If Demographics Is Destiny, Is Your Credit Union Dead?

October 10, 2017 at 9:04 am Leave a comment

Image result for millennialsI shouldn’t start my first day of the work week with one of those credit unions are doomed blogs but I can’t resist. The truth is radical demographic shifts are taking place and like any other business, if you’re not adjusting to these trends then you’re destined to fail. In the immortal words of Ted Turner, “You can either leave, follow, or get out of the way.” After all, whoever said demographics is destiny was spot on.

What has me thinking so negatively this morning is this great article in the Wall Street Journal reporting that the biggest single age cohort is 26 year olds who number 4.8 million. People ages 25 and 27 also follow close behind. In other words, we are now seeing the shift away from the baby boomers to people in their 20’s and 30’s who are on the verge of buying a house or getting married for the first time. All those things you typically have to go to a bank or credit union for. Interestingly, Millennials make up about 42% of home buyers today and 71% are first time home buyers. As this survey from the National Association of Realtors shows, Millennials are more skeptical about the economy than their elders but they are still a key part of the home buying industry.

The article goes on to explain how companies ranging from Home Depot to Briggs & Stratton are retailing their retail efforts to respond to this demographic bubble. For example, retailers are responding to a generation which probably spent more time on x-box than helping Dad with a home construction project by offering basic classes such as how to use a tape measure.

The lessons and/or warning signs for credit unions are obvious. The average age of a credit union member is somewhere around 47. And let’s be honest, our conventions can easily be mistaken for retirement village outings. As former NCUA Chairman, Debbie Matz commented a couple of years ago, “If the trend of aging credit union membership continues, many credit unions may have no future”

The good news is that this trend doesn’t have to be a threat. It’s actually an opportunity. For one thing, surveys tell us that this is a generation that has learned the lesson that excessive debt is a bad thing. It also has grown up in an internet culture that at its best emphasizes community relations. In short, credit unions stand for much of what the younger generation finds attractive. To those of you who have tried to capitalize on this, good job. To those of you haven’t, either start planning to do so or decide who you’re going to merge with.

 

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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