think you're, you're dead on about you having to start younger, because, you know, I think a lot of us were raised in you where you didn't talk about money openly. You know, you didn't tell people what you made or you know, your debt situation or whatever it is. And so, and of course, that correlates to wealth building and financial inclusion even credit unions are like the original financial inclusion advocates and people of modest means. So you know, given This is what credit unions is about, where can we be doing better? Yeah.
Matt 05:05
I mean, first, I think, you know, credit unions do a great job, you know, focusing on the member experience, right and doing what's best for their member, which is something, you know, here green light, we, we try to have a similar approach. So we've we've found that, you know, to be, you know, be quite quite valuable to be partnering with credit unions. But the member experience, obviously, is paramount. But, you know, I do think becoming relevant and reaching that next generation is really important for, for credit union members, for credit unions, I should say, many credit unions we talked to their goal is to get younger, they have aging member bases, and you know, to meet younger generations kind of where they're at, and where they're going and being relevant really talks to kind of meeting them where, where they spend their time, right, and I believe you may have heard of a webinar we did with with Tansley Stearns, who's wonderful, who's the president, CEO of one of our partner, credit unions, community, financial, Craig in Michigan. But you know, she talks to the, hey, there's no, no shortage of, you know, financial education tools, but finding tools that are really relevant to that next generation that are really engaging they, they do a phenomenal job engaging with utilizing social media channels to get out their messaging. But, you know, having content that is, you know, in small bites compelling, and very relevant to that next generation, I think, is really what helps get the level of engagement that I know many, many credit unions are really looking to, when it comes to financial education and engaging that next generation.
Sarah 06:53
And as I alluded to earlier, you know, credit union members, the average credit union member is about 53 years old now. And just 10 years ago, it was like 47. It's only climbing. And so it's not, doesn't bode well, for the industry, frankly, that I think a lot of us love. And so why you kind of started on this, but maybe in go more detail, why are we having this issue? Why accordions having this issue? Yeah,
Matt 07:20
I mean, I think it's not just credit unions, I think if, you know, if you talk to other types of financial institutions, they're running into this as well. You know, there's never been more competition for the younger, kind of next generation of financial institution user. You know, there's a proliferation of Neo banks, you know, out there that are increasingly, you know, whether that's Venmo, or its chime, or its coin base, you know, having products for teenagers, and then ultimately wanting to, you know, attract them when they become young adults. These are mobile first solutions, right, that, that really, you know, resonate, I think I saw a stat there's 42.9, estimated mobile banking users among Gen Z by 2025. So these these solutions, you know, these are, you know, fintechs, and Neo banks that are, they're going after that population, then you even have technology providers, you know, like, like Apple and others, that are offering financial services products that already have every, every 11 or 12 year old in my neighborhood already has an iPhone, my six-year-old wants one he will while but, you know, they're they're engaging younger and younger demographics, and then, you know, having financial service offerings, you know, is allowing them to acquire that customer or member earlier and often. So it's there's a lot more competition, you know, for the children of their members for the credit unions. And that's, frankly, why, you know, we talked to hundreds of credit unions a green light before we launched our green light for credit union solution that's been adopted, you know, by many credit unions before we created our cue, so Greenlight really to specifically try to address you know, that that pain point of how to how do you engage, you know, Gen Z and Gen alpha, and try to ensure, like a really bright future for your credit union and make sure you have a way to combat you know, kind of that aging, but valuable, you know, member base that you have today.
Sarah 09:26
Yeah, and I love that, you know, you talked about all the fintechs that are coming out credit unions and credit unions are getting better. I feel like probably ahead of the community banks even as far as adapting some of those tools from the fintechs. Because they know they can't build it themselves. And that's not their expertise. And I think that's, that's great. So partnering has become a big issue or not an issue per se, but just finding the right partners. And so, Just tying that all together, especially some of the the Gen Z now saw their parents struggling, you know, during the great recession and afterward. You know, it seems like this is like the perfect pair. So talk about how we can address those issues. And specifically, you know, talk a little bit more about green light and how it works.
