As the median age of the credit union member continues to climb, one of the main problems is marketing to these younger potential members. Many millennials and members of Gen Z simply do not know that credit unions exist or how they’re different from banks. Just 4% of Gen Z has accounts at credit unions! This is a massive opportunity!

At GAC 2024, Sarah Snell Cooke had the chance to talk to Union Credit Co-Founder and Chief Revenue Officer Barry Kirby to talk about how important it is for credit unions to reach younger consumers digitally and how Union Credit’s marketplace can help market their services.

Read the full transcript below:

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Sarah Cooke 00:30

So welcome, everybody to The Credit Union Connection. We're here live at the Governmental Affairs Conference 2024. Sitting here with Barry from Union Credit. Welcome.

Barry Kirby 00:43
Thank you. Thanks for having me

Sarah Cooke 00:45
here. You're very welcome. So how's the show been going for you guys so far? Good. Busy. Yeah.

Barry Kirby 00:52

It's my 21st year here. So

Sarah Cooke 00:54
really, how did we just meet?

Barry Kirby 00:57

I remember when there was actually exhibitors. It wasn't here. But it was at a different place when they were out on the sidewalk. It used to be at Dupont Circle. Yes, yes. And that's where I used to hang out. So yeah, it's busy. And it's always like catching up with old friends. Yeah, yeah. No, I have a new one.

Sarah Cooke 01:14

Hi, I'm happy to be your friend. Thank you. So yeah, I feel like I've heard like the energy, the attendance, everything seems to be up this year. Yeah, that's good. Good for credit unions. Tell us a little bit of you know, just kind of introduce Union Credit.

Barry Kirby 01:31

Sure, if you would, yeah. So prior to this, my Co-founder, Dave Berger. And I worked at a company called CuneXus, which was all focused on keeping the existing membership that we have today, engaged with the credit union. So really just keep those credit as members from peeling off. So we exited that business it's still alive and well and successful back in 2020. But along that journey, one of the consistent questions we were getting was, can you help us bring us in a new member, not like an indirect loan number, but a real new member and ideally younger? Because we have an aging membership population? Yes. And so that was a challenge. And so that's really the the entire premise behind Union Credit is to help to expose Gen Z and millennials to their credit union, really the credit union movement and what it is. And so we've we built a whole ideas, Union Credit, the name is more than just a play on the name of credit union upside down. It's this notion, this idea that 50 of us or 100 credit unions can come together. And we're just as strong and have the ability to move the needle like a Chase Bank. But when we unionize and become enjoined together, we can start making some some actual impacts. And so that's really what Union Credit is, it's this idea that we've built this marketplace, and we're proactively reaching into the Gen Z and the millennial population is bringing products to them. So they understand that, you know, there are other offers out there other than SoFi, Chasers, like other people, and they're called these credit unions,

Sarah Cooke 03:02

right? Because we do socially align well with the younger generations. But, of course, there's the whole brand awareness issue. Nobody knows what a credit union is, nobody comes out of college saying I want to work for a credit union, you know, like, so yeah. How are you reaching all these young people? Yeah.

B

Barry Kirby 03:22

So the last stat we had seen is 4% of Gen Z are members of a credit union. Yeah, that's should terrify everybody listening to this that has any interest in being in the credit union space. The average credit member today is 55. And it's actually rising. It's somewhere and up around 57. By the end of this year, the average US consumer is 37. That should terrify all credit union leaders as well. So the question we always ask is, if I were to walk outside streets here in DC, and ask a 25 year old, young professional starting their life, have you heard of SoFi? Or have you heard of this credit union over here? Nine out of 10 times they're gonna say I heard of SoFi. And so the real question is, if they haven't heard of us, and they have a financial need, how are they going to find you? So I mean, Marketing 101 is, how do I let somebody know I exist? And so that's what we're doing. So we are working with providers, like the Experian the app on your phone that shows you your credit score, Bank Rate, and all of these different apps that are on a person's phone. And we are literally coming into those applications saying here are these other institutions that you're not familiar with, but they want to here serve you. Because to your point on the alignment, where this population, the top three things that Gen Z and millennials do align with is they choose providers that are mission based. They want to focus on local, local and community, which is kind of interesting. They're very digital generation. But they go to local breweries, they shop at local grocery stores, they go to local fitness places. Right. They don't bank locally. Yeah, that's a kind of an interesting thing. It's like, hey guy, like, you know, you're on Tik Tok, you've talked about all this locality. How about this credit union down the street that's supporting the kids, you know, T-ball league? And is it reinvesting in your community? And so we just got to get that message out proactively. And then that's, that's how we're engaging with this population.

