Millennials took a big financial hit during the recession, with wounds that are still fresh and unlikely to heal quickly, and a growing, under-utilized industry is hoping to build some new momentum.
According to the Credit Union National Association, credit unions have lately been aggressively steering marketing efforts toward the millennial generation, with very straight-forward pitches on the industrys non-profit status, and arguing that its fees and interest rates are lower than profit-minded banks and the pitch might be working. According to CUNA, credit union membership surpassed the 100-million mark this summer.
Employers looking to beef up their benefit package, to attract and retain their employees, are looking for partners they can trust, says Kathy Hall, senior manager of business development with Alliant Credit Union one of the largest credit unions, serving members nationwide. I think they find the financial cooperative model attractive, she adds. Businesses are understanding more than ever the importance of a financial cooperative.
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When employers see credit unions with lower interest rates and low-to-no fees, they really feel like its a benefit they are extending to employees, Hall notes. And she advises that while there are no costs to partnering with a credit union, not all financial institutions are a perfect match for every employer.
For example, Alliant is not a cash-heavy institution. We resonate with millennials and individuals that like to do online banking, Hall says. Employers with more digital-savvy employees would be a good fit, she says.
But employers can certainly contact us, and if were not a right fit we will help them find a credit union that is, she adds.
The typical process is painless, and involves the employer approaching a credit union and requesting to be added to its charter. Alliant, for example, votes monthly on including new employer groups to the credit unions charter. Once approved, the credit union submits their letter to a financial regulator. For Alliant, being a state-chartered credit union, that would be the Illinois Department of Financial and Professional Regulation.
Once that process is complete, the credit union launches an education program, with a combination of in-person and online tools so new employees are aware of the options available to them, and provides the employer a regular participation report.
While CUNA doesnt have specific data on business partnerships with credit unions, Vicki Christner, a spokeswoman with the association, says a fast growth in overall credit union memberships a recent growth to about three times the rate of population growth has been noted.
There are 1,840 credit unions, with nearly 14 million memberships that are sponsored by a single employer; and 1,894 with more than 31 million memberships are sponsored by multiple groups [including employer groups], Christner says. These two classes of credit unions now represent 56% of all 6,622 U.S. credit unions, and memberships in these credit unions are equal to 44% of the total 100 million U.S. credit union memberships.
However, the Society for Human Resource Management says it has seen a downturn in the past five years of its employers offering credit unions as a benefit: with 26% of employers offering it as a benefit in 2013 versus 36% in 2010.
That being said, its still a common benefit, says Bruce Elliott, SHRMs manager of compensation & benefits. There are obvious benefits in the lower fees and interest rates, and it is usually easier and cheaper to get loans through a credit union, he says.
Millennials like them because their products are cheaper, and its easier to get credit from a union than from a commercial bank. In addition, most are online and millennials are more tech savvy, says Elliot.