Matt 10:23
Yeah, absolutely. Greenlight's been around, you know, now for almost about 10 years. We're a family finance company that offers a family digital wallet that includes a debit card for kids, as well as a mobile financial education experience called Level Up that really kind of aims at giving parents you know, convenience and peace of mind and really teach their kids and teens how to earn, save and spend wisely. We've really got a mission that we want to, you know, help every parent raise smart, financially savvy kids. And to date, we have over 6 million parents and kids using our using our app and our subscription service. And kids collectively have saved over $400 million. Using using the green light app, just this year, we did start to really place a lot of emphasis on on solutions customized for credit unions. Greenlight for credit unions is, you know, it's basically a customized family banking solution for credit unions that allows you know, the credit union to add Greenlight's comprehensive family finance offering to their existing, you know, financial service products, and offer it as like a super free suite of family banking, and educational tools. We see that credit unions do a great job in their communities, promoting financial education. You know, Greenlight spent 10s of millions of dollars to build a mobile game based off the national K through 12. Standards for financial education curriculum, that's mobile first, it's got animated videos, it's got actual mobile games, that kids but it teaches them, you know, great financial tools around for instance, you know, you brought up savings earlier, you know, the value of savings, why it's important to do it needs versus wants, educates them about investing and giving back. And, you know, so it's basically taking the green light technology, making it seamless for a credit union to make that decision to your point earlier, should they build something their own on their own? Or should they partner with somebody who's got an offering and with Greenlight, we've got 500, and you know, people, many of whom are engineers, that are solely focused on providing the solution. How do we make it easy and convenient for parents to share money with their kids, but also teach their kids about money. So we've really designed the solution for credit unions to make it so right out of the box, they can have this best-in-class, mobile financial education experience in this family digital wallet, without having to get on like a comprehensive three-year IT roadmap to get a project like this implemented, we have credit unions, like, you know, South Bay Community Credit Union in California, that launched this in under a month, right? So it's meant to be something speed to market quick and light lifting, to allow credit us to innovate and combat some of those problems that you you alluded to at the start. Yeah,
Sarah 13:27
You mentioned that Southbay was up within a month or so. So how does it work for the credit union themselves?
Matt 13:37
So, a credit union signs up to basically sponsor Greenlight. For all the families that are members, you know, of their, of their credit union. The, we're able to help them we have a whole kind of partner success work organization that helps, you know, the credit union communicate out whether that's through emails, whether it's in their app, whether it's in their branch that you can imagine the the branch staff love, being able to engage with, you know, a parent when they bring their child into into a branch. But, you know, they have a whole co branded registration experience, a co branded mobile app experience, even have the ability to put their logos on the debit cards that kids get, you know, the greenlight experience, and it's free for the member. So this creates a really sticky member experience, you know, a couple of areas we see, you know, credit union members who get this for free, through their credit union really enjoying and taking advantage of the offering. When it comes to what we call earn and teaching kids the value of earning money, this as the ability for parents to automate allowances for kids or to assign chores around the house. And, you know, when the when the child or teen completes those chores, they're able to get their allowance We see a good example of Community Financial Credit Union, we see their members heavily over index in assigning chores and automating allowance than our general benchmark of the 6 million customers Greenlight has using our app, we also see them engaging with the financial education game level up, increasingly more than than a typical green light customer. So it's not just that, hey, this is a nice free extra value added service that you get as being a, you know, a member of psccu. You remember, you know, Red River credit union, this is this is really a benefit that your members are going to get great utility out of. So we've been really pleased to see that.
Sarah 15:43
Yeah, absolutely. And, can you talk a little bit to the results for some of your credit union clients, like as far as members added or engagement on the mobile app, whatever? How are you measuring those objectives?
Matt 15:58
So you know, the areas they've seen the biggest benefits so far has been around member retention. This is a very sticky experience. For members with kids or members with grandkids or members that are a caregiver of a child. They've reported significant reduction in churn member term, adults using this app versus, you know, similar cohorts of members who are not using green light for free. So that's like the first benefit. We also hear back from our credit unions, partners that they're also using this in terms of customer acquisition, adult customer acquisition, this is a value prop, that they attach in their branch collateral that they do in a lot of their digital advertising. We have some very innovative marketers among the credit unions we work with, and see that a pretty healthy portion of the families that are signing up for Greenlight are actually new members of the credit union. So as part of their kind of member opening experience, they're seeing Greenlight help contribute to them being new members. And really the biggest value prop that we see in it is pretty nascent, just because we just launched this, this program in March. And, and we do, you know, typical Greenlight customer, from a child perspective is around 12 years old. So maybe not the sweet spot for when, you know, a credit union want to be creating an adult member. But we help facilitate what we call graduation with our credit union. So if a credit union partner of ours tells us, you know, what, we have a student checking product, we'd love to see these kids when they get to be 16. Start using Greenlight through, you know, a dozen or so different tactics, starts communicating to the adult member, the parent, and the teen, when it's time that the that our crediting partners have a specific product for them, we start promoting that, that account opening process, so that they can acquire that next generation of member which is, which is obviously super critical. And as I mentioned before, we are seeing great engagement for the financial education game. And we're seeing, you know, increasingly higher and higher scores will probably need a little bit more time to test like pre post in terms of financial literacy metrics, but we're very encouraged by how often you know, these credit union members and their kids are engaging with financial education in the Greenlight app.