Sarah Cooke 05:22

Yeah. Because one of the things that, as I mentioned earlier, it drives me nuts is, you know, brand awareness of credit unions. Nobody, not nobody knows who they are. But a lot of people don't know who they are, and especially, you know, the future members and the who should be current members to maintain relevance, and you know, you would think 100 years in business people would know who you are. So, how has the response been like in some of the credit unions that you're working with? What has been the results?

Barry Kirby 06:00

Yeah, so good result response has been kind of it's hot and cold. I'm very transparent on these things a lot of last year this time, and still some now you know, the, the message overarching message for credit unions is liquidity, liquidity, liquidity, and surety, we don't have any money, I got it, like, I get it. Like, we didn't have to try during COVID, the getting was so good. We kind of sat back and got lazy. And I worked at credit unions. So like, I've been in this for a while, like, I'm not depending on you, but it's natural human behavior, right. So we kind of got a little bit lackadaisical in what we were doing. And so the response has been, well, now we have issues now we can't lend money. And it's, it's like I hear you, but a 25 year old, again, young professionals not sitting on a treasure trove of a CD or deposit. But they do have financial needs. So that's when you start exchanging with them. And so we've been really just bringing the credit unions back to center, which is where we started, which is the credit union model was built to serve the communities you're in, in a time of need. That is the entire credit union movement. And we've kind of gotten away from that we're now saying, Give us consumer what we need, which is the wrong thing. And so the response has been good. So now that we've kind of moved through that, and everybody's kind of starting to come to reality on that. But I mean, last quarter, and 2023, we made up roughly 8% of the entire country's new member population. And I think that's a pretty good number. I mean, we're, at that time, we were six months into it. And we made up nearly 10% of all of the new members coming in the door. Yeah, and 60% of those are in their 30s. And they're super prime consumers. So like, the results have been good. Yeah. We're seeing a lot of credit unions too are taking interesting approaches, they're getting less branch traffic that's coming in, because everybody's digital now post COVID. And they're asking questions, like, what do I do with my staff? I don't want to lay people off. And it's like, well, I have an idea, reallocate those people to onboarding these new younger members, we're bringing, let's put him back to work. Right. And so we're very happy with the results, we have plenty to improve on and get better, which is the way it should be. Yeah. But so far, so good. Yeah,

Sarah Cooke 08:19

that's awesome. And I love the idea of kind of retraining the people rather than, you know, kick them to the curb, for example, but also your members need those people at times, right? Yeah. I mean, they may know I want this car and I need this loan. So I'm gonna you know, apply. But other times, you need somebody to explain to you how do I you know, save money with a new CD or whatever it is when especially when you're that young?

Barry Kirby 08:46

Sure. So I pick on the I use it, I use SoFi lot as kind of my, my villain. There's other ones out there. But I tell credit union leaders all the time. They're the superpower we do have is we have human beings on the other side. SoFi doesn't have a human being on the other line. Like that is a differentiator. I know we all want to be digital, and we want to automate everything. You want AI all over the place. I get it. That's great. But what we're hearing from Gen Z and millennials is when they want to talk to somebody, which there's gonna come a time they actually want to hear a human's voice. So that's one of those three things they want. They want that, mission purpose and they want community focused. So like those three things when you put them in those three buckets, right, a credit union literally covers all of those. We're just not doing a good job. packaging up and broadcasting.

Sarah Cooke 09:35

Right, right. And a lot of credit unions. I knew there's a couple different camps. I mean, some credit unions are doing very well with with building a brand and getting their names out there. I think there are some credit unions that one don't realize that their what they're doing is extraordinary. Right They think it because just do every day, right? And there are others that just do They don't know where to go. Like they know they need younger members. When I started there, yeah, yeah, where do you start? It is very overwhelming, I'm sure. So I think that's a really excellent option. Now, how many? How many credit unions are you working with now?

Barry Kirby 10:15

Oh, there's, there's probably 30 or so, there. But I mean, today we're, I mean, the big stuff that works so well how we built Union Credit that the model was, we have this extraordinary opportunity. So for example, take Bank Rate. Hopefully they don't hear this, but it's for a smaller credit union or even for a larger credit union to be inside of Bank Rate requires to spend in the seven figures to be in there. So that's basically isolated to the SoFis and ABs, the Pen Feds like you get the idea, you gotta be big. And so it's, it's, it's really about for us, the way we built this is we opened these doors during liquidity crisis. And so these providers are now seeing the Bank Rates that will experience the world saying, we need to see more lenders, because our lenders too, are having liquidity issues. So it opened that door to actually hear us out. So now we're sharing with credit unions, we have this opening with the Bank Rates of the world who have never worked with us. And the experience who haven't worked with us to say, give us a chance as a credit union system to engage these young consumers. We can we do have the best products, we just got to get a distribution hub that works. So that's really what we're sharing with them is we're keeping this door open, and we want to make it successful. So we've got about 30 credit unions today. But the big number is we can touch digitally on somebody's phone. About 150 million people. Right? Yeah. 90% of the addressable population. That's a big deal.

