By John Flynn, CEO, Open Lending
I’m a baby boomer. In certain areas of life, I’m settled in my ways. I’m beyond what financial institutions might consider the prime borrowing age. I have my banking relationships, and I’m unlikely to change them.
The average credit union member, according to a five-year old report from CUNA, is 48.5 years old – approaching that time in life where financial relationships have been long developed. Nonmembers’ average age is three years younger. The Financial Brand reported from a FIS study which found that baby boomers account for 41% of credit union memberships. Not so high as community banks at 50%, but much higher than regional banks at 30%.
The numbers can seem disheartening. Could credit unions (and community banks for that matter) sliding quietly into obsolescence?
Or, might those well-developed relationships present credit unions with great new opportunities? A May 30, 2019, article in The Financial Brand stated that 75% of consumers 18-26 (older Gen Z) choose their primary banking institution based upon referrals, many of which come from family members the young adults admire – such as grandparents, according to the FIS Performance Against Customer Expectations study. The article also pointed to a Deloitte survey finding that many young adults base their decisions exclusively on recommendations.
Credit unions and community banks need to look at how to turn those baby boomer members into ambassadors and advocates for the institution. How can you provide exceptional service for the boomers to talk up and match it across all channels, so that their Gen Z children and grandchildren are interested in taking advantage of the great experiences your financial institution offers?
Board rooms might be grayer than our membership. Can we get our volunteers involved in talking up the opportunities at your credit union or bank, whether on a wider scale, such as a senior center educational session, or simply to their children and grandchildren?
While young adults and teenagers are often buying their first car, we must also understand that they may have thin credit files. Through an intricately built system of alternative data and analysis, plus default insurance, Open Lending’s Lenders Protection can help with that. Contact us today to learn more.
But we shouldn’t discount the value of baby boomers in their own right. Many of us love the nostalgia of owning the classic cars of our youth, and we pay big time for it. A LendingTree study found that baby boomers owe a median of $25,187 on non-mortgage debts. Auto loans account for 38.5% of that non-mortgage debt.
Opportunities abound with boomers, whether it’s getting them into that 1969 Dodge Super Bee weekend ride or their children or grandchildren into their first vehicle at better rates, more reasonable payments and with better service than they’re going to find anywhere else.