Sarah Cooke 11:40
Yeah, absolutely. Absolutely. And so how does it look for the credit union when they're on the back end of that? How does that work?

Barry Kirby 11:49

Yeah, so the way our model works is, any consumer loan product or deposit product, whether it's a checking account, or credit card, home equity, whatever the product may be. So our credit unions are essentially publishing or promoting their products in our platforms. It includes their underwriting criteria, their membership and field of eligibility, we then take all that and apply it to these giant audiences. We're pre screening these 100 plus million people. And we're saying if they fit these buckets, then show them these credit unions' products. And so what happens is, for a consumer, let's say, they're in Zillow, or they're in wherever they are, if they're engaging in these apps, they see that these local credit unions want to serve them. And these consumers we did we already figured out, are they eligible join the credit union, we handle all the we've already done essentially pre screened them and pre approved them upfront. So we're saying, Hey, if you need to do a credit card, then Teachers' Credit Union has this amazing offer for you. We handle all of the membership opening on our side of the house. Young people don't understand this, that they don't filling out a membership application is a foreign thing to them. So stop doing it. Stop asking them to do it. We do it an indirect auto, we actually create membership for an F&I. But we asked a young person or anybody really on our website to fill out a membership application. So what we're saying is the same credit the same favor you're doing for the auto dealer, can we do it for this other person over here? So we handle all of the membership eligibility, the guidelines, and essentially what happens is when they say I want that credit card, we send to them a member who's already been memberized. And the last thing for them to do is to now fulfill the loan. But it's all direct. It's all direct lending. And they then cross sell them and educate them on why credit unions are are a good solution for them.

Sarah Cooke 13:43

And how is the adoption rate on the consumer side? Like, how are they doing with a how they respond? Yeah, they I mean, it's one of those experiences where they already kind of know what to expect, which is great, because credit unions have not always figured out how to elevate their member service to a level where it's the same as we always talk about like Netflix or Amazon or whatever. Yeah. And that's essentially what y'all are trying to do. It's part of it.

Barry Kirby 14:19

Yeah, I told somebody recently, and a lot of times in the credit union, especially in the leadership position, sometimes we we know certain truths, but we don't actually say them out loud. But it's okay to say them out loud if you're gonna move on, but we're in credit union space, we're really good at creating great products. We're not so good at distributing great products. Those are two different sides of the house. Amazon doesn't build products. Amazon's a phenomenal distributor of products right. So what we're building is this Amazon model for credit unions. And so we really just want them to focus on building the best products we will distribute those from a consumer perspective and get it out to them. And the adoption rate has been good right now our biggest challenge right now is we have more demand from this young population than we have supply on the credit union side of the house. Liquidity. Yep. Which is. And I get I tell them, I hear you. I know, you're, you got lending challenges. But the good, the good. And the bad news is in five years, if we don't address this aging membership population, you won't have another liquidity crisis. No, because you're not going to be relevant. Yeah. You won't have anything to worry about. Because we will have we won't be around, because our members will have aged out.

Sarah Cooke 15:37

Right. Yeah. I mean, you mentioned earlier how average age is 55? Seven, heading to 57? Yeah. You know, 10, 15 years ago, we were talking about our membership is too old. And it was only like, 43 then, you know, and, and it's gotten so much worse since that time. So I mean, I think it's great idea to Ill actually, hopefully, work, you know, yeah. But yeah. So I will give you the opportunity to share your final thoughts, advice to credit unions.

Barry Kirby 16:12

I would say whether it's using credit or anybody, I think that the first step is just asking the question, where do we start and making a concerted effort to actually starting? So I mean, I know we say it in the boardroom, again, I sit on the board of a credit union. So I get it, like we all say, here's our mission. But are we actually practicing the mission of serving the community I get, you got to take care of your members first. But again, a credit union is a community Chartered Institution. It's not just for the members, it's for the community. And so liquidity aside there, I think we got to start engaging with these populations and letting them know what the purpose is and how you serve their community. And you may have to get figure out, get creative, and figure it out. Because I can tell you right now, 80% of Gen Z and millennials join a credit union through a loan. So all that aside, so he's got to figure out so if, you know, how are you going to address that? Like, you got to figure that out. And then whether it's Union Credit or somebody else, it's really if we don't start it, start addressing it now, again, these liquidity chord changes, whatever we got going on is not going to matter, right?

Sarah Cooke 17:22
Yep. Yep. Absolutely. Thank you for your time. Thank